Medicare Compliance & Reimbursement

MedPAC looks to shake up hospice pay--but don't count on a case mix adjuster.

After more than 20 years, the Medicare hospice payment system could see some big changes.

The Medicare Payment Advisory Commission is considering recommending changes to the hospice payment system in its June report to Congress. And lawmakers have proven receptive to MedPAC's suggestions lately.

One change that won't happen any time soon appears to be a case mix adjuster, MedPAC staff indicated at its recent meeting.

MedPAC contractor RAND Corp. analyzed data from one for-profit hospice chain. The results "don't make a compelling case that case mix adjusters based on patient characteristics would improve the accuracy of the payment system," according to MedPAC staffer Kathryn Linehan.

In other words, "if it ain't broke we shouldn't fix it," notes MedPAC Commissioner John Bertko.

Leaving hospice payments "unadjusted by case mix" is a wise idea, says John Mahoney, principal of the Summit Business Group in Penfield, NJ. Adding a case mix adjuster "would require a significant increase in the amount of data that hospices would be required to collect and manage," notes Mahoney, former president of the National Hospice Organization. "At the end of the day, the government and hospices may have a slightly more equitable payment system, but they would probably both pay for it in added management and compliance costs."

A case mix adjuster also could lead hospices to cherry-pick the most lucrative patients, notes the National Association for Home Care & Hospice.

MedPAC Eyes Lower Pay for Middle Days

MedPAC staff and commissioners displayed more enthusiasm for rebalancing hospice payments across the length of stay. RAND's data analysis showed the hospice chain delivered more intensive care at the beginning and end of patients' hospice stays--especially in the last three days of care when patients were dying.

"Redistributing payments from the middle days to the first and especially last days of the stay would more accurately reflect the costs incurred at these stages of the hospice stay," Linehan said in the meeting.

"It is important that MedPAC is acknowledging the higher costs at the beginning of care and again during the final days of life," cheers attorney Mary Michal with Reinhart Boerner Van Deuren in Madison, WI. That pattern is "a constant in hospice, regardless of whether a hospice is for-profit or not-for-profit."

The proposal recognizes the problem of late entry for some hospice patients, especially cancer patients, Michal notes. "It is heartening."

Although receiving higher payments for the first and last days of stays would help with short-stay patients, it could prove damaging for hospices that are taking on more non-cancer-diagnosis patients, warns consultant Beth Carpenter with Beth Carpenter and Associates in Lake Barrington, IL.

"Increasing numbers of hospice patients have non-cancer diagnoses," Carpenter points out (see related article in [...]