Reforming the Medicare Hospice Benefit

As a wrap to my two previous articles regarding recent fraud and False Claims Act suits and issues in the hospice industry, a concluding piece is warranted.  As I have written before, the fraud issues and cases in the Hospice industry divide (though not equally) between the providers committing the fraud and an inferior Medicare Hospice Benefit combined with CMS’ ability to effectively administer the benefit.  As with all provider programs under Medicare, the payment methodology provides increased levels of reimbursement for higher intensity or higher acuity care.  These higher payment levels are often dramatically out-of-sync with how patients utilize care and how providers deliver care and support operating realities simultaneously.  Additionally, the justification methodologies employed by CMS for a provider to grab a higher level of care and thus garner more reimbursement provide no effective screen to the event.  In short, the governmental recourse is post-claim reviews, often not completed, and when complete, years post the payment fraud.  Oddly enough, the government (CMS) doesn’t even effectively monitor current claim trends against normative utilization patterns. Perhaps this is why the Department of Justice and the CMS Office of Inspector General estimate annual fraudulent billings to Medicare of between $60 and $90 billion.

Since inception, the Medicare Hospice benefit has received the least amount of re-work, structurally in terms of definitional language and organically in terms of payment methodology.  For all intents and purposes, other than per diem payment machinations, the payment levels and definitions remain unchanged. Likewise, the eligibility and benefit structure remains fundamentally unchanged.  These two core elements are incongruous to the industry growth and general health policy trends that have occurred since the benefits origin. While the number of patients and providers has grown dramatically over the past decade (twice as many beneficiaries using the benefit today), the payment and eligibility plus coverage criteria remain fundamentally unchanged.

The Accountable Care Act includes a mandate for the Secretary of HHS to reform the Medicare hospice payment system and thus, a rounded benefit program (ideally) to mirror the payment changes.  In effect, the benefit will be substantively revised, at least from a payment perspective.  As go payment changes in these programs, so comes regulatory language that ultimately, configures in whole or in part, the related coverage and benefits (e.g., acute and post-acute PPS).  Prior to this forthcoming change, Congress in 2010 authorized a demonstration project for Medicare and the hospice industry, allowing Medicare payments for, in concert with the per diem hospice benefit, certain amounts of curative care.  To date, no movement on this initiative has taken hold.

The hospice hardline exists between curative and palliative care. Enrollees must forego any curative care options in order to garner the Medicare hospice benefit and the services of a hospice.  For all too many patients, this is an unacceptable choice.  For all too many physicians, this keeps hospice out of the discussion as an option; saving the futility implication for a point later.  The net effect of this hardline is that hospice utilization, while up in numbers, is increasingly driven to the last days of life.  It also increasingly occurs in an institutional setting as opposed to the “hospice goal” of dying at home.

The dilemma for economic policy consultants such as me is that hospice is an aspect of the care continuum that should see higher, appropriate utilization. By appropriate, I mean less of the “push the envelope” growth evidenced in the Vitas complaint and less of the very last days of life growth that come only after all other options exhaust.  Hospice or palliative care is an exceptional delivery system that can save the Medicare program significant dollars while offering qualified patients, comfort and access to appropriate resources.  Getting to the modernization and reformed program level however, requires a conceptual shift in the Medicare hospice benefit.

  • Best practice diagnostic screenings and assessments need to take the place of the ‘certification’ standard presently in-place.  Medicine is very capable today of approximating death by types of disease.
  • The benefit needs to integrate transitional periods of curative technology and care, allowing patients to transition earlier.  If recovery occurs, so be it.  This conceptually, will satisfy the barriers in the minds of patients and physicians and removed the “futility” stigma. A payment methodology needs to incorporate this care.
  • A PPS methodology needs creation with logical review periods and standards, analogous to home health, SNFs, etc.  Logically, the hospice system is simpler and can encompass far less criteria.
  • Within the PPS methodology, the “place of care” issue requires reform.  Payment must reflect the care needs of the patients, not the paradigm of “death at home”.  An aging society is less and less likely to “die at home” as integrated families and non-paid caregivers are less and less the norm.  More patients on hospice, will die in institutional environments and the payment methodology must incorporate this reality.
  • A flaw exists in the Medpac remedy of per diem payments (same model adjusted) correlated to length of stay  unless the same correlates to an assessment and a resulting PPS model.  In this approach, length of stay is not  a factor; care required is the sole factor. If Medpac believes intensity changes through the stay, this model addresses that issue generically.
  • The concept of benefit periods needs revamping.  Personally, from an economic perspective,  I prefer someone using a palliative benefit program for a year or more compared tot the present fee-for-service Medicare model.  In fact, the Hospice benefit should incorporate end-stage care and palliative care payments as opposed to the current paradigm which is truly, end-stage.

While I can’t guarantee the above changes eliminate the fraud activity in the industry, they certainly level the field and address the flaws in the Medicare hospice benefit that contribute to the fraudulent activity.  Provider behavior, especially when a profit element is at play, will always follow to a certain extent, the economic axiom of “what gets paid for gets done”.

Leave a Comment