The Medicare Payment Advisory Commission (MedPAC) is poised to recommend that the U.S. Centers for Medicare and Medicaid Services (CMS) reduce the aggregate cap for hospice payments by 20% in 2024.
The commission has yet to vote on the recommendations, but MedPAC has called for similar cuts annually since 2018. To date, Congress has not implemented these reductions.
CMS set the 2023 cap at $32,486.92, up from nearly $31,300 per patient for Fiscal Year 2022.
“The commission has recommended the hospice cap be wage adjusted and reduced by 20%,” Kim Neuman, principal policy analyst at MedPAC, said at the group’s recent meeting. “Changing the cap in this way would make it more equitable across providers, and we will reduce aggregate Medicare expenditures by focusing payment reductions on providers with long stays and high margins.”
The calculations that underlie MedPAC’s proposals are complex, but those two factors — length of stay and margins — stand out.
During 2020, about 18.6% of hospices exceeded the cap, MedPAC estimated. This percentage has been rising steadily for several years. In 2015, the commission reported that 12.5% exceeded the cap.
Most of the above-cap hospices had relatively high average lengths of stay and live discharge rates. They also tended to be freestanding for-profits that operate predominantly in urban areas, MedPAC found.
Reducing the cap would serve to bring down margins among those providers, according to the commission. On average, above-cap providers had margins nearing 23% before the cap was applied, the commission indicated. After the cap, those margins tumbled to about 8%.
If Congress were to implement the recommendation, MedPAC projects that the proportion of above-cap hospices would reach 33%, still mostly for-profits with average lengths of stay around 240 days.
In the provider space, stakeholders have raised concerns about the impact that such cuts could have if they were enacted.
The National Association for Home Health & Hospice (NAHC) warns that a 20% cut could reduce patients’ access to care, exacerbate health care disparities and ultimately push Medicare costs upwards.
If fewer patients can access hospice, NAHC contends, hospitalizations could go up, which would be counter-productive to the MedPAC’s objective to extend the viability of the Medicare trust fund. Current estimates have the trust fund hitting shortfalls beginning in 2028.
“If you’re going bankrupt, you don’t usually try to take action the day before bankruptcy hits, right? MedPAC recommendations can then be given more attention than they might otherwise have been given during that non-trust-fund-going-bankrupt era,” NAHC President Bill Dombi told Hospice News. “We’re especially concerned about the recommendation on reducing the cap.”
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