Hospice the Next Generation: How the Benefit Could Change

The possibility exists that hospice care will change more in the next few years than it has during the previous four decades.

The Medicare Hospice Benefit turned 40-years-old in 2022, and in that time the program has remained fundamentally unchanged. Adjustments have occurred, like implementation of the “U-shaped curve” in reimbursement, the service intensity add-on and methods for calculating the payment cap to name a few. But the essential structure remains the same — per diem payments for patients with a six-month terminal prognosis who choose to forgo curative care.

Since 1982, the benefit has allowed millions of patients to spend their final days in their homes with their families, in accordance with their wishes. To an extent, it has also segregated hospice from the rest of the health care system.

Now, catalysts are at work that could spur gradual movement towards system integration and care coordination. Among these forces are regulation, technology, the prevalence of certain diagnoses and value-based payment models.

“Some of the indicators are that hospice will become more integrated into the health care system from the provider standpoint, but also from the payer standpoint,” National Hospice and Palliative Care Organization (NHPCO) COO and interim CEO Ben Marcantonio told Hospice News. “I think we’re going to see more interaction with larger health insurance systems and how they interact in the health care system, and that will definitely impact hospice. A great deal of that will help us reach more people, but it will bring some challenges as well.”

A more integrated system

Recognition is growing among health care providers, payers and policymakers that the silos around individual care settings can drive up costs and adversely affect patient outcomes.

Better coordination could give hospice and palliative care providers more visibility among patients and other clinicians, and improve their ability to engage with patients earlier, according to National Association for Home Care & Hospice (NAHC) President Bill Dombi.

“I think that what you’ll see happen in five years really starts with the degree to which hospice becomes much more integrated with health care at earlier stages. It won’t be a handoff kind of service, at least entirely,” Dombi told Hospice News. “It would be more integrated into the thought process of physicians and health care providers, as well as people who could benefit from hospice. We’ll see more and more opportunities for concurrent care-type services, which would then have hospice being a much more vibrant part of health care overall, rather than being considered separate and distinct.”

The prospect of concurrent care is attractive to providers, whether this is hospice offered in tandem with curative services or some type of palliative care model. The current requirement for a six-month terminal prognosis has become somewhat contentious.

Much of the debate has centered around regulation. Agencies have scrutinized providers in surveys and audits over longer lengths of stay, and the subject of determining eligibility based on the prognosis rule has been an issue in several high-profile court cases.

While metrics like length of stay can be indicators of fraud, they can also reflect the influx of people who are admitted with less predictable disease trajectories than the cancer patients for whom the hospice benefit was initially designed. This has led to calls to “modernize” the benefit by reconsidering the six-month requirement.

With greater integration, other providers in the system could also adopt more of the principles that guide the ways hospices deliver care. Already the larger health care industry is making slow but steady steps towards interdisciplinary person-centered care, advance care planning and programs to address social determinants of health.

“All of those things are built into the hospice architecture now and are being built into a curative care architecture as we speak,” Dombi said.

Change won’t be easy

These opportunities also come with challenges, including some of the issues that hospices are dealing with already.

Among them is the workforce shortage. While integration and new payment structures could allow providers to reach more patients, the question remains as to whether enough clinicians will be in place to care for them.

Hospice leaders frequently invoked constraints on clinical capacity during the past year to explain slower-than-expected growth or slipping financial performance. Referral rejection rates have also reached an all-time high of 41%, according to data from CarePort, a WellSky company. Pre-pandemic, the baseline rate hovered around 25%.

Health care operators, including hospices, will also have a learning curve when it comes to deepening their collaboration and adjusting to different types of reimbursement and payer mix, particularly when it comes to value-based payment models.

The U.S. Centers for Medicare & Medicaid Services (CMS) has been all-in on value-based models. Even across presidential administrations in a fractious political environment, officials have indicated that this is the direction that CMS intends to go.

Proponents argue that these models could themselves foster greater coordination and ease transitions of care for patients in Medicare Advantage plans or aligned with Accountable Care Organizations (ACOs).

While hospices may be able to benefit from expanded avenues for payment, some fear that the need to negotiate contracts with payers could result in lower rates. This was a common concern around the hospice component of the value-based insurance design model (VBID).

The next two years will offer a clearer picture of how reimbursement remains to be seen. Hospice VBID is now entering its third year. Up to this point, CMS has required participating payers to pay hospices the same per diem amounts as the traditional benefit. In year three, health plans meeting certain criteria will have the option to negotiate different rates.

“All leaders in our space should absolutely have a continual eye on year-two results [of VBID], once they get published, as well as any payer contracting in alternative payment model providers that are looking to have a negotiated rate relationship, and then maybe an ask for a reconfiguration of certain hospice services,” Nick Westfall, CEO of Chemed Corp. (NYSE: CHEM) subsidiary VITAS Healthcare recently told Hospice News.

Greater reliance on technology, data

Technology will also be a driver of change. More hospices have adopted systems that use predictive analytics, machine learning, telehealth, remote patient monitoring and robotic process automation to build efficiency, reduce administrative burden on staff and engage patients earlier and more often.

“I think technology and an understanding of how to use data to drive more efficient care for hospice and palliative patients is a very positive change that we’ll see continued to expand, understanding when to make a visit by which discipline, how to support patients and families using the information and begin to create predictive understandings of how to build the best care plan for individuals is a very positive thing,”  Tim Ashe, chief clinical officer for the post-acute technology firm WellSky, told Hospice News.

Data will also be increasingly crucial in hospices’ negotiations with payers and marketing to potential referral sources. These stakeholders will want to see evidence of quality care, as well as a track record of reducing hospitalizations, emergency department visits and the associated costs.

One tech innovation still on many hospices’ wish lists are electronic medical records (EMR) systems that allow for greater interoperability with providers in other settings, which could allow for smoother care transitions, among other potential benefits.

A growing patient population

Whichever way the tailwinds and headwinds blow, hospices can expect at least one development with close to absolute certainty — demand for their services will grow.

This is largely a function of demographics. Most people in the space are well aware of the burgeoning aging population, rising Medicare enrollment and the prevalence of chronic and serious illness. But other considerations will factor in.

For one, more people know about hospice. Though misconceptions still abound, the word is getting out and, for the most part, utilization has been trending upward.

The utilization rate did take an uncharacteristic dip in 2020, to 47.8% among Medicare decedants, according to the Medicare Payment Advisory Commission (MedPAC). This is down from 51.6% in 2019. The commission attributed some of the decline to disruption from the pandemic, such as the limited access to patients and slower referral streams from hospitals and other facilities.

Another sobering reality behind those numbers is that people were dying faster than they could access the benefit. So, mathematically, a higher percentage of those patients did not enroll.

Nevertheless, more people did choose hospice in 2020 — 1.72 million compared to 1.61 million the previous year, according to NHPCO. That trend will likely continue.

“Hospice creates clear, unique value as a segment of health care,” Ashe said. “When you couple that uniqueness with the expansion in demand in terms of the aging population with multiple comorbidities, I think what hospice is positioned to do is rapidly continue to grow. I do think that the growth trend will accelerate.”