Quality Data, Cost Control: Hospices’ ‘True North’ in Medicare Advantage

Medicare Advantage plans are connecting the dots between quality scores and care delivery costs.

When choosing a hospice to work with, payers in the Medicare Advantage (MA) realm zero in on providers’ quality scores and its patient population growth potential, according to Frontpoint Healthcare CEO Brent Korte. Consequently, those are key data pieces for hospices when it comes to negotiating with payers.

Synthesizing and tracking quality data and patient reach internally is important when communicating the value of a hospice’s services to MA plans, Korte said during the National Association for Home Care & Hospice (NAHC) Financial Management Conference.

“It’s trying to keep things as simple as possible in terms of quality stars and size or scope,” Korte said at the conference. “When you come to the table with [payers], they obviously want to know you’re providing a great service and they want to know you’re going to make a difference from a population perspective. [Those are] a true north going into preparing for reimbursement and having those conversations.”

MA payers are gauging how a hospice measures up in the U.S Centers for Medicare & Medicaid Services’ (CMS) star ratings in the agency’s Care Compare system, as well as results from Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys, according to Korte.

Through MA, CMS contracts with private insurance companies to provide coverage for Medicare beneficiaries. The program currently does not cover hospice outside of the value-based insurance design (VBID) model demonstration, but it remains one of few reimbursement pathways for palliative care and services to address social determinants of health.

Medicare Advantage is a growing force in health care. More MA plans emerge each year, and their beneficiary populations continue to grow.

This year, the number of MA plans swelled to 3,998 nationwide, up 6% from 2022. Last year these plans covered more than 28 million Americans, or nearly half of the entire Medicare population, according to the Kaiser Health Foundation

Navigating reimbursement uncertainties is among the common “pitfalls” for hospices when stepping into Medicare Advantage negotiations, Korte stated. Unlike traditional fee-for-service payment structures, hospices need to navigate financial risks of potential unpaid services, he said.

This means hospices need solid billing and clinical documentation practices to secure sufficient reimbursement from MA plans, he indicated.

“Be prepared for every [claim] denial,” Korte said. “Learning from having a process orientation to the work that you do is key. It is relentlessly having this team attacking every piece of waste in that billing process. Bulletproof your clinical charting and documentation.”

However, a main challenge for hospices are variations in the ways payers analyze and determine reimbursement rates based on quality scores and patient population sizes, Korte added.

Hospices also need to understand the nuances of care delivery costs and how they factor in to MA reimbursement rates, according to Erin Masterson, associate principal of consulting at SimiTree.

“It’s not just submitting claims, [hospices] need to know the payers, they need to know the rules. They need to be able to think critically — to be able to look at an admission rate and strategize,” Masterson said during the conference. “What are you willing to accept in that negotiation of understanding and being prepared for that conversation to illustrate the value of home health [and hospice]. Understanding your outcomes is important. But it’s [also] knowing when, how and what you’re going to have in your back pocket when you go into contracting.”

Another layer to approaching value-based payment negotiations is tracking any lost revenue tied to billing claim denials, or looking at a hospices’ “bad debt ratio,” she stated. Providers with higher rates of billing claim debt collection, for instance, are often viewed by Medicare Advantage plans as higher performing providers, Masterson explained.

Hospices that have insight into why certain claims were successful and others denied can gain a leg up on competitors in MA negotiations, she said.

“A lot of times there are payer projects that are occurring within these MA plans, and adjustments that happen,” Masterson stated. “And that’s why it’s so important to see what you’re writing off, analyzing that and calculating reimbursement adjustments to pivot revenue needs. When it comes to MA, it doesn’t follow the same rules. It’s how you really position ourselves to push on that reimbursement.”