Hospice News: Hospice Groups: CMS Should Reconsider Payment Rate Calculation Methods

The proposed Medicare reimbursement rate hikes for some levels of hospice care is a positive move, according to comments on the 2020 proposed rule submitted to the U.S. Centers for Medicare & Medicaid Services (CMS) by hospice industry organizations, but they also voiced concerns regarding how those rates are calculated as well as the potential for increased regulatory scrutiny of higher-acuity care.

CMS in late April released its annual proposed rule that outlines the agency’s regulatory priorities for hospice in the coming year, including payment rates. The rule called for a 2.7% cut in routine home care payments and a corresponding 2.7% increase in payments for continuous home care, general inpatient care, and inpatient respite care.

A key motivator for the revisions: Current rates for those three service levels amount to less than the cost of providing those types of care. However, the corresponding cut to routine home care payments could end up costing hospices, because more than 90% of the care they provide falls into that category.

According to the Affordable Care Act, Medicare payment increases must be budget neutral, requiring CMS to compensate for any increases with comparable cuts in other areas. If the rule becomes final, the per diem routine home care rate would fall to $195.65 per patient in FY 2020, down from the 2019 rate of $196.21.

“[The National Association for Home Care and Hospice(NAHC)] shares a number of the concerns that CMS and others have raised relative to the inadequacy of payment rates for [continuous home care], [inpatient respite care], and [general inpatient care] and the potential that low rates could affect availability of contracts and staff, and disincentivize appropriate use of these care levels,” NAHC indicated in a comment letter obtained by Hospice News. 

NAHC was not alone in supporting the rate increases, which the National Partnership for Hospice Innovation (NPHI) and the National Hospice & Palliative Care Organization (NHPCO) also lauded.

“We applaud CMS for its recognition that appropriate payment to cover all four levels of care is crucial to encouraging holistic and high-quality hospice care,” NPHI said in its comment letter. “NPHI strongly supports increasing payment for the [three] levels of care because of our view that the other levels of care are critical parts of the hospice benefit and are underutilized, and we are thrilled that CMS is recognizing this gap and proposing action to close it.”

However, all three of these industry advocacy groups raised serious questions about how the rates were calculated, and how the cuts to routine home care could impact hospice providers.

“The proposed cut is already threatening the viability of many of our programs even with the proposed increase in rates for the other levels of care,” NPHI said in comments on the rule.

NHPCO raised questions about the sample sizes and metrics that CMS used in its cost of care analysis relative to reimbursement rates, recommending that the routine home care payments rate be maintained at 2019 levels while continuing to increase the rates for the other three levels of care in a manner that accounts for at least two more years of provider costs reports.

CMS relied on fiscal year 2017 cost reports for less than one quarter of the total number of Medicare-certified hospice providers to calculate average routine home care costs.

“We are very concerned about the data used in the analysis—specifically how few hospices were considered after applying the Level 1 edits and the 1% trim,” NHPCO said in a comment letter. “The resulting sample size is very small and only includes cost reports from a small subset of providers. For these reasons, we strongly believe that the cost data on which CMS relied were not sufficient for calculating the proposed reimbursement amounts.”

As CMS and the U.S. Department of Health and Human Services Office of the Inspector General continue to pay close attention to the validity of hospice claims, hospice providers are also concerned that the rate increases for three higher-acuity levels, though needed, would incentivize increased utilization of those services, which in turn could result in more regulatory scrutiny, audits, claim denials and for-cause surveys.

Hospice utilization among Medicare decedents rose to exceed 50% for the first time during 2018, according to the U.S. Centers for Medicare & Medicare Services (CMS). As utilization climbs, so does the amount of dollars CMS spends on hospice care, spurring the agency to step up enforcement in an effort to control costs. Medicare hospice expenditures rise by about $1 billion annually.

The Office of Inspector General (OIG) at the U.S. Department of Health and Human Services late last year issued a report on vulnerabilities in the Medicare hospice program. Based on its findings, OIG recommended that CMS strengthen the survey process and improve oversight to “identify hospices that engage in practices that raise concerns.”

“We note that expanded use of inpatient care has led to intensive scrutiny by the OIG on a recurring basis, and similar concerns resulted in a reinterpretation by CMS of GIP eligibility criteria,” NAHC indicated in its letter. “NAHC also believes that the current regulatory and audit environment has created significant fear on the part of hospices that use of higher levels of care may precipitate audits and recoupment of payment. NAHC strongly urges CMS to work with the hospice industry to create an environment under which hospices and contractors have a clear and consistent understanding of the criteria that must be met to ensure that hospices are using higher levels of care appropriately and without substantial financial risk.”