4/3/2017. Hospice Reimbursement Explained

Transcription

1 Hospice Reimbursement Explained Indiana Association for Home and Hospice Care Annual Conference & Exposition May 9, :30 PM 5:00 PM marcumllp.com Your Speakers Joshua S. Banach, CPA Senior Manager Marcum LLP 111 S. Pfingsten Road, Suite 300 Deerfield, Illinois Phone: Fax:

2 Your Speakers Scott Manson, CPA, CGMA, CMA Partner Marcum LLP 111 S. Pfingsten Road, Suite 300 Deerfield, Illinois Phone: Fax: Today s Objectives Describe the components of the Medicare reimbursement rates and how they fit into the rate calculation Describe how the Centers for Medicare & Medicaid Services (CMS) develops reimbursement rates for the four levels of care Discuss the future of hospice reimbursement by describing the changes already made and speculating about further future changes 4 2

3 LEVELS OF CARE REVIEW 5 Review Levels of Care Routine Home Care Continuous Care Four Medicare Levels of Care Inpatient Respite Care General Inpatient Care 6 3

4 Routine Home Care This is the default type of care when other levels of care are not provided NHPCO estimates routine care accounts for 93.8% of all hospice days based on their 2015 Facts and Figures Report 7 Continuous Care The patient receives 8 hours of care in a 24 hour period that starts and ends at midnight At least 50% of this care must be provided by a registered nurse or licensed practical nurse This must occur during a period of crisis The National Hospice & Palliative Care Association (NHPCO) estimates continuous care accounts for 1.0 % of all hospice days based on their 2015 Facts and Figures Report 8 4

5 Inpatient Respite Care Must be provided in a Medicare participating hospital, hospice inpatient unit or a skilled nursing facility (SNF) or nursing facility (NF) Type of care when caregivers need respite Cannot be provided to beneficiaries who live in a facility NHPCO estimates inpatient respite care accounts for 0.4% of all hospice days based on their 2015 Facts and Figures Report 9 General Inpatient Care Must be provided in a Medicare participating hospice inpatient unit, hospital or SNF with 24 hour RN level of care Provided when pain or symptom management is necessary that cannot reasonably be provided in any other setting NHPCO estimates general inpatient care accounts for 4.8% of all hospice days based on their 2015 Facts and Figures Report This is an increase from 2.2% in the 2012 report and has been on the list of items CMS is monitoring 10 5

6 CURRENT REIMBURSEMENT SYSTEM REVIEW 11 The Medicare Hospice Benefit The Medicare hospice benefit was established in 1983 to provide Medicare beneficiaries with high quality care at the end of their lives Medicare regulations require a 6 month or less prognosis The benefit is designed to provide compassionate care, pain management, and emotional and spiritual support that align with each patient s wishes The benefit is designed to allow the patient to receive care in any place of residence (private residence, nursing home, residential facility, hospital, etc) 12 6

7 The Medicare Hospice Reimbursement Rate Hospices are subject to consolidated billing guidelines, meaning that the hospice receives the daily reimbursement rate and then incurs all costs necessary for caring for the patient Several items may be billed separately if they are deemed to be unrelated to the terminal diagnosis For Example, Medicare Part D Drugs Thus, the Medicare reimbursement rates cover all expenses necessary for a hospice to provide care to its patients These expenses are detailed on the Medicare cost report Hospices must file a cost report annually 13 Medicare Cost Report: Worksheet A General Services Capital Costs Direct Patient Care RNs, LPNs, Hospice Aides, Nurse Practitioners Non Reimbursable Expenses Bereavement Employee Benefits PT/OT/ST Volunteers Maintenance, Laundry, Housekeeping Spiritual, Dietary, Other Counseling Advertising Routine Supplies, Volunteer Coordination, Pharmacy DME, Non Routine Supplies, Imaging, Transportation Telehealth/Telemonitoring Pease note this list is not all encompassing of cost centers 14 7

8 Medicare Cost Report: Worksheet A By looking at the previous slide, one can see which expenses are, or are not, factored into the reimbursement rates The overall listing of cost centers on the cost report was recently revised, effective in late 2014, with the release of an updated cost reporting form If one were to compare the old and new cost reports, many differences could be noted in the cost center listings The revised listing more accurately reflects the actual cost report expenses being incurred by hospices The new cost report did not make any changes to coverage or allowable expenses CMS is actively reviewing the expenses reported on these new cost reports to aid their payment reform efforts 15 Hospice Reimbursement Review Currently, under Medicare, all hospices are reimbursed daily rates for every day of service based on level of care Every patient will sign a notice of election (NOE) with their intent to begin hospice care and indicate their preferred hospice provider This NOE is acknowledgement from the patient that they are relinquishing all rehabilitative and curative care, forgoing other Medicare benefits, and electing the hospice benefit The hospice will then have 5 days from the day of election to get the NOE approved (not just submitted) by their Medicare contractor Late filing will cause provider liable days Information required includes date of election, attending physician information, and signature acknowledging the decision 16 8

9 Hospice Reimbursement Review For every calendar day after the notice of election date, the hospice will bill Medicare at one of the 4 levels of care Each level of care has its own unique reimbursement rate, which reimburses for the average amount of care time required for the patient on each given day There are currently two tiers of the routine home care, which reimburse a higher amount for the first sixty days of care and a lower amount for all days of care beyond sixty This will continue as long as the patient remains in the care of the hospice (until discharge) The patient revokes their benefit The patient dies If the patients transfers from one hospice to another, the new hospice will begin billing Medicare If there is a 60 day break in hospice services and the patient elects hospice again, the higher routine rate will apply again 17 Hospice Reimbursement Review The Medicare hospice rates are updated annually and are effective for services dates from October 1 st through September 30 th of each year CMS typically releases all data required to calculate the reimbursement rates approximately 60 days before they go into effect The rates are county specific meaning that every county has unique reimbursement rates based on the cost of employing a workforce Several counties are typically grouped together for rate setting purposes 18 9

10 Current Hospice Reimbursement Rates 10/1/2016 9/30/17 Indiana CBSA Area Bloomington Cincinnati Columbus CBSA Code Wage Index Routine Home Care Days Routine Home Care Days Continuous Home Care* Full Rate Rate per 15 minutes Inpatient Respite Care General Inpatient Care *Severe Intensity Add On During last 7 days of patient's life, up to four hours per day billable for routine days at CHC rate for RN or social worker visits if routine day Indiana Monroe Dearborn Bartholomew Counties Owen Ohio Included in Union Rates 19 Current Hospice Reimbursement Rates 10/1/2016 9/30/17 Indiana CBSA Area Elkhart/ Goshen Evansville Fort Wayne CBSA Code Wage Index Routine Home Care Days Routine Home Care Days Continuous Home Care* Full Rate Rate per 15 minutes Inpatient Respite Care General Inpatient Care *Severe Intensity Add On During last 7 days of patient's life, up to four hours per day billable for routine days at CHC rate for RN or social worker visits if routine day Indiana Elkhart Posey Allen Counties Vanderburgh Wells Included in Warrick Whitley Rates 20 10

11 Current Hospice Reimbursement Rates 10/1/2016 9/30/17 Indiana CBSA Area Gary Indianapolis-Carmel- Anderson Kokomo CBSA Code Wage Index Routine Home Care Days Routine Home Care Days Continuous Home Care* Full Rate Rate per 15 minutes Inpatient Respite Care General Inpatient Care *Severe Intensity Add On During last 7 days of patient's life, up to four hours per day billable for routine days at CHC rate for RN or social worker visits if routine day Indiana Jasper Boone Howard Counties Lake Brown Included in Newton Hamilton Rates Porter Handcock, Hendricks Johnson Madison, Marion Morgan, Putnam Shelby 21 Current Hospice Reimbursement Rates 10/1/2016 9/30/17 Indiana Lafayette-West Louisville/ Michigan City/ La CBSA Area Lafayette Jefferson County Porte CBSA Code Wage Index Routine Home Care Days Routine Home Care Days Continuous Home Care* Full Rate Rate per 15 minutes Inpatient Respite Care General Inpatient Care Indiana Benton Clark La Porte Counties Carroll Floyd Included in Tippecanoe Harrison *Severe Intensity Add On During last 7 days of patient's life, up to four hours per day billable for routine days at CHC rate for RN or social worker visits if routine day Rates Scott Washington 22 11

12 Current Hospice Reimbursement Rates 10/1/2016 9/30/17 Indiana Muncie South Bend/ Mishawaka Terre Haute Rural IN CBSA Code Wage Index Routine Home Care Days Routine Home Care Days Continuous Home Care* Full Rate Rate per 15 minutes Inpatient Respite Care General Inpatient Care Indiana Delaware St. Joseph Clay All Other Counties Sullivan Counties Included in Vermillion Not Rates Vigo Indicated *Severe Intensity Add On During last 7 days of patient's life, up to four hours per day billable for routine days at CHC rate for RN or social worker visits if routine day Elsewhere 23 REIMBURSEMENT RATE COMPONENTS 24 12

13 Setting the National Standard Medicare Reimbursement Rates Prior Year Rates Multiply by SBNF (Routine Rates Only) Multiply by wage index standardization factor Multiply by hospice payment update percentage Current Year Rates 25 SIA Budget Neutrality Factor When the SIA payment was introduced for 2016, it was determined by CMS that the payments would be budget neutral From 1997 through 2016, a neutrality factor had been a component of the reimbursement rate CMS decided that this budget neutrality would be offset using the routine home care reimbursement rates No effect to continuous, respite, or general inpatient rates CMS collects their data from the most current and complete utilization data available at the time of rate setting (claims) For 2017, budget neutrality factors are and for routine high and routine low rates respectively 26 13

14 Wage Index Standardization Factor Each year, CMS applies the wage index standardization factor in order to maintain overall budget neutrality when applying the most recent hospital wage indices This practice is also applied in other provider types, such as home health and skilled nursing facilities This neutrality factor will eliminate the possibility of overall increases or decreases in aggregate rates due to fluctuating wage indices CMS simulates total payments using both the prior year and the current year wage indices and then divides them into each other This is done independently for each level of care 27 Hospice Payment Update Percentage The Balanced Budget Act of 1997 mandates for years 2002 and beyond, hospice rates for the subsequent fiscal year must be updated at the inpatient hospital market basket percentage for that fiscal year The Affordable Care Act mandates that for years 2013 and beyond hospice rates must be reduced by changes in economy wide productivity Productivity is defined as the 10 year moving average of changes in annual economy wide private nonfarm business multifactor productivity (MFP) Additional Information: Statistics Data and Systems/Statistics Trends and Reports/MedicareProgramRatesStats/MarketBasketResearch.html The Affordable Care Act also mandated an additional 0.3% reduction to the market basket for years ( subject to suspension) 28 14

15 Hospice Payment Update Percentage Hospital Inpatient Market Basket Update 2.7% 2017 Multifactor Productivity Percentage 0.3% Affordable Care Act Mandated Percentage 0.3% 2017 Hospice Payment Update Percentage 2.1% National Reimbursement Rate Calculation: Routine High & Low LOC 2016 Rate SBNF Wage Index Standardization Payment Update Percentage 2017 Rate Routine High $ $ Routine Low $ $

16 2017 National Reimbursement Rate Calculation: Continuous, Respite, General Inpatient LOC 2016 Rate Wage Index Standardization Payment Update Percentage 2017 Rate Continuous* $ $ Respite $ $ General Inpatient $ $ *The above rate is for 24 full hours of care; to calculate a 15 minute increment, divide by Original Rate Calculation From year to year, the hospice rate is carried forward with the aforementioned update percentages and increases When the hospice benefit was originally enacted in 1983, CMS established the four levels of care and attempted to align reimbursement rates as closely as possible to the average costs hospices would incur Cost data from a 1982 hospice demonstration project were used to calculate cost per visit estimates for various expenses A relatively small sample size was utilized to calculate this date (26 hospices) Through the years, various adjustments were made to account for the other levels of care, length of stay, drugs, supplies, and market basket increases, inflation, and other provided services However, the basic rate calculation remained the same 32 16

17 Original Rate Calculation The 1983 original routine reimbursement rate was comprised of the following components: Routine Rate Cost Per Day Component Nursing Care $16.25 Home Health Care $12.74 Social Services/Therapy $3.23 Home Respite $1.46 Interdisciplinary Group $2.78 Drugs $1.18 Supplies $4.49 Equipment $1.13 Outpatient Hospital $2.99 Therapies Total $ Original Rate Calculation Compared to Inflation & Market Basket Source: Abt Associates Hospice Payment Reform Study 34 17

18 Hospice Rates Through The Years National Rate National Rate Routine Routine High Routine Low Continuous Respite Inpatient 10/1/2006 $ $ $ $ $ $ /1/2007 $ $ $ $ $ $ /1/2008 $ $ $ $ $ $ /1/2009 $ $ $ $ $ $ /1/2010 $ $ $ $ $ $ /1/2011 $ $ $ $ $ $ /1/2012 $ $ $ $ $ $ /1/2013 $ $ $ $ $ $ /1/2014 $ $ $ $ $ $ /1/2015 $ $ $ $ $ $ /1/2016 $ $ $ $ $ $ /1/2016 $ $ $ $ $ $ Hospice Rates Through The Years Indianapolis Area Indianapolis Area (Marion County) Routine Routine High Routine Low Continuous Respite Inpatient 10/1/2006 $ $ $ $ /1/2007 $ $ $ $ /1/2008 $ $ $ $ /1/2009 $ $ $ $ /1/2010 $ $ $ $ /1/2011 $ $ $ $ /1/2012 $ $ $ $ /1/2013 $ $ $ $ /1/2014 $ $ $ $ /1/2015 $ $ $ $ /1/2016 $ $ $ $ $ /1/2016 $ $ $ $ $

19 Hospice Rates Through The Years Indianapolis Area v National Rates Indianapolis vs. National Routine Routine High Routine Low Continuous Respite Inpatient 10/1/2006 $4.93 $28.80 $4.02 $ /1/2007 $5.15 $30.07 $4.20 $ /1/2008 $3.20 $18.69 $2.61 $ /1/2009 $4.51 $26.31 $3.67 $ /1/2010 $10.93 $63.80 $8.91 $ /1/2011 $0.12 $0.73 $0.10 $ /1/2012 ($0.79) ($4.62) ($0.64) ($3.28) 10/1/2013 $0.56 $3.25 $0.45 $ /1/2014 $2.21 $12.91 $1.80 $ /1/2015 $1.50 $8.76 $1.22 $6.22 1/1/2016 $1.73 $1.36 $8.76 $1.22 $ /1/2016 $0.65 $0.51 $3.31 $0.46 $ Hospice Rates Through The Years Rate Update Percentages Indianapolis Area Indianapolis Area (Marion County) Routine Routine High Routine Low Continuous Respite Inpatient 10/1/ /1/ % 3.34% 3.33% 3.34% 10/1/ % 2.08% 2.39% 2.18% 10/1/ % 2.97% 2.78% 2.91% 10/1/ % 6.88% 5.99% 6.59% 10/1/ % 4.07% 2.65% 3.61% 10/1/ % 0.99% 1.13% 1.03% 10/1/ % 2.59% 2.40% 2.53% 10/1/ % 3.15% 2.93% 3.08% 10/1/ % 1.14% 1.24% 1.17% 1/1/ /1/ % 1.44% 1.51% 1.64% 1.51% 38 19

20 Hospice Rates Through The Years Indianapolis Area Statistics Average annual increases for the Indianapolis area from the past 10 years were Routine: $3.23 (2.12%) Continuous: $17.46 (2.06%) Respite: $2.44 (2.12%) Inpatient: $12.39 (2.07%) The above data is the average percentage change in rates based on annual rate update for the Indianapolis CBSA from (individual percentages by year, not ten year cumulative) Largest Increase: 6.88% Smallest Increase: 0.99% (decrease year removed) The only decrease was fiscal year beginning 10/1/2011 These are locality specific 39 Quality Data The Affordable Care Act also required that hospices begin collecting quality data in 2012 to begin submitting data in 2013 This is accomplished through the Hospice Quality Reporting Program (HQRP) If a hospice does not comply with the HQRP rules, the market basket update percentage will be reduced by 2 percentage points Thus, for 2017, if a hospice fails to meet HQRP guidelines, their payment update percentage will be 0.01% Because of this, in a year where rates increase, a hospice can still see a decrease in their reimbursement 40 20

21 Geographic Adjustments CBSA Areas For a particular hospice to obtain their actual rates, there are more calculations that need to be performed The Office of Management and Budget (OMB) divides the country into core based statistical areas (CBSAs), which are devised by both population density as well as location of nearby hospitals Every county in the country is placed into a CBSA CBSAs can include any number of counties For Example, Indianapolis CBSA areas range from 1 11 counties per area Counties are classified as Urban or Rural for hospice reimbursement purposes The classification is dependent on census and population If a county is classified as urban, it will fall into a CBSA area All counties not classified as urban are considered rural and have the same statewide reimbursement even though they could be located anyplace in that state 41 Geographic Adjustments CBSA Areas Every CBSA that a hospice serves, either in patient s homes or in inpatient settings, has a unique reimbursement rate It is very important for hospices to keep track of these CBSA areas because their reimbursement rates are dependent on the location of their patients A hospice caring for patients in their homes could have several different CBSA areas, thus several different reimbursement rates It is vital to track this accurately for accounting purposes, so revenues and receivables are properly stated For example, there is a $26.29 (or 16%) per day difference in the highest and lowest routine(high) rates in Indiana 42 21

22 Geographic Adjustments CBSA Areas CBSA areas are subject to revision The OMB will revise these areas when they feel the hospital and wage data require updating based on census trends The CBSA areas were last updated effective with the 10/1/2015 reimbursement rates When CBSA areas are revised, particular counties can change areas, which can have significant changes in reimbursement Change from one urban CBSA to another urban CBSA Change from an urban CBSA to a rural CBSA Change from a rural CBSA to an urban CBSA 43 Geographic Adjustments Labor & Non Labor Percentages For reimbursement purposes, the national reimbursement rates are broken down into labor and non labor percentages This is not standard amongst the four levels of care The four levels of care each have unique requirements for directly caring for patients, with relatively stable administrative costs and varying capital costs The unique labor percentages reflect this The labor portion provides reimbursement for salary and wages, while the non labor portion provides reimbursement for all other costs associated with providing the particular level of care These percentages will allow for rates to be adjusted appropriately for costs that are location dependent 44 22

23 Labor & Non Labor Percentages 2017 Level of Care Labor Percentage Non Labor Percentage Continuous 68.71% 31.29% Routine 68.71% 31.29% Respite 54.13% 45.87% General Inpatient 64.01% 35.99% 45 Geographic Adjustments Wage Index In addition to dividing the county into CBSAs, the OMB also assigns every CBSA a wage index The wage index is a factor that addresses the varying salary levels across the country Wage indices are updated annually The wage index is centered with as a base Counties where salary levels are relatively higher will receive a wage index greater than Counties where salary levels are relatively lower will receive a wage index lower than For example, please note the following county current wage indices: Bartholomew County Marion County Clark County Rural Counties

24 OMB Calculations The OMB determines the wage indices by taking average hourly wages by hospitals in each market area divided by the average hourly wages nationwide The information is taken from the annual cost reports Each year, the most recent data is used that is complete, reviewed, and corrected as necessary The OMB takes labor and non labor percentage from the long term care hospital which factor average costs to deliver care, as well as geographic considerations In years when the OMB revises the CBSA areas, because of potentially significant reimbursement changes, CMS typically allows a one year phase in of the rates by blending the average of old and new wage indices in the year of the change 47 Hospice Rates Through The Years Wage Index Indianapolis Area Indianapolis Area (Marion County) Wage Index +/ 10/1/ /1/ % 10/1/ % 10/1/ % 10/1/ % 10/1/ % 10/1/ % 10/1/ % 10/1/ % 10/1/ % 1/1/ % 10/1/ % 48 24

25 Calculating a Reimbursement Rate National Base Rate Labor Percentage Wage Index National Base Rate Non Labor Percentage 49 REIMBURSMENT CHANGES AND THE FUTURE 50 25

26 Hospice Medicare Reimbursement Recent History As mentioned, there have been several recent changes to the Medicare hospice reimbursement system: Dual Routine Reimbursement Rates SIA Payment These changes move the reimbursement to a U Shaped model where reimbursement is higher at the beginning and ending of the patient s care in hospice, which more closely mirrors true expenditures 51 Routine Home Care Reimbursement Changes Effective with service dates 1/1/2016 and after, CMS changed the structure in which it reimburses for routine home care Routine home care now has a two tiered payment structure, based on where a patient is within their hospice stay A hospice stay is defined as beginning with the day they elect the hospice benefit and ends with the date of death or revocation of the benefit The reimbursement is structured as follows: Days 1 60 of hospice stay are reimbursed at the high rate Days 60+ of hospice stay are reimbursed at the low rate If a patient revokes the hospice benefit and subsequently re elects, their stay will reset to day 1 if there was a 60 day gap between care 52 26

27 Analysis of the Dual Routine Care Rate 10/1/15 Routine Home Care Rate (Indianapolis) $ /1/2016 Routine Home Care High Rate $ /1/2016 Routine Home Care High Rate $ Service Intensity Add On (SIA) Payment Effective 1/1/2016, CMS has initiated a new additional payment available to hospices called the Service Intensity Add On Payment Just like the new routine home care reimbursement structure provides for more reimbursement at the beginning of a hospice election period when the expenses are greater, the SIA payment provides more reimbursement during the care intensive last 7 days of a patient s life The SIA payment allows hospice providers to bill for registered nurse and social worker visits made at the end of a patients life 54 27

28 Service Intensity Add On (SIA) Payment The SIA payment is paid based on 15 minute increments of registered nursing and social worker visits and is based on the continuous care reimbursement rate The SIA payment is limited to 16 units per day, for each of the last 7 days 55 Hospice Payment Reform Several years ago, CMS contracted with a consulting firm to conduct extensive analysis about hospice utilization and cost data in an effort to evaluate the payment system The ending goal was to develop a reimbursement system that most accurately and closely reflects expenditures during a hospice length of stay As part of this study, the contractor provided simulations regarding several potential reimbursement system changes Tiered Payment Model Rebasing of Routine Home Care Rate 56 28

29 Tiered Payment Model (Simulation) The tiered payment model simulation created several groups of hospice episodes where particular daily hospice reimbursement is dependent on where the day is within the hospice length of stay There are also adjustments for extremely short hospice stays and for visits near the end of life It created potential payment groups that are based on average daily resource use and the reimbursement rates are set based on relative costs of care for that day within the length of stay Weights were assigned to the days and reimbursement was based on these weights 57 Tiered Payment Model (Simulation) The following were the simulated groups with their implied weights: RHC (days 1 5): 2.30 RHC (days 6 10): 1.11 RHC (days 11 30): 0.97 RHC (days beyond 30): 0.86 RHC (during last 7 days of life with qualifying visit): 2.44 RHC (during last 7 days of life without qualifying visit): 0.91 RHC (if total length of stay is <6 days and all days are routine): 3.64 Even though the relative weights were only simulated, it is noticeable which parts of the hospice stay are weighted heavier, and this aligns closely to the current model 58 29

30 Rebasing of Routine Home Care Rate (Simulated) The other simulation prepared by CMS s consultant called for a rebasing of the routine home care rates RHC accounts for about 94% of all census days The original hospice rates were set back in 1983 based on a sample of 26 hospices and has only had limited changes since (besides the payment update process described earlier) Under this simulation, major components of the reimbursement rate, such as nursing, home health aid, and social service costs would be rebased Based on this, the simulation would have resulted in an approximate 11% decrease in the routine home care rate 59 Hospice Payment Reform From all the changes that have already occurred with hospice reimbursement, it is clear to see that the current structure is changing Through these changes, CMS is attempting to accomplish a thorough payment reform which, among other goals, will accomplish the following: Create a reimbursement system where reimbursement mirrors expenditures Properly reimburse for the levels of care based on the actual cost to provide that care Hospice cap considerations 60 30

31 Create a Reimbursement System Where Reimbursement Mirrors Expenditures By looking at the existing changes to the routine reimbursement structure and the SIA payment add on, CMS has developed a Ushaped reimbursement model This model helps align reimbursement with the time frame when expenditures are the highest The higher reimbursement in the first 60 days of a hospice stay covers many of the administrative and organizational costs of caring for a patient The SIA payment add on reimburses hospices for some of the additional time necessary to care for a person during the intense last several days of life 61 Properly Reimburse for the Levels of Care Based on the Actual Cost to Provide That Care In addition to matching reimbursement to expenditure during an individual hospice stay, CMS is also gathering data through both the cost reports and claims to determine truer costs of each of the four levels of care CMS can mine through the data and determine what hospices are spending on their programs and see if the reimbursement levels for each of the levels of care are adequate This is why accurate cost reports and billing claims are crucial The home health industry just experienced a 14% cut in overall rates that was partially due to poor quality cost reports 62 31

32 Hospice Cap Considerations The hospice cap exists to limit reimbursement based on an average of six months of reimbursement The hospice cap limits will require these hospices to payback any reimbursement over the cap amount, which occur if a hospice has an average length of stay approaching 6 months A study showed that the new dual routine reimbursement system would yield an overall 0.14% increase in reimbursement; this total increased to 5.40% for hospices that exceed the cap A comparison of the old and new routine home care reimbursement systems show a hospice begin incurring a loss when compared to each other around day 180, depending on location Medicare appropriate hospice patients are required to have a 6 months or less to live prognosis 63 The Future of Hospice Reimbursement Although no specific changes have been announced, much speculation has taken place in the industry as to the next changes surrounding hospice reimbursement Case Mix Element More clinical assessments required Diagnosis based reimbursement Numerous other models have been discussed 64 32

33 The Future of Hospice Reimbursement In addition to just looking cost report data and cost per day totals, CMS also digs into claims data to obtain much of it information By examining a clean hospice claim, the following information is obtained: Patients age, location, marital status, sex, referral source Patient s admission date (average length of stay) Patient s discharge date (average length of stay) Number of days at each level of care Number and type of every visit made to patient How many times the patient has drug refills Diagnoses Payer 65 The Future of Hospice Reimbursement As CMS obtains all this data, they have the ability to mine through the information and create statistics for every demographic, every diagnosis, and every level of care This data can be traced back and cross referenced to cost report data to see how much it truly costs to provide services for hospice patients Any of this data can be used as criteria for developing rates 66 33

34 Alternative Payment Models As part of the Affordable Care Act, in an effort to curb numerous hospice patients that are not traditionally hospice eligible (dementia patients as opposed to cancer patients), CMS has introduced the Medicare Care Choices Model This is a three year demonstration project being phased in from 2016 through 2018 Medicare beneficiaries who have not yet elected hospice have the option to receive palliative care from hospice while still receive therapeutic services from other providers 140 hospices are part of the demonstration Hospices are paid a monthly fee ($200 $400) to provide the services Results are still forthcoming 67 Exclusion from Advantage and Integrated Payments With value and improved patient care as the center, Medicare is increasingly moving toward integrated payment systems However, even with this in mind, hospice has mostly (with limited exceptions) been carved out of Medicare Advantage (Medicare Part C) and Medicare Medicaid Alignment Initiatives In addition, hospice is typically excluded from many bundled payment programs However, there is a large push for services to be available across the continuum which could potentially include hospice services in the future This could allow for additional services to be included in the future 68 34

35 Value Based Purchasing Another product of the Affordable Care Act was value based purchasing (VBP), which aimed to improve the quality of care while containing the overall cost Hospice was included on the original listing slated for a 2016 start date Although this has not happened, it is a possibility for the future Under VBP, providers who obtain favorable results will be rewarded at the detriment of providers who obtain poor results Currently, home health agencies are under demonstration of VBP where up to 8% of revenue can be either added or taken away based on quality measures 69 Resources payment reformsare a modest step forward but more changes are needed/ _White_Paper.pdf 015_Facts_Figures.pdf 70 35

36 Questions? 36