With the advent of the 2016 (Happy New Year!), hospices now face the revised hospice payment system. Specifically, Medicare will pay a higher routine home care rate for the first 60 days of care ($187 average) and a lower routine home care rate for days beyond 60 ($147 average).  These adjustments are supposed to be approximately budget neutral.

The varied RHC payments will be calculated automatically by the contractors and do not require separate billing. But, hospices should monitor January billings carefully to ensure that payments under this new system meet defined expectations.  Here are some of the specific rules:

• The new rate system will take effect midstream, so a patient admitted December 1, 2015 will have 29 days of remaining higher RHC eligibility in January 2016 (assuming continuous service).

• The 60 day higher RHC period will be counted only during days on service, so if a patient revokes and readmits, then the higher RHC period should span 60 payment days, not 60 calendar days;

• The 60 day higher RHC period will reset if a patient has been off service for at least 60 days. Although eligibility period counting will remain the same, the higher RHC payments are available, in theory, more than once for the same patient.

In addition, a service intensity add-on payment is available during the last seven days of life for certain services by hospice RNs and social works (but inexplicably not for LPNs; LPNs need better lobbyists apparently). SIA payments will be speculative and difficult to manage in that:

• No one knows exactly when the last 7 days of life will occur, so to benefit from SIAs, hospices will have to predict the date of death, something that is notoriously difficult in most cases;

• When such 7 day periods cross-over the end of a billing month, billings for SIAs in the prior month will have to await date of death information, perhaps further delaying the hospice billing process (already slowed down by sequential and monthly billings limitations); and

• SIAs are limited to 16 quarter-hour units during the last 7 days.

Because of the unpredictable date of death, it remains to be seen whether hospices will be able to sensibly manage these theoretical additional payments. Because the SIA period is difficult to anticipate, and yet built into the budget neutrality of the payment adjustments, Medicare may well anticipate saving money overall on the payment adjustments.

In the final months of 2015, MedPAC noted the new payment system, but had little substantive comment. Medicare’s new system in fact does not match MedPAC’s vaunted U-shaped curve in that higher payments are available upfront for a longer period of time (60 days instead of 7 or 15 days) and there is no certain back end payment adjustment.

MedPAC notes that the adjusted system is in part intended to “redistribute revenues” from for profit and urban providers to non-profit and rural providers. Whether this was intended and whether anything like this result will occur under the revised payment system remains to be seen.

Here are some notes from MedPAC’s recent hospice summary (Neuman, 12-10-2015):

• Half of all hospice patients are on service 17 days or less (one-quarter are on service 5 days or less). This is a statistic that should draw the most attention from MedPAC, but it draws virtually no comment. The systematic failure to provide more timely access to hospice affords very little opportunity for either savings from hospice or for realization of the benefits of hospice for fifty percent of hospice patients. Does two weeks of hospice provide any material benefit to patients or Medicare?

• Ten percent (10%) of hospice patients receive service for 240 days or more. Although some long stay patients are to be expected in any logical distribution, this group continues to be a lightning rod, and easy target for MedPAC, the NHPCO and anyone else looking for an easy target. MedPAC continues to surmise that these long stay patients are admitted from a profit motive and are likely ineligible.

The dichotomy between MedPAC’s criticism of the tenth percentile of longest living patients and its refusal to address the fact that more than half of patients are on service less than 3 weeks is striking.

In 2015, MedPAC also published a study aimed at rebutting a series of studies showing that hospices save Medicare money. On a specific samples of patients, MedPAC concludes that hospice is either revenue neutral or slightly additive to costs.  MedPAC blames the lack of savings again on long stay patients, failing to consider the possibility that the additional expense for the very short stay population afford no possibility of conserving resources on heroic end-of-life health care.

While MedPAC understandably focuses upon and seeks to limit our national Medicare expenditures, MedPAC continues to fail to acknowledge the government’s absolute control over the benefit, including: (a) an unlimited benefit period; (b) absence of National Coverage Determinations; and (c) the continued watering down even of objective criteria set forth in Local Coverage Determinations.

Rather than tell patients that they cannot have certain services, the government, including MedPAC, finds it more convenient to allow small (and dysfunctionally-lobbied) hospices to take the upfront risk of providing services under amorphous LCDs. Medicare and MedPAC then criticize hospices for the small subset of patients that live beyond 180 days.

Everyone should remember that the hospice benefit is available by statute to any patient with “an average life expectancy of six months,” note the word “average.”

The supposition by MedPAC that the new payment system will “redistribute payments” in a meaningful or useful way will be an interesting hypothesis to watch in the coming year.