MVI’s View on Hospice System Payment Reform
Here is MVI’s present position on hospice payment reform. Our position is based on our objective, non-political view for we are not affiliated with any national trade organizations or groups. We serve hundreds and hundreds of hospices of all flavors including Not-For-Profit, For Profit, large, small, community-based, and national companies. We do not have large ideological investments at risk nor compromised views due to prior related-issue positions. Whether we end up with a modified aggregate CAP, U-Shaped Curve, some synthesis of the two or other payment methodology, we will continue to help the hospices we have the privilege to serve in the creation of world class end-of-life care through meticulous attention to detail. Though MVI has perhaps more operational data than any organization regarding hospice financial operations, we remain flexible and open, with a spirit of “let best ideas prevail.” The very core of MVI is the idea that “there is safety in the counsel of many”… many views, including data views as well as views obtained from human observation and personal experience.
- First, we applaud MedPAC on its efforts. The introduction of the U-Shaped Curve has shaken the dust from complacent thinking and has forced many of us to reconsider how hospices are paid. We should not fear new thinking. We extend our compliments on this fresh approach that provides our sector of healthcare a new option to consider.
- We also applaud the originators of the hospice Medicare Benefit, especially the person(s) who conceived the aggregate CAP concept and per diem structure. Though it could be administered more efficiently by FIs/MACs, and has an indexing defect, with a few simple changes, the hospice aggregate CAP would be devastatingly effective in reducing Medicare end-of-life expenditures and could elegantly solve the eligibility question.
In our view, here are the best ideas that have surfaced to date, keeping in mind that quality must be a primary consideration in addition to the financial objective (to reduce overall Medicare payments).
Expectation Management: Payments to hospice providers will increase even with the adoption of any reasonable hospice payment system reform proposal simply due to the obvious shift in demographics. However, overall Medicare payments for end-of-life care will be less as providers will be forced to become more efficient through payment reductions. Therefore, based on sheer volume and consumer demand, hospice Medicare payments will increase as a percentage of overall Medicare spending. We are quite confident in our predictions and ask that people file this article away and re-read it after a decade or so.
The Human Factor
The biggest “human” consideration is the fact that patients that receive quality hospice care live longer. The foundational flaw in the U-Shaped Curve methodology, as we understand it, is that payments diminish for patients with longer Lengths of Stay and rewards hospices when patients die. The unintended consequence is that quality hospice care providers will be penalized and incentivized to hasten death after 90 days as the “decedent” adjustment will provide such incentive. Hospice will become even more of a “brink of death” service than it is today. It must be noted that it would be virtually impossible for MedPAC, by analyzing traditional data, to pick up on this “human factor” that patients that receive great hospice care live longer. The people in the trenches (front-line clinicians) know and understand this human phenomenon. People die when the rug of comfort and compassion is pulled from beneath them. This is the human factor…similar to the increased number of deaths after a holiday.
The Cost of Monitoring the U-Shaped Curve
In addition (and not to be minimized), will be the increased costs for hospice providers to manage within the suggested U-Shaped Curve. This will be an additional provider burden, not to mention an additional burden for FI/MACs to administer. The U-Shaped Curve introduces a more complicated system…and enforcing Fraud and Abuse functions will be increased. There will be tremendous system enhancement costs required for this type of change. At MVI, we have to think in terms of business models that optimize financial resources (for that is one of the reasons people pay us). With the U-Shaped Curve (or any other methodology), we will help hospices determine the optimal practices for managing within the prevailing ideology. Right now, if the U-Shaped Curve becomes reality, it would suggest that patients live 90 days and die.
The Solution?
Again, we do not pretend to have all the answers. However, we feel that the aggregate CAP is more of the solution than the problem, for not only hospice, but many other healthcare sectors. The current aggregate CAP methodology could be optimized with a few technical systematic changes to be “devastatingly effective.”
We propose that the aggregate CAP be indexed by CBSA with quarterly immediate withholdings by the MACs/FIs of payments to hospice providers that exceed the CAP so that funds do not have to be recouped. Once the CAP has been indexed it is possible that it could be lowered if necessary. This is a simple way to achieve most of the desired outcomes from a quality and financial standpoint. In addition, we suggest that a couple “modifiers” be included.
Modifier #1 – Limit the percentage of “live” discharges to a small percentage per “CAP quarter.” This forces hospices not to be reckless in their admission process as hospices will have to “keep most of the patients they take.”
Modifier #2 – Enforce the rule that requires 5% of Direct Care to be provided by Volunteers. This recommendation is based on the “roots” of hospice. In this country, hospice started on front porches and in church basements by people that received no paycheck. We have drifted as we have become more homogenized as a healthcare option. We (MVI) think that QUALITY hospices attract volunteers. It is difficult to fool a community for a long period of time. People learn where to get quality services and what is worth their time. Time is the most precious donation anyone can give…as time may be the ultimate constraint in the human experience. Communities need to be engaged and work with healthcare providers to decrease costs as well. It is a community effort…one that both political parties should see as part of healthcare reform.
Modifications to the current aggregate CAP system would be MUCH easier from a programming standpoint than the U-Shaped Curve. The great thing about the CAP and the per diem system is that it allows a hospice a dimension of creativity in its operational practices. The more we attempt to regulate to unnecessary detail, in this case by “time-period,” the more limited a hospice is in its practices. This is how non-mainstream health systems start. Perhaps this will be the start of Hospice Version II?
Patient Eligibility?
Again, let us manage expectations with two statements regarding the eligibility question:
- Patients are eligible for hospice if they die.
- All prognostication methodologies are inherently flawed. However, death itself is quite measureable. Therefore, only allowing a hospice to discharge a small percentage of “live” patients quarterly (calculated along with the CAP calculation) seems quite doable.
Would this not help to resolve the eligibility question somewhat? Perhaps we are overlooking something or oversimplifying? The percentage of deaths for an overall hospice program can be easily measured, as well as the reciprocal of this…and the CAP itself solves this problem for us AUTOMATICALLY when combined with a modifier that limits the percentage of patients discharged alive. What would be the “live” discharge percentage per quarter? We don’t know exactly, but would start around the 5% mark based on observation.
It is not MVI’s intention to get caught in a political or ideological crossfire. We simply desire a hospice payment system that can be administered effectively, diminishes overall Medicare expenditures, reduces hospice providers’ management costs, and ultimately results in higher quality hospice care. We have been told that it is “dumb” for MVI to express its opinion and risk offending clients or prospective clients from a business standpoint. However, with our unique vantage of the hospice world, to withhold this opinion would be cowardly on our part. We would be contributing to the problem rather than helping all parties advance towards a better solution. We believe that solutions are much simpler than we may perceive…and that they may even be self-evident… In the end, let the best ideas prevail!
~ Andrew Reed
