Reimbursement News

AHA Opposes Medicare Reimbursement Cut for Early Hospice Care

A proposal to reduce Medicare reimbursement to hospitals discharging patients to hospice care early does not align with best palliative care practices, the AHA argued.

Medicare reimbursement and hospice care

Source: Thinkstock

By Jacqueline LaPointe

- Congress should not pass a proposed policy to reduce Medicare reimbursement rates to hospitals discharging patients to hospice care earlier than the expected, the American Hospital Association (AHA) advised.

The proposed policy builds on a 2013 HHS Office of the Inspector General (OIG) report that suggested CMS apply the hospital transfer payment policy to early discharges to hospice care.

The hospital transfer payment policy states that CMS should pay hospitals a per diem rate in lieu of the Inpatient Prospective Payment System (IPPS) rate for patients transferred to another hospital or post-acute care facility, including skilled nursing facilities, inpatient rehabilitation facilities, home health agencies, long-term care hospitals, and psychiatric hospitals.

The per diem rate cannot exceed the full IPPS payment that would have been paid to the hospital if the patient had not been transferred.

CMS designed the hospital transfer payment policy to ensure hospitals do not receive the full payment for patients discharged early because IPPS rates are based on an average length of stay for each diagnosis.

The policy also disincentives hospitals from transferring patients early to minimize their costs while still earning the higher Medicare reimbursement rate under the IPPS.

OIG recommended that CMS apply the hospital transfer payment policy to early discharges to hospice care because Medicare would save over $6.5 million with the expanded reimbursement policy.

While OIG made its recommendation about four years ago, Congress is now considering implementing the Medicare reimbursement cut for early hospital discharges to hospice care.

However, AHA explained to the Senate that hospice care is unique compared to other post-acute care services detailed in the hospital transfer payment policy. Skilled nursing facilities, long-term care hospitals, and other post-acute care facilities provide curative care, with some services overlapping hospital services.

The hospital transfer payment policy prevents hospitals from transferring their costs to post-acute care providers for overlapping services.

But hospice does not offer curative care. Physicians must verify that patients have less than six months to live before hospice care is covered. Patients also willingly stop coverage of all services treating their terminal illness.

“This is a serious decision that a patient makes together with his or her family and physician. Hospitals do not ‘push’ patients into hospice in order to be able to discharge a day earlier, they transfer patients to hospice because it is the best setting in which to provide the care they need and have elected – to suggest that hospitals make this decision based on anything other than the patient’s wishes and their physician’s judgement is preposterous,” the hospital group wrote.

The AHA also contended that the OIG recommendation was based solely on reducing Medicare spending, not provider concerns or policy rationales. “It was a solution in search of a problem,” the group stated.

The OIG investigation also relied on a sample size of just 0.006 percent of Medicare claims to make its recommendation. The sample size was too small to develop a meaningful Medicare reimbursement policy.

Additionally, the AHA expressed disappointment that OIG dismissed concerns from CMS regarding the recommendation.

In response to OIG’s advice, CMS stated that applying the hospital transfer payment policy to hospice could “produce lower than estimated savings by discouraging hospitals from making transfers to more appropriate and cost-effective care settings until a patient’s length of stay would not result in a reduction of payment to hospitals.”

OIG countered that hospital officials stated in a questionnaire that a Medicare reimbursement cut stemming from the expanded policy would not impact how they provide care or create an incentive for hospitals to extend inpatient stays.

“It follows, therefore, that the converse of this point is also true – hospitals would not be discharging patients early to hospice merely to receive the full IPPS payment,” AHA wrote. “Hospitals are discharging patients to hospice because that is the care they need.”

The hospital group concluded that the Medicare reimbursement cuts to hospitals would penalize hospitals for respecting patient wishes and transferring terminally ill patients to the most appropriate care setting.

“Expanding the post-acute care transfer policy to also apply to discharges to hospice is not based on sound policy,” the group stated.