Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

How can CMS Reform the Medicare Hospice Payment System?

By Stephanie Reardon

CMS must update the Medicare hospice payment system using the data gathered by this audit in order to meet the ACA requirements.

- The Department of Health and Human Service (HHS) Office of Inspector General (OIG) released the results of its audit of all Medicare hospice claims from 2007 to 2012.It was performed to meet Patient Protection and Affordable Care Act (ACA) requirements. The Centers for Medicare & Medicaid Services (CMS) must update the hospice payment system using the data gathered by this audit in order to meet the requirements. During this process it was discovered that incentives need to be limited for certain types of diagnoses in hospices.

The purpose of Medicare hospice care is to help terminally ill (life expectancy of six months or less) beneficiaries continue life with little to no disruption, as well as to provide support to their families and caregivers. Medicare Hospice care can be given in multiple settings, including within the home.

For a beneficiary to be eligible for Medicare Hospice care they must also be eligible for Medicare Part A. The beneficiary must also have certification to prove they have a terminal illness with a life expectancy of six months or less should the illness run the usual course. Once accepted, the beneficiary receives nursing care, medical social services, hospice aide services, medical supplies and physician services.  Beneficiaries are entitled to receive hospice care for two 90-day periods, followed by an unlimited number of 60-day periods.

The ACA required CMS to reform the hospice payment system after October 2013. To fulfill this requirement, CMS is collecting data and using studies to determine which payment reform plan to use. CMS provided Hospice Item Set (HIS) to hospices to submit with data for review. CMS will use the HIS to calculate quality measures and will implement the Hospice Experience of Care Survey in 2015.

However, OIG determined in 2011, that hospices with a high percentage of Medicare beneficiaries living in nursing facilities, were given more Medicare payments per beneficiary and served beneficiaries who spent more time in hospice care. Another report determined that Medicare paid an average of $960 per week for hospice care for each beneficiary in a nursing facility. Medicare spending for all hospice care increased 46 percent, from $10.3 billion to $15.0 billion over a span of five years between 2007 and 2012. OIG provided several recommendations to CMS. These include:

  • Reform payments to reduce the incentive to target beneficiaries certain diagnosis’s or those likely to have longer stays by possibly tying payment rate to beneficiaries needs.
  • Focus on certain hospices for review including hospices that have high rates of payments from beneficiaries in assisted living facilities, high percentage of beneficiaries receiving aide for over 180 days, high percentage of beneficiaries with certain diagnoses and high percentages of beneficiaries who rarely receive hospice visits.
  • Develop and adopt claims-based measures of quality
  • Making hospice data publicly available for beneficiaries
  • Educate hospices about how they compare to other facilities.

In written reports, CMS agreed with OIG’s recommendations.



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