MedPAC: Payment evaluation needed
August 1, 2002
MedPAC: Payment evaluation needed
Report paints a rosy’ picture of patient access
MedPAC, the congressional advisory panel on health care delivery and financing, has called on the U.S. Department of Health and Human Services (HHS) to evaluate the adequacy of Medicare’s payments to hospices for providing end-of-life care to patients and families.
While the agency’s recommendation has been welcomed by hospice industry leaders, its largest trade association criticized MedPAC for potentially downplaying the access problems hospice currently face.
"The report inadequately addresses the complex factors that often prevent patient access to end-of-life care," the National Hospice and Palliative Care Organization (NHPCO) said in a press release. The statement came days following the June 17 release of MedPAC’s report to Congress, "Medicare Beneficiaries’ Access to Hospice."
No word yet from HHS or the Center for Medicare and Medicaid Services on what steps, if any, will be taken as a result of MedPAC’s recommendations.
MedPAC is an independent federal body that advises Congress on issues affecting the Medicare program. The 17-member commission meets publicly to discuss policy issues and formulate recommendations to Congress on improving Medicare policies. The report is the result of the Benefits Improvement and Protection Act adopted by Congress in 2000. In that act, Congress charged MedPAC with examining the factors affecting the use of hospice benefits under the Medicare program. These include delays in the time (relative to death) of entry into a hospice program, differences in use between urban and rural hospice programs, and the presenting condition of the patient.
In its hospice report, MedPAC made two specific recommendations to HHS, which administers the Medicare program:
- Evaluate hospice payment rates to ensure they are consistent with the costs of providing appropriate care.
- Research differences in the care and resource needs of hospice patients and determine whether a case-mix adjusted payment system for hospice is feasible, and study ways to establish a high-cost outlier policy.
Hospice providers are concerned with the report because Medicare beneficiaries’ access to hospice care was not comprehensively assessed, says Jonathan Keyserling, vice president of public policy and communications for the NHPCO, in Alexandria, VA. Specifically, the NHPCO takes issue with the way MedPAC depicted growth in the industry. The report illustrated growth in terms of the numbers of hospice providers and patients served, which have increased over the years.
"It does not actually determine the number of patients who never accessed or never learned of hospice care," NHPCO said.
As a whole, access has increased, according to the MedPAC report. The agency cites the tripling of hospice services in 2000 compared to 1992 and an increase in Medicare beneficiaries using hospices from 9% in 1992 to 23% in 2000, including 60% of beneficiaries who died from cancer in 2000.
But the NHPCO argues that the numbers may mislead Congress. While MedPAC statistics point to increased access, the numbers may simply be a reflection of the growing number of Medicare beneficiaries as a result of the graying of the American population.
It would be more accurate, NHPCO says, to look at the number of patients who do not receive hospice care or who don’t receive information about hospice services until too late in the disease process, says Keyserling.
"They didn’t take the additional step of looking at those who didn’t use hospice," Keyserling says. "By ignoring the substantial number of people who don’t have access to hospice care, it may paint too rosy a picture about the path to hospice."
Looking beyond supply and demand
The problem seems to lie in the two indicators of hospice access used in MedPAC’s report: use of services and supply of providers. Essentially, MedPAC graded access on whether supply met demand. While the supply of hospice services has kept pace with the growing number of Medicare beneficiaries, there still are too many patients who are denied access simply because they aren’t given proper information or information is not given in a timely manner, Keyserling maintains.
This seems to be borne out in a separate survey of health care consumers who wanted hospice information sooner than they got it. The survey, conducted by NHPCO, showed that nearly nine out of 10 Americans favor a consultation with end-of-life experts to inform patients with life-limiting illness of their care options.
The results of the survey, which was done in conjunction with the Harris Interactive polling company, were released in February 2000. It was conducted to look at the Medicare Hospice Benefit 20 years after the federal government began reimbursing hospices for the care they provide to terminally ill patients. The results corroborate an earlier study done by the National Hospice Foundation, the charitable arm of the NHPCO.
Of the 88% of respondents who support end-of-life consultations, most cited a belief that the information provided during the consultation would result in increased control over decision-making, improved quality of life, and alleviation of financial concerns.
Despite the criticism, the hospice industry is applauding the recommendations made by MedPAC. "NHPCO welcomes MedPAC’s recommendations to review and evaluate alternative Medicare reimbursement mechanisms for hospice services," said Keyserling.
The MedPAC report addressed the issue of short length of service and how it negatively impacts hospice because hospices are unable to recoup their costs when the admission and the days surrounding a patient’s death — the two most expensive periods of patient care — are too close to each other.
It also suggested in its recommendation for reimbursement evaluation that payment for services furnished to a patient living in a nursing home be reviewed.
One concern of hospice experts, however, is the use of cost reports to review costs. The NHPCO is concerned that the relatively new hospice cost reports will not paint an accurate picture of hospice costs, which could lead to unfair reimbursement.
Hospice reimbursement doesn’t cover costs
One of the pieces of evidence MedPAC considered was the 2000 Milliman & Robertson report on how hospice costs have changed since the inception of the Medicare Benefit rule.
According to a study of 10,000 patients cared for in large hospice settings, the current reimbursement rate for routine home care, which accounts for 95% of hospice days used by Medicare patients, does not cover the costs incurred by hospices. It also found that the gap between what hospices are paid and how much it costs to deliver care poses a real threat to hospice programs nationwide.
M&R compared cost data from 1982, when the Medicare hospice benefit was first established, with cost figures from 1998-1999. The study pointed out a number of areas in which Medicare failed to keep up with hospice costs:
- Patients are enrolling in hospices later. With patients electing the hospice benefit closer to the time of death, there is less revenue opportunity for hospices. According to the study, the average length of service has dropped to 40 days, while the original Medicare hospice benefit set the original rate based on a 70-day length of service.
- New technology. Advances in technology, breakthrough therapies, and prescription drugs have increased the cost of hospice care far beyond Medicare’s annual market basket update, which is used to determine annual reimbursement increases. While the hospice per diem rate has doubled since the early 1980s, prescription drug costs, for example, have risen 1,500%.
- An increase in outpatient hospital therapies. The advent of palliative care chemotherapy and radiation treatment increased cost per day to more than $17 per day. Medicare originally envisioned outpatient therapies to account for about $3 of the per diem reimbursement.
Armed with the best evidence the industry has ever had to show that Medicare’s per diem reimbursement is out of step with the scope of care hospices provide today, the NHPCO is now trying to persuade Congress to raise per diem rates to reflect today’s needs.
Hospice drug costs rising 18.3% per year
The MedPAC report raises three points the hospice industry hopes lawmakers will consider:
• Increasing cost of prescription drugs. In 1982, when the hospice benefit was established, prescription drug costs amounted to about $1 of the $41.46 per diem payment. Today, prescription drug costs have soared to $16 per day of a $98.96 per diem payment.
"Drug costs have skyrocketed, making pain relief and symptom management — cornerstones of hospice care — much more expensive. Many of the most effective and widely used drugs for relief of cancer patients’ discomfort are shockingly expensive," the NHPCO wrote in a press release that followed the unveiling of Milliman and Robertson’s interim study results.
Many lawmakers want beneficiaries to get a break from rising drug costs. Depending on the source of information, drug costs are increasing 15% to 20% per year, experts say. Hospice drug costs are rising 18.3% per year, according to Hospice Pharmacia, a Philadelphia-based consulting firm. Because drug costs make up a significant portion of a hospice’s direct costs, Hospice Pharmacia predicts those expenses will likely double in three to five years if left unattended.
Experts blame a combination of factors for the rising cost of drugs: higher drug utilization, inappropriate prescribing practices, and an increasing elderly population.
• Declining length of service. When Medicare set the rate for hospices in the early 1980s, it estimated a 70-day length of service, compared to the current average of 40 days. Hospices have suffered from short lengths of stay and have struggled to come up with ways to bring patients into care sooner. Most hospice leaders blame current eligibility requirements that force physicians to make the uncertain prediction that a patient will die within six months as a result of their illness. In addition, reimbursement rules also mean physicians lose revenue as a result of a hospice referral.
Declining length of service exacerbates the already low reimbursement rate, widening the gap between cost and reimbursement. That’s because hospices encounter higher costs in the first few days following admission and in a patient’s final days. Per diem payments are often not enough to cover the cost of program introduction at admission and intensive care at the end of a patient’s life.
• Outpatient hospital therapies. The advent of more innovative and expensive palliative care methods, such as palliative chemotherapy and radiation treatments, has contributed to the increase in hospice costs. With hospices filing cost reports this year, Medicare administrators will have their own hospice cost data to help them determine future reimbursement. While critics scoff at the reliability of cost report data, at least for the first few years, Keyserling welcomes more data.
"The more data that is collected, the better we will be able to show what hospices are going through," he said. "The [Milliman and Robertson] report is an attempt to show that current reimbursement does not reflect current practices."
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