Home Care Tech Report: Advanced Analytics Mitigate Negative Side of New Hospice Payment System

August 17, 2015

goCMS recently announced updates to the hospice payment structure. To gauge the industry’s temperature on the adjustments, Tim Rowan with Home Care Tech Report interviewed our own in-house hospice nurse Carleen Rogers. Here’s the article that reflects their conversation:

Advanced Analytics Mitigate Negative Side of New Hospice Payment System

On July 31, 2015, the Centers for Medicare & Medicaid Services issued a final rule (CMS-1629-F) that updates fiscal year 2016 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. For convenience, we reprint the official CMS summary of the final rule in the sidebar at the bottom of this page. Visit theCMS Websitefor a copy of the complete, 221-page, final rule.

To help understand how hospices will be impacted by the new payment system, we spoke with 20-year hospice veteran and consultant Coleen Rogers, RN, BS, CHPN. In addition to her years as a hospice nurse and administrator, Ms. Rogers been an independent hospice consultant, a clinical adviser to Homecare Homebase during the development that company’s hospice product and, since February of this year, serves asClinical Transformation Consultant for Medalogix.

“I regard this rule as a positive one for hospice providers,” Ms. Rogers began. “If you look beyond the average reported in the summary, which describes the payment increase as an estimated 1.1 percent ($160 million), you will see that most providers will do well under the new system.”

According to an August 5 posting on the CHAP web site, a clearer summary than CMS’s own, Medicare-certified providers currently receive a per-day reimbursement of about $160 for patients in “Routine Home Care.” Starting in January, hospices will receive $25 more, about $185 a day, for RHC but only for the first 60 days. From day 61forward, the daily rate goes down to $145.

Service Intensity Add-On
When the patient expires, CMS willlook at last seven days of service to see if the hospice has sent nurses and social workers into the home.If so, there will be an additional payment,a Service Intensity Add-On,to cover the costs of additional RN and social worker visits typically provided to the patient and family at the end of life, when there is greater need for spiritual and emotional support services.The SIA payment will be equal to the continuous home care hourly rate, multiplied by the amount of direct patient care provided by an RN or social worker for up to a total of four hours per day.

“This system matches hospice costs,” Coleen Rogers told us. “Patients need more services and medication management and emotional and spiritual care during the first 60 days, so hospice expenses tend to be higher at the beginning of an admission. After 60 days, if the patient remains on service that long, things tend to settle into a routine and hospice costs are not as high. And in the end, services and costs tend to rise again. Therefore, under the 2016 payment system, if you focus on doing what is right for the patient, you will also be doing what is right for Medicare and for the taxpayer.

“Hospices that are affiliated with home health providers and that use ourMedalogixBridgeanalysis system to identify patients appropriate to transition from home health to hospice are seeing fewer episodes of care that are seven days or less,” she continued. “Nevertheless, more than half of hospice episodes nationwide are still from seven to fourteen days. That means that, under the upcoming payment system, most hospices will be paid the full $185 per day for the entire admission for more than half of their patients. This is why CMS’s statement that the net change is only a 1.1% rate increase overall is a little deceptive. It is actually better than that for most providers.”

Changes to Payments under the Medicare Hospice BenefitHospices will see an estimated 1.1 percent ($160 million) increase in their payments for FY 2016. The $160 million increase in estimated payments for FY 2016 reflects the distributional effects of the 1.6 percent FY 2016 hospice payment update percentage ($250 million increase), the use of updated wage index data and the phase-out of the wage index budget neutrality adjustment factor (-0.7 percent/$120 million decrease) and the implementation of the new Office of Management and Budget (OMB) Core Based Statistical Areas (CBSA) delineations for the FY 2016 hospice wage index with a one-year transition (0.2 percent/$30 million increase). The elimination of the wage index budget neutrality adjustment factor (BNAF) was part of a 7-year phase-out that was finalized in the “Medicare Program; Hospice Wage Index for Fiscal Year 2010” final rule (74 FR 39384, Aug. 6, 2009), and is not a policy change.Final Rule DetailsBudget Neutrality Adjustment Factor phase-out
The BNAF was implemented in 1997, when CMS moved from an outdated wage index to a more current and accurate method for determining hospice payments. The FY 2010 Hospice Wage Index final rule finalized a schedule to phase-out the BNAF over seven years, reducing it by 10 percent in FY 2010 and by 15 percent each year from FY 2011 through FY 2016.Alignment of Cap Year
This final rule will align the cap accounting year for both the inpatient cap and the hospice aggregate cap with the fiscal year for FY 2017 and later. This allows for the timely implementation of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) changes while better aligning the cap accounting year with the timeframes described in IMPACT Act. The IMPACT Act mandates that the hospice aggregate cap be updated by the hospice payment update percentage, rather than using the CPI-U, for a specified time. In addition, we will align the timeframe for counting the number of beneficiaries with the fiscal year for FY 2017 and later.CBSA-OMB Delineations
This rule adopts changes to the delineations of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and guidance on the uses of these delineations reflected in the OMB Bulletin No.13-01. These changes will be implemented using a blended wage index with a one-year transition, which aligns with the policy finalized for the Skilled Nursing Facility PPS and Home Health PPS in FY 2015 and calendar year (CY) 2015, respectively. For each county, a blended wage index will be calculated as fifty percent of the FY 2015 wage index using the current OMB delineations and fifty percent of the FY 2015 wage index using the revised OMB delineations.Proposed Routine Home Care Rates
This rule implements two different payment rates for routine home care (RHC) that result in a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for 61 or more days of hospice care. These differing payment rates further the goal of more accurately aligning the per diem payments with visit intensity and the cost of providing care. The two RHC rates will become effective on January 1, 2016. Between October 1, 2015 and December 31, 2015, hospices will continue to be paid a single RHC rate updated for FY 2016.Service Intensity Add-On
This final rule will implement a Service Intensity Add-On (SIA) Payment effective January 1, 2016 and beyond in conjunction with the finalized RHC rates. The final SIA payment is a payment that will be made for care provided to Medicare beneficiaries by a hospice in the last seven days of life if certain criteria are met. This payment is in addition to the per diem rate for the RHC level of care and will encourage visits to patients at the end of life when more resource-intensive days typically occur.Clarification Regarding Diagnoses on Claim Form
We are clarifying that hospices are required to reportalldiagnoses identified in the initial and comprehensive assessments on hospice claims, whetherrelatedorunrelatedto the terminal prognosis of the individual. ICD-9-CM coding guidelines (and effective on October 1, 2015, ICD-10-CM) state to report all diagnoses that affect patient care. This also includes the reporting of any mental health disorders and conditions that would affect the plan of care, as hospices are to assess and provide care for identified psychosocial and emotional needs, as well as for physical and spiritual needs.The final rule went on display on July 31, 2015 at theFederal Register’sPublic Inspection Desk and will be available under “Special Filings,” athttps://www.federalregister.gov/public-inspection.For further information, seehttp://www.cms.gov/Center/Provider-Type/Hospice-Center.html.

*This article originally appeared inHome Care Technology Report.