Experts Share Strategies to Reduce Hospice Medication Costs

Medications are a top expense for hospice providers, who are dependent on capitated per diem payments from Medicare. Hospices can’t increase the amount of their income per patient, so they must rely on creating efficiencies and effective cost management to raise their margins.

In addition to medications themselves, hospices spend time, effort and money on medication management and reconciliation, data analytics regarding medication utilization, documentation required by the U.S. Centers for Medicare & Medicaid Services (CMS), and access to support from clinical pharmacists.

“Nationally you see that pharmacy expenses are [hospice’s] second biggest budget line item, with the biggest one being their organization their staff, their building and so forth,” said Jason Kimbrel, MyNHPCO pharmacist community leader for the National Hospice and Palliative Care Organization (NHPCO), said. “The old adage in hospice that your biggest expenses are heads, meds, and beds, so full-time employees, then medications and then ‘beds’ being a stand-in for durable medical equipment.

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The expenses are compounded when the hospice factors in associated costs such as the time that staff spend educating patients and families about their medications, reviewing medication lists to ensure the patient has an appropriate drug regimen, coordinating care that includes some medications covered by the Medicare Hospice Benefit and some covered through Part D, as well as delivery and supplies such as infusion pumps and IV tubing, among others.

Maintaining compliance with complex regulatory requirements also requires staff time and can drive up costs.

“There are regulatory costs on top of just the physical drug costs, and those depend on the care setting of the patient,” Michael Shapiro, chief medical officer at Cornerstone Hospice and Palliative Care in the Orlando, Fla., region, told Hospice News. “There are different requirements in terms of packaging, how drugs are dispensed, who is authorized to dispense them, and other considerations that depend on whether the medication is being dispensed in the home, a hospice house or inpatient unit, or a long term care facility or other setting.”

Adopting practices that take into account the full scope of costs associated with medications and careful stewardship of resources can make a significant impact on cost reduction.

“Cost avoidance is critically important, and part of that is ensuring the patient is receiving the right medication at the right time, delivered in the right way,” said Samira Beckwith, president and CEO of Hope Healthcare, Fort Myers, Fla.. “You don’t want to have competing drugs, because that is a waste of medication. You also have to make sure that the drug is clinically appropriate for them, won’t interact adversely with other medications or lead to a problem, such as increased risk for falls, that could send the patient to the emergency room. It’s surprising how many ER visits result from something going wrong with a patient’s medication.”

Leveraging the expertise of pharmacists is an important strategy for avoiding and controlling costs, Kimbrel told Hospice News, including ensuring the patient receives an appropriate amount of a medication that will meet their needs but not result in excess waste. A pharmacist can consult on medication management questions and make recommendations to streamline the process as well as address any duplicative or unnecessary medications that can be discontinued.

Use of a pharmacy network in which multiple organizations pool resources to expand buying power or use of a pharmacy benefit management (PBM) service have also proven to be effective strategies. Among other services a PBM can implement hard stops that require special review and approval when a drug price goes above a certain threshold, Shapiro told Hospice News. Adherence to a formulary to ensure patients receive the most cost effective medication to achieve the desired outcome has also proven to be a successful strategy..

As in all things hospice, the interdisciplinary care team plays a key role in managing medication costs.

“The role of the staff in patient and family education and time spent in the initial assessment going over the patient’s medication list can’t be overestimated,” said Mollie Gurian, chief strategy officer for the National Partnership for Hospice Innovation told Hospice News. “Because patients when they come to hospice often have a complex medical history, and they might have a number of medications that don’t interact well or that can be discontinued, so the hospice team coming together and being that coordinating force can help the patient feel better and also reduce costs.” 

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