On the Horizon: Value-Based Hospice Care

The U.S. Centers for Medicare & Medicaid Services (CMS) is experimenting with the concept of including hospice in value-based payment models, as evidenced by the forthcoming Medicare Advantage carve-in, the Medicare Care Choices model and the Primary Care First initiative. While the agency has no immediate plans to transform the Medicare Hospice Benefit’s per diem payment model, opportunities for hospice to enter value-based payment programs will likely proliferate in years to come.

The goal of value-based care models is to improve the quality of care while also reducing costs. In value-based purchasing, payers, including Medicare, create financial incentives to health care providers for achieving a certain level of performance on specific quality measures, typically process measures. In some models payers apply penalties or other disincentives for poor performance or poor outcomes.

A transition to a value-based system would pose challenges and present opportunities for hospice providers, negotiations with payers may reduce reimbursement dollar amounts, but providers may be able to engage with patients earlier in the continuum of care, with longer lengths of stay potentially offsetting any payment reductions.


“As we start talking about value-based care with hospice, there are opportunities with chronic illness management programs because you have patients with congestive heart failure, chronic obstructive pulmonary disease or cancer who repeatedly go back to the hospital,” Chuck Lee, CEO of Florida-based Cornerstone Hospice & Palliative Care, told Hospice News. “The skill set that traditional hospice providers bring to bear would be perfect for helping to address a lot of those needs, whether its medical, psychosocial, or whether some of the social determinants come into play.”

A key quality metric that is used for some value-based care programs, such as those for hospitals, is reduction of readmissions within 30 days of discharge, as well as avoiding preventable hospitalizations. The hospice model of providing interdisciplinary, patient-centered care, often in the place the patient calls home, has been shown to reduce such hospitalizations, improving patient comfort and satisfaction and significantly reducing health care costs. These achievements align well with the goals of value-based care.

The most significant value-based initiative that will affect hospices in coming years will be the Medicare Advantage carve-in demonstration set to begin in 2021. The carve-in, according to CMS, is intended to increase access to hospice services and facilitate better coordination between patients’ hospice providers and their other clinicians. Reactions to the carve-in demonstration have been mixed, with many lauding the CMS action and others expressing concern.


Medicare Advantage plans are offered by private insurance companies approved by CMS, and include HMO, PPO, and fee-for-service plans among other options. The program represents an integrated care model that promotes coordination of services and provides incentives for quality and patient satisfaction. Beginning in 2020, the program will be available in all 50 states as well as U.S. territories.

Though CMS has not released many details about how the carve-in will work, some have theorized that Medicare Advantage plans would not limit hospice to the last six months of life, but would begin to incorporate hospice into an integrated care continuum.

“The six-month terminal prognosis requirement could be removed if Medicare wants an integrated product. It’s wouldn’t be siloed. The patient could move more seamlessly from primary care, for example, to acute care to palliation and ultimately to hospice,” said Mary Ann Boccolini, president and CEO of Samaritan Healthcare & Hospice, told Hospice News. “While the back office payers and providers may use these terms, like ‘acute care’ or ‘hospice,’ so they can keep track of where the patient is in the care continuum and what services are available to them, the patient wouldn’t necessarily see those labels. It would just be continuous. The patient would have their health plan and the physician responsible for their care who would direct them to the right treatment at the right time, but those treatments may not necessarily be labeled.” 

Improving quality is a cornerstone of value-based payment systems, so hospices who want to be ready for any forthcoming transition should maintain a sharp focus on their quality metrics. CMS’ current Hospice Quality Reporting Program includes two reporting systems in which hospices must participate in order to receive full reimbursement from Medicare: the Hospice Item Set and the Hospice Consumer Assessment of Healthcare Providers and Systems (CAHPS).

The Hospice Item Set contains nine publicly reported quality measures. Even in the absence of a value-based payment model for hospice, referral partners such as hospitals, physician practices and nursing homes are paying increasing attention to these scores when choosing a hospice, as are patients and families.

In the second measurement system, CAHPS, surveys are sent to the family after the patient has passed away to gauge their satisfaction with the care their family member received. The survey vendor contacts the family by phone or mail approximately 42 days after the end of the month in which the patient died.

The survey’s 47 questions indicate the family’s perception of hospice performance on 11 metrics such as hospice team communication, symptom management, emotional and spiritual support, patient and caregiver training, and whether the family would recommend the hospice, among other data points.

“Our first priority has to be quality. We have to make absolutely sure that our performance on quality measures is strong, whether it be CMS Conditions of Participation or [accreditation body] standards or any other publicly reported measures,” Boccolini told Hospice News. “CAHPS scores will be particularly important.”

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