CMS Finalizes Hospice Capitation Rates for Medicare Advantage Plans

The U.S. Centers for Medicare & Medicaid Services (CMS) has revealed the final payment capitation rates that indicate the amounts the agency will provide to Medicare Advantage plans to offer hospice coverage through the value-based insurance design demonstration project, commonly called the “carve-in.” The carve-in is slated to being Jan. 1, 2021.

The announcement did not specify what percentage of these funds would ultimately go to hospice providers. That would likely be determined through individual negotiations between hospices and health plans.

“It’s important to note that these rates are what CMS will pay to plans that participate in the model, and these rates incorporate a number of factors that can vary widely across hospices in any specific area, including aggregate cap status and variability in levels of care,” Theresa Forster, vice president for hospice policy for the National Association of Home Care & Hospice, said. “Ultimately it will be the contractual agreement between the [Medicare Advantage] plan and the individual hospice that will govern what a hospice is paid.”


Through Medicare Advantage, CMS contracts with private insurance companies to provide coverage for Medicare beneficiaries. CMS in early 2019 year announced that it would test coverage of hospice care through Medicare Advantage plans beginning in 2021. The agency began accepting applications for participation in the program last December.

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 demo have been mixed.

The degree of flexibility that Medicare Advantage plans will have in regards to what hospices will actually be paid is a source of concern for some providers.


“CMS is encouraging innovative payment arrangements between the Medicare Advantage organizations and in-network hospice providers,” said Annie Acs, director of health policy and innovation for the National Hospice and Palliative Care Organization (NHPCO). “We’re worried from an NHPCO perspective about the amount of flexibility that these organizations will have to determine that payment structure, and we are unsure that it would be adequate.”

The Medicare Advantage program has been growing in recent years. The number of participating beneficiaries tripled between 2019 and 2020, totaling nearly 1.2 million enrollees in 30 states, according to CMS.

“I’m hopeful that hospices can figure out how to work with their health plan partners to figure out how to make sure that they get enough money to meet the needs of caring for these beneficiaries,” Mollie Gurian, director of hospice, palliative, and home health policy for LeadingAge, said. “I think the model does provide flexibility to do that. I’m hopeful that hospices are able to take a look at this and think about how the money that’s presented to plans can meet their needs and go forward with strong proposals that would meet [the hospices’] own needs.”

A number of stakeholders in the hospice space have asked CMS to delay implementation of the carve-in to give hospices more time to prepare, particularly in light of the COVID-19 pandemic. LeadingAge, NHPCO and a number of other industry groups have called for the program’s launch to be pushed back to 2022.

“Given where we are with the COVID pandemic and the stakeholder feedback that [the Center for Medicare & Medicaid Innovation] has been receiving, we were surprised that they haven’t thus far announced an official one-year delay of the VBID model,” Acs told Hospice. News. “And, again, there is a lack of details on what the rates mean for hospice providers specifically.”

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