Change is coming for hospices in 2021 as the industry starts to shift towards value-based payment models, including the Primary Care First initiative. As the implementation dates for these programs approach, hospices need to identify the value proposition and revenue potential for each of the models that will fall under the auspices of that program.
The U.S. Centers for Medicare & Medicaid Services (CMS) announced the program in April and will implement the models in phases beginning in January 2021, initially in 26 regions throughout the United States. Hospices and palliative care organizations are eligible to participate in the payment models provided they meet the program’s criteria. The program is designed to control costs, reduce avoidable hospitalizations and improve care coordination.
Eligible providers can choose to participate in one or more of three payment options under the program: A general payment option and a Seriously Ill Population payment option designed to serve patients with complex, chronic needs, through which providers focused on caring for that population would receive increased payments, as well as a series of direct contracting models.
The establishment of these models promises to have a transformative impact on the hospice space, including providers’ bottom lines.
“There’s a whole new landscape that hospices will have to lean into and figure out how to be successful within. This is value-based care and the referral paradigms that have been created under this innovation are going to be the new normal. If [hospice providers] don’t participate, they don’t learn,” Jeremy Powell, CEO of Acclivity Health, told Hospice News. “They are going to be assigned patients by CMS and effectively have a hospice feeder for the first time in 40 years. If they don’t understand how to staff against that pipeline, and build metrics of success and [key performance indicators] around that, then it’s going to compress the market. There are going to be agencies that don’t innovate who are going to fail or get acquired, whether they’re nonprofit or for profit, in a certificate of need state or not. Folks that can figure out how to do it well are going to be the ones that succeed, and the folks that don’t are going to be the ones that get left behind.”
Acclivity Health operates a program that provides assistance to hospice and palliative care providers as they ready themselves for participation in the Primary Care First models.
A key goal of Primary Care First is to create a spectrum of models to support patients suffering from serious illness from diagnosis through end of life.
Hospices and palliative care practitioners will be able to receive payments through Primary Care First’s general payment option if they meet the programs eligibility requirements. They can also participate exclusively in the Seriously Ill Population payment option, either directly as an organization or by partnering with a primary care practice.
The Serious Illness Population model likely holds the greatest value proposition for hospice providers, compared to the other Primary Care First models. However, that model during the program’s first year will only be available in 21 states and five metropolitan areas including Cincinnati, Kansas City, Philadelphia, and two regions within New York state.
“If [the Serious Illness Population model] were nationwide, it would be the clear leader, because it’s really a single-sided risk contracting paradigm. The federal government in essence is actually playing the role of the payer in total, creating these provider roles upstream for hospice. They allow the hospice, palliative and even home homebound primary care agencies to get paid appropriate amounts for serving a more complex population,” Powell said. “The reason that direct contracting is not quite as good a fit is you have to play the role of payer. You have to design the plan. It’s a more complex and likely a chasm too big to cross for many agencies who haven’t taken that kind of risk. It’s more natural for them to be inclined to perform well in the Serious Illness Population model, because they don’t have to build a lot of the plant design components.”
The direct contracting options include three voluntary payment models that are designed to help CMS and health care providers reduce the cost of care and improve quality within Medicare fee-for-service programs. The models adapt and integrate concepts from other programs such as Accountable Care Organizations, the Medicare Shared Savings Program, and Medicare Advantage, as well as strategies used in the private sector.
The Center for Medicare and Medicaid Innovation (CMMI) at first indicated that only large practices of more than 5,000 patients were eligible to participate in these models. However, CMMI later developed a pathway in the first year for smaller organizations with a threshold of 250 patients. This is designed to address a high-needs population, which the agency defines as patients with a hierarchical condition category (HCC) score greater than 3, or a lower HCC score with multiple unplanned hospital admissions and demonstrated frailty or disability.
Despite being a more complex program, incentives exist for hospices to participate in direct contracting.
“The Serious Illness Population model has a one-year boundary, or actually you should average eight months for your patient before you transition them to a [primary care provider]. In direct contracting, they relax a lot of those definitions,” Powell explained. “You could be in certain direct contracts for three or four years, literally building a pipeline with the same patients, building trust and rapport, helping them navigate the system, helping them build out their advanced care planning documents, and then executing against them when the time is right. There is a significant advantage for agencies to get involved with and work within direct contracting. If they aren’t in a Serious Illness Population market then that’s priority one. If they are in a SIP market, it’s priority two.”