California Hospice Network Restructures, Readies for Value-Based Care

California Hospice Network (CHN), a coalition of nonprofit hospices in that state, is restructuring its leadership and operations and working hard to prepare for the entry of hospice into value-based payment programs in 2021, such as Medicare Advantage.

Three California-based hospices — the Elizabeth Hospice in San Diego, Mission Hospice & Home Care in San Mateo and Hospice of Santa Cruz County — established the California Hospice Network last year to support the growth of community-based hospice care throughout their state. Among the goals of the collaboration is to reduce overhead costs, improve the members’ bargaining position with payers and health plans and smooth the transition into value-based payment models.

One of the founding members, Elizabeth Hospice, recently left the network due to divergent activities and timelines that complicated their participation.

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“Elizabeth [Hospice] has been very involved from the very beginning with what we were doing, and it’s been an incredibly strong partner. We just have a little bit different priorities from an organizational standpoint,.” said Anne Fyffe, board chairperson and acting CEO of CHN. “But it was an incredible collaboration, and I don’t rule out at all that we’ll all be back at the table. Right now, our priorities were a little different among the three organizations, but we had a very successful first year, and we look forward to working with them in the future.”

To better compete with large for-profit hospice companies, nonprofit hospices in several states have formed similar coalitions. Three hospices in 2013 established Ohio’s Hospice, for instance. That partnership has since expanded to nine members in addition to joint venture activities.

Though each California Hospice Network member remains a distinct, independent organization, the partnership enables the hospices to collaborate on best practices and improve efficiency through cost sharing and shared services. Among the network’s successes is the significant reduction of employee health insurance costs for each member hospice.

“We consolidated our health benefits under a single broker who marketed on our behalf, and so we were really able to leverage some some cost savings that we wouldn’t have been able to see on our own,” Dolores Gomez, CEO of network member Mission Hospice and Home Care, said. “We were able to save around 15% off of our annual premiums compared to if we had done this marketing separately. That was close to $750,000 in savings for the three entities, and so we’re really looking at how we can continue that going forward.”

A second major initiative the network is undertaking is the development of a shared electronic medical record system (EMR) among the member hospices. The network expects this move will reduce costs, give them access to previously cost-prohibitive electronic products, and improve information security as well as enhance benchmarking of the members’ key performance indicators. This could give them a leg up when it comes to negotiations with payers and Medicare Advantage plans.

“Our affiliates are moving towards one shared EMR environment. This provides a lot of efficiencies that could not have been realized in separate environments. We have had incredible collaboration across the network and with Netsmart, which is the EMR that all three are working with,” Gomez told Hospice News. “Being in one secure environment, we were able to negotiate a bundle of services and solutions from Netsmart and the EMR at a significant cost reduction. This is really a great initiative as we move to potentially new affiliates joining the network. The integrated system will support consistent excellent clinical care, which will be based on the best practices that we have been implementing across our clinical teams.”

CHN expects that the system will be completed in September and become operational by Oct. 1.

Much of the network’s efforts are geared toward preparation for the inclusion of hospice in value-based payment models such as Medicare Advantage.

Through Medicare Advantage, the U.S. Centers for Medicare & Medicaid Services (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.

Currently, hospices receive a standard per diem payment per patient via the Medicare Hospice Benefit. When they begin working with Medicare Advantage plans, hospices will have to negotiate their rates and services with each plan. When smaller organizations band together, such as through California Hospice Network, they can achieve a stronger bargaining position. 

“I think everything that we’re doing is preparing for the [value-based insurance design model (Medicare Advantage)]. Payers need to create a network of hospices that they’ll work with. During the first couple of years everyone will be in that pool, but in 2023 plans can form a traditional network, where the payer gets to choose what hospices they want in their group,” said Cathy Conway, CEO of Hospice of Santa Cruz County, said. “We know that pricing matters. We know that geographical footprint will matter. We’re already talking to payers about how an organization like CHN could be that preferred network.”

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