Hospice in Value-Based Care: From the ACA to the MA Carve-In, Primary Care First

Health care has been in a state of transformation during the past decade since the Affordable Care Act (ACA) became the law of the land. Among other provisions, the ACA created the Center for Medicare & Medicaid Innovation (CMMI), which is spearheading vast changes to the ways hospices get paid.

The changes are largely driven by a move to orient Medicare and Medicaid programs around value-based care payment models, which tie payments to the quality of care and award health care providers for creating efficiencies and cost savings. Though one could argue that the bundled payments through the Medicare Hospice Benefit represent a value-based payment arrangement, hospices have long been excluded from some of the newer programs, such as Medicare Advantage. This is set to change starting in 2021.

Improving quality and reducing costs are the two pillars of value-based care, as both health care and political leaders increasingly recognize the unsustainable trajectory of the nation’s health care spend.


“The politics of health care has become pretty dicey. There are no persons that will stand on any pulpit at any level of politics and talk about the opportunity to raise taxes. That kind of problem means that if we are raising the number of patients into Medicare, if that number exceeds 10,000 persons per day becoming Medicare eligible, we’d have to age that number of persons into the workforce to offset some of the costs of those persons being on the Medicare benefit,” said Jeremy Powell, CEO of Acclivity Health during a presentation at the National Hospice & Palliative Care Organization (NHPCO) Interdisciplinary Care conference. “Because we’re not growing that part of our population, and therefore taxes at that amount — because we can’t tax and create revenue without there being employees and corporations being set up to keep pace — it’s creating a bit of a stranglehold on what health care can do.”

One major focus is on reducing acute care utilization. This includes reductions in hospital admissions, readmissions and length of stay, emergency department visits and episodes in intensive care units.

Medicare Advantage, which among other facets provides incentives for reducing hospital readmissions, is among those programs.


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 is available in all 50 states as well as U.S. territories. CMS is planning to test coverage of hospice through Medicare Advantage starting in 2021.

Medicare Advantage will not be the only value-based payment model newly available to hospices next year.

The U.S. Centers for Medicare & Medicaid Services (CMS) announced the Primary Care First program in April 2019 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.

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.

In each of these programs, data collection management will become increasingly essential.

“Almost all of health care, especially if you watch what Medicare is doing, is promoting this idea that you can deliver better quality and lower cost care if you use the data that’s available,” Powell said. “As you watch Medicare and some of the programs that are rolled out, it’s rolling out more and more data. And the things they have in vast quantities are claims-based data that’s going to continue to become more and more prevalent.”

Key data points that could impact hospice payment within a value-based program include performance on publicly reported quality measures, reductions in readmission rates, ICU stays and emergency department visits, overall cost savings and performance on Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys.

The focus on cutting acute care utilization is expected to spur a growing trend in the health care field that is shifting care out of the insitutional setting and into the home, particularly for those patients who have high-needs such as care for serious, life-limiting illness, often with multiple chronic conditions. These high-need patients represent a large and growing contingent of the Medicare population.

Hospices provide the majority of their care in the home setting, In 2018, more than 55% of hospice care days took place in a private residence, as opposed to an inpatient, skilled nursing or assisted living facility.

“In reality as we move forward, so health care for the sickest among us will no longer be an institution-based solution, it will look much more like a homebound set of services,” Powell said. “Be mindful that this is a big move. People that are building towers today for more acute beds are going to have a short run where that investment will pay off, and then there will be a long term period where they will have made an investment in a past version of health care. “

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