Hospices to Receive a Per Diem Payment Under Medicare Advantage in 2021

Providers have faced a slough of unanswered questions regarding the demonstration project to test hospice coverage through the value-based insurance design model (VBID), commonly known as the Medicare Advantage carve-in. Among the most pressing of these questions is how they will be paid.

For the program’s first year, which commences Jan. 1, 2021, most hospices participating in the program would receive a per diem payment similar to the way they are reimbursed through the current Medicare Hospice Benefit. Though by some indications this may change after the first year.

“Many or some of the plans are looking, at least in this initial year, at paying some version of per diem payment. Most or all of them that we’ve heard of so far are at a fee-for-service minus rate. So it may be fee-for-servers minus 8% or 10% or 12%,” said Theresa Forster, vice president for hospice policy and programs for National Association for Home Care and Hospice (NAHC). “But that is sort of their opening gambit when they’re making an effort to contract with the hospices in-network. There may be some that are trying to do these types of contracts with a capitated rate to hospices, but in this year — because of the limited amount of time that they had to get ready, and because of the desire to have hospices be an agent involved with them — they’re taking a per diem payment approach at this time.

Forster made her comments during a presentation at NAHC’s 2020 Home Care & Hospice Conference & Expo.


Among Medicare Advantage plans, 53 will be covering hospice and palliative care in 2021 through the VBID model, according to CMS. The carve-in comes at a time when Medicare Advantage is seeing record-high levels of participation for 2021 among beneficiaries, reaching about 42% for 2021, CMS reported.

The 53 participating Medicare Advantage plans cover 8% the market and a limited geographic footprint, according to data from the U.S. Centers for Medicare & Medicaid Services (CMS). With current plan participation, hospice coverage through VBID will be available in 13 states and Puerto Rico.

Through the demonstration CMS will evaluate the inclusion of hospice in VBID using several metrics, including rates of patient length of stay that are less than seven days as well as those that exceed 180 days. The agency will also measure documentation of patients’ goals of care, performance on pain control, family satisfaction and the number of days that patients were in their homes during their final six months of life.


A key metric that plans will be tracking at the behest of CMS is spending outside of the hospice coverage, pertaining to conditions deemed unrelated to the patient’s terminal diagnosis. Documentation of eligibility and relatedness continues to be a compliance priority, as CMS has been scrutinizing hospices in recent years regarding which services or treatments should be covered in the providers per diem payment, or whether a patient should have been certified for hospice at all. 

“Medicare Advantage plans will track spending outside of hospice. We know that this has been a big issue for CMS in recent years,” Forster said. “They’ll be looking at Parts A, B and D spending outside of hospice, and the Medicare Advantage plans and CMS will actually be tasked with making determinations of relatedness to hospice care.”

Companies featured in this article: