Puerto Rico Hospice Carve-In Could Have Implications Nationwide

A booming value-based payment market in Puerto Rico may have indications for programs emerging in the United States beginning next year. Mainland U.S. hospice providers may face similar risks and rewards when weighing participation in the forthcoming payment demonstration to test the inclusion of hospice in Medicare Advantage.

Commonly called the hospice carve-in, the U.S. Centers for Medicare & Medicaid Services (CMS) will add a hospice component to the Medicare Advantage Value-Based Insurance Design (VBID) Model beginning in January. Spanning a four-year period, the demonstration could have long-term impacts for the hospice industry at large.

Based on the geographic availability of the 53 participating plans, the program will be available to beneficiaries in 13 states and Puerto Rico. Of the participating plans, more than 20 are from Puerto Rico, representing nearly half of the current overall Medicare Advantage hospice penetration rate. Hospices in Puerto Rico cared for more than 9.700 people during 2019 and received a total of nearly $102 million in payments from CMS, the agency reported.


“The amount of Medicare Advantage organizations working under the pilot [in the mainland United States] will be very, very low when you compare it to Puerto Rico. ” said Kevin León, president of miEMR Inc., an electronic medical record and billing software company for hospices based in San Juan. “The scenario in Puerto Rico is not the same as the [mainland] United States because we are starting with 400,000 out of a total 600,000 patients who are under managed care with Medicare Advantage organizations.”

Medicare Advantage penetration rates in Puerto Rico reached 72% for the current year, according to Leon. That represents 66% of the total amount of patients enrolled in Medicare who are going straight into that model.

Nationwide, the carve-in will start small in its first year, with the participating Medicare Advantage plans covering only 8% the market and a limited geographic footprint, according to data from CMS. The trajectory of this value-based care model could have a significant effect on the way hospices do business, with many increasingly turning focus on how these payment demonstrations are shaping up in existing/participating regions.


According to 2016 research from the JAMA Internal Medicine, a journal published by the American Medical Association, Puerto Rico held the highest Medicare Advantage participation rate of any state or territory, accounting for approximately half of the island’s health care expenditures. The study’s authors indicated that the country’s plans are similar to their counterparts in the United States in that they offer lower cost-sharing premiums than traditional Medicare programs.

This represents an opportunity for hospice and palliative care providers to expand services and gain insights from its current VBID marketplace.

“There’s such a need on the island in terms of providing health care services across all levels of post-acute,” said Anthony Spero, president and CEO of Ascend Health. “We identified Puerto Rico as an opportunity for us to be able to bring hospice and palliative care to the island. There isn’t that distribution of hospice and palliative care services across the continuum in Puerto Rico. The more support we can provide, it makes such an impact for the folks that live there.”

Ascend Hospice, a subsidiary of New Jersey-based Ascend Health, entered the Puerto Rico market last year through the acquisition of Grace Hospice, which has operations across the island. Ascend Health operates in California, Kansas, Massachusetts, Missouri, New Jersey, Pennsylvania and Virginia. Grace Health of Puerto Rico, the acquisition marked Ascend Health’s first step into the country’s hospice market.

“We are dealing with a low-income community, so that brings a lot of different social issues that we have to face,” said Ana Beatriz Torres, executive director of Grace Health of Puerto Rico. “The cost reductions for Medicare Advantage is a perfect combination because then you have a better quality of life for that patient, better quality for their family and for the caregivers.”

Navigating potential risks will be a balancing act for revenue cycle management as hospices enter the value-based care payment arena. Moving forward with participation in VBID models will involve potentially unpredictable shifts in reimbursement as hospices abide by new billing and claim practices. Hospices will need to look for ways to maximize current services to offset possible dips/hits to bottom lines.

Hospices planning to participate in value-based payment demonstrations may need to reshape care models and build up staffing support, according to León.

“The amount of payment that the Puerto Rico hospice receives is maybe between 30% to 40% lower than what any hospice in the United States receives,” León told Hospice News. “Hospices need to identify how they can change their model from being a per-patient basis to a per-volume basis. You need to identify today how much you can grow with the current platform that you have.” 

Companies featured in this article:

, , , , , ,