Building Payer Relationships Key to Financially Sustainable Palliative Care

Building and sustaining a financially viable palliative care program will largely depend on a hospice’s ability to demonstrate quality of care and negotiate with payers for reimbursement for these services, according to Anne Tumlinson, CEO of the consulting firm ATI Advisory at the Hospice News Palliative Care Summit.

Demand for palliative care has skyrocketed in recent years. Last year more than 70% of hospitals in the United States with 50 or more beds had a palliative care program, up from 67% in 2015 and 7% in 2001, according to Center to Advance Palliative Care (CAPC), which reported that these institutions cared for 87% of all hospitalized patients nationwide in 2020 and at least half of the in-home palliative care providers in the United States were hospices that same year.

Value-based care initiatives have expanded the number of payment mechanisms available to palliative care providers beginning this year. Many providers are seeing their best opportunities within Medicare Advantage, including supplemental benefits programs and the value-based insurance design model (VBID) demonstration, or Medicare Advantage hospice carve-in. Only 53 Medicare Advantage health plans are participating in VBID during 2021, but that number is expected to grow in subsequent years.


“We will see more plans come into VBID, so keep an eye out. There’s a lot to learn about that model and in places where you can add value, but there are also some tripwires that you have to just be very aware of,” Tumlinson told Hospice News.

Value-based care models tie payments to the quality of care and provide incentives for health care providers for creating efficiencies and cost savings. 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.

Value-based care represents both opportunity for providers who get the math right and risks for those who get it wrong, Tumlinson told Hospice News. Providers evaluating which health plans they should work with need to be mindful of the payer’s ability to help them build their patient population and engage patients further upstream of the end of life.


“For the performance-based payments [the payers] might offer you to center on quality, I would be very wary of any risk-based payments in this environment, because they’re really tricky to construct,” said Tumlinson. “You have to do the math. Do I believe that this plan can generate enough volume for me, and will be effective in generating volume driven to it? This means getting to people sooner or getting them to elect hospice to get the volume-to-need that will make those tradeoffs worth it.”

Months into the carve-in, hospices are seeing rising patient volumes while expanding service offerings and adapting to new billing processes. Despite a growing demand, hospices have struggled to navigate uncertain payment waters without a clearly-defined palliative care benefit of reimbursement of these services. Through VBID, CMS aims to create a reimbursement structure in which Medicare beneficiaries who have a serious illness receive a coordinated set of benefits including palliative care. Among the Medicare Advantage plans, CMS is seeking that can offer personalized experience, Tumlinson told Hospice News.

Absent a dedicated Medicare benefit for palliative care, hospice providers will need to negotiate rates and coverage with private payers and health plans. The ability to demonstrate quality care and cost-savings will be key for palliative care programs to sink or swim as hospices seek to build payer relationships in value-based care, according to Tumlinson.

In addition to working within VBID, Medicare Advantage plans have the option to offer palliative care as a supplemental benefit. According to an analysis by ATI Advisory, 61 health plans nationwide are offering in-home palliative care as a benefit. This is up from 29 in 2019. More than 455,000 beneficiaries are enrolled in these plans.

Congress in 2018 passed the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act (CHRONIC), which expanded the range of supplemental benefits within Medicare Advantage to include programs to address social determinants of health as well as home-based palliative care.

“Tactically, there are a number of different ways to engage with these plans, and it varies by plan,” said Tumlinson. “The Medicare Advantage plans can do deals with their in-network providers. They can build a network of hospice providers and essentially craft a deal, and those deals are going to involve three things: meeting quality measures; accepting reduced rates; and the hospice provider offering some level of concurrent care, supplemental benefits or transitional care.”

Payers are looking for hospices that can demonstrate value. They want to see robust data when it comes to quality metrics and are particularly interested in a provider’s track record with reducing hospitalizations, skilled nursing facility utilization, emergency department visits and readmissions.

Being able to demonstrate that you’re able to deliver palliative care in a predictable way is important to attracting and retaining payer interest from a cost perspective, according to Tumlinson. This includes achieving consistent results on quality, reducing high acuity care.

“What they really love is working with providers who can operate under a per capita cap, who are willing to put some skin in the game around performance, who have a point of view on who the right target is for the intervention,” Tumlinson said.

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