Education for Health Plans a Key to Success in MA Hospice Carve-In

The learning curve for carving hospice into Medicare Advantage through the value-based insurance design model is a two-way street. While providers have had to learn how to work within a managed care environment and negotiate contracts with private payers, many Medicare Advantage health plans have a lot to learn about hospices.

For the past couple of years, hospice providers have braced for change in anticipation of the Center for Medicare & Medicaid Innovation’s value-based insurance design (VBID) demonstration, commonly called the Medicare Advantage hospice carve-in. The program represents an integrated care model that promotes coordination of services and provides incentives for quality and patient satisfaction.

Half a year into the program, hospice providers have discovered a need to educate the health plans about the nature and value proposition of their businesses. The entrance of hospice into the value-based care arena has payers puzzling their way through the new benefit, according to Erik Johnson, senior vice president of Optum Advisory Services, speaking at the Hospice News Value-Based Care Summit.

“For payers, this is all new for them. They’re not really sure what to expect or how to manage a hospice benefit or hospice network,” Johnson told Hospice News during the summit. “Like any new benefit, it’s a hard one for actuaries to price, because in the fee-for-service world it’s a benefit that isn’t used in a timely way, so the historical data that actuaries have played with aren’t a particularly good indicator of what might be able to be derived from a managed hospice benefit. There is a lot of interest in seeing how this plays out from a demonstration perspective.”

Through Medicare Advantage, the U.S. Centers for Medicare & Medicaid Services (CMS) contracts with private insurers to cover the agency’s beneficiaries. Prior to Jan. 1, hospice was excluded from the program. In the first year of VBID, a total of 53 health plans are offering hospice. These Medicare Advantage plans cover 8% of the market, according to CMS.

The program is expected to grow going forward. Additional health plans are ready to sign on for 2022, and VBID will likely be available in at least eight new states next year. This includes the sizable California and Florida markets.

To date, the carve-in has not led to substantial industry change, but the potential for transformation for better or worse remains, according to Tarrah Lowry, CEO of Sangre de Cristo Community Care, who also spoke at the summit.

Among the potential opportunities is growth in palliative care. The VBID program requires participating hospices to offer palliative care upstream. Part of the impetus for this is to help ensure seamless transitions into hospice when the time comes, as well as reducing hospitalizations, emergency department visits and other high-acuity care.

About 50% of community-based palliative care providers in the United States are hospices, according to the Center to Advance Palliative Care.

CMS in 2020 began allowing Medicare Advantage plans to cover palliative care as a supplemental benefit. Recent analysis by the consulting firm ATI Advisory indicated that the number of Medicare Advantage plans offering home-based palliative care coverage jumped to 134 in 2021, up from 61 last year. Other supplemental coverage such as in-home support services, food services and social needs benefits also saw a substantial rise.

“There’s lots of innovative things that can come from Medicare Advantage companies and partnerships with them,” said Lowry. “They need to see us as more than just end-of-life-care; they need to see us as part of that care continuum as we move up through palliative care, and that’s really what I hope comes from this.”

Sangre de Cristo Community Care participates in VBID through a contract with Humana (NYSE: HUM) as part of the insurance giant’s preferred provider network.

Among the nine insurance companies that will participate in the Medicare Advantage carve-in during the program’s first year, Humana operates the most plans that will offer hospice. Humana’s MA plans began offering hospice in five markets: Atlanta, Cleveland, Denver, the Louisville, Ky., metro area (including southern Indiana), and the Richmond-Tidewater region of Virginia.

Humana in April announced plans to acquire the remaining 60% stake in Kindred at Home for $8.1 billion. This includes Humana’s existing equity value of $2.4 billion from its existing 40% ownership of the business. Humana acquired the 40% stake in 2018, with private equity firms Welsh, Carson, Anderson & Stowe and TPG Capital holding the remaining 60%.

Humana intends to spin off and sell Kindred at Home’s hospice segment following the transaction’s closing, while maintaining the home health asset. The company’s hospice strategy is focused on partnerships through its preferred provider network, such as its contract with Sangre de Cristo.

“Humana wanted palliative care really to fill that gap between the patients and the hospice providers, and what we hope to see from that is maybe longer the length of stay,” Lowry said. “This moves us a little bit forward in the care continuum, which is something that hospice has always been saying we wanted. We may see more patients who are receiving aggressive treatment, because [through Medicare Advantage] they get that 30 days of aggressive care after they sign up for hospice.”

Despite the potential, some of the anticipated benefits have yet to materialize during the first seven months of the demonstration. According to Lowry, very little has changed in terms of how Sangre de Cristo receives referrals or in patients’ length of stay. Transitions of care into hospice have not been significantly affected to date, nor has the company seen a rise in patient volume as a result of VBID.

The demonstration is still in its early days and some of those expectations may yet come to pass, but providers also have cause for concern, according to Lowry. This is largely because the rules will change as the program progresses.

During the first year of VBID, CMS requires Medicare Advantage plans to pay providers comparable rates to what they receive through the traditional Medicare Hospice Benefit, but reductions could occur in subsequent years. Also, MA plans are currently hunting for hospices to work with in 2021 and 2022, but they can limit the number of providers in their networks in 2022. Plans have the option to close their networks entirely and stop bringing new preferred providers on board starting in 2023. Hospices seeking to get involved with the expanding program should consider establishing contracts with health plans sooner rather than later.

As the demonstration approaches its second year, more hospice providers and payers are anticipated to step into value-based care, according to Johnson. Hospices can demonstrate their value proposition to Medicare Advantage payers through data reflecting quality of care, patient and family satisfaction and reductions in hospital admissions and readmissions, as well as emergency department visits.

“The most obvious hydraulic to start a growth engine is for some early successes to be well-publicized. MA plans are hyper-competitive and are now looking at each other to see whether they’re having success with these models,” said Johnson. “They’re also looking to see whether they can attract new beneficiaries to a new benefit design. Hospice could help with word-of-mouth in some local markets to drive that. The degree that they start to see some real success stories, that’s when we will start to see accelerating growth — in the second and third year.”