Hospice Providers See Strong Opportunities in High-Needs Direct Contracting

A rising number of hospice and palliative care providers are turning their eyes towards the Center for Medicare & Medicaid Innovation’s high-needs direct contracting payment option, which is designed for coverage of patients with multiple serious or chronic conditions. Since becoming operational April 1, hospices have increasingly adapted their services and programs to fall under the newly available direct contracting models.

Hospices nationwide have been diversifying their services in recent years to capitalize on value-based payment models and to establish relationships with patients further upstream in the course of their illnesses. An increasing number of hospice providers are offering PACE, home-based primary care and palliative care, among others. These programs will be essential for those considering direct contracting.

Providers are gearing up to take complete responsibility for a patient’s care, potentially far before they near the last six months of life, while also assuming 100% of the financial risk.


“The voluntary alignment is so important, and it’s distinguishing characteristic of this model,” said Jill Schwartz-Chevlin, senior medical officer and national leader of palliative care for California-based Landmark Health, speaking at the recent Hospice News Value-Based Care Summit. “To be attributed to the high needs track, a hospice’s beneficiaries must have a serious illness defined with a [hierarchical condition category (HCC)] risk score of three or greater, have a more moderate risk score with two or more unplanned admissions in the previous 12 months, or show signs of frailty.”

Direct contracting, which was unveiled in conjunction with CMS’ Primary Care First initiative, includes three payment model options that are designed to help the agency and health care providers reduce the cost of care and improve quality. The models incorporate lessons learned from other programs such as Accountable Care Organizations, the Medicare Shared Savings Program and Medicare Advantage.

CMS recently announced that the direct contracting program is under review, and the agency is not currently accepting applications for the demonstration’s second year. This means that the remaining option for hospice and palliative care providers to reap the benefits of these models would be to partner with an existing direct contracting entity.


The high-needs track is supported by an HCC risk adjustment methodology that weighs acute conditions more heavily. This is intended to better capture rapid deterioration of health throughout a patient’s illness trajectory, signaling opportunities to quickly respond to patients’ needs, reduce costs and improve quality.

Landmark Health provides services in 18 states nationwide, including areas where hospice utilization runs high among Medicare decedents such as Rhode Island and Michigan where rates in 2018 were at 57.5% and 53.8%, respectively, according to the National Hospice & Palliative Care Organization.

The minimum number of aligned beneficiaries for participation in the high-needs option begins at 250 in the program’s first year and rises to 1,400 by the last year of the model in 2026 in comparison to a minimum number of 5,000 for the standard track, according to Schwartz-Chevlin.

The gradually increasing minimum number of beneficiaries may allow hospices to test the waters of the high-needs direct contracting track, starting off small in terms of patient reach with room to grow during the five-year period.

As with the other direct contracting models, the high needs option opens doors to the plurality of the beneficiaries, including those in need of primary care services. Hospice providers must be equipped to step into a primary, coordinated care role in order to make direct contracting work.

Working within the high-needs payment track allows those hospices to pool their resources and develop an infrastructure to support the provision of primary care services, according to Robin Jensen, chief operating officer of Cyft. The Massachusetts-based firm offers advanced analytics software and programming for senior care providers and specializes in value-based contracting services.

That infrastructure must include a system to collect robust data about performance, quality and patient outcomes.

“[With] this idea of providing primary care services, you need to understand the beneficiary risk pool,” Jensen told Hospice News during the summit. “You need to understand the need for data around the total cost of care and focus on the operational workflows to facilitate optimizing HCC coding. Leverage your expertise in advance care planning, goals of care and other issues of patient-centered care. Then focus on those quality measures that have helped to improve outcomes for your patients.”

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