Hospices Building Value-Based Avenues to Palliative Care

Value-based payment models are among the factors spurring rising interest in palliative care among hospices. These models present new avenues towards palliative care reimbursement, along with risks. As the payment landscape evolves, understanding payer priorities will be key for hospices weighing the risks and opportunities in palliative care.

Hospices have increasingly recognized value-based models as a way to foster palliative care integration. Roughly 72% of hospice leaders who responded to a Hospice News and Axxess survey indicated that emergence of value-based payment models influenced their decisions to provide palliative care.

Additionally, upwards of 60% reported rising interest among patients in hospice and palliative care services. More than 60% of respondents cited the pandemic as a factor driving up demand for this type of care, but demand building since long before COVID. Hospices represent a bulk of an estimated 50% of community-based palliative care providers nationwide, according to the Center to Advance Palliative Care.

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Value-based models can allow hospices to fill gaps in care and reach a broader base of patients in need through palliative care services, according to David Cook, CEO of Hosparus Health, which offers palliative care services in Kentucky and Indiana through its subsidiary Pallitus Health Partners.

“We see so many people facing serious illnesses that don’t fit the hospice bucket,” Cook told Hospice News. “They’re either not medically eligible, or they might not be ready for hospice services. Those people live in our community and they need support. When you think about value-based care, that changes the script. For most programs, that’s a compelling reason to consider palliative care services.”

Palliative care physician and licensed independent practitioner services are currently reimbursed through fee-for-service Medicare payment programs that often do not sufficiently cover the full range of interdisciplinary care.

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Fee-for-service reimbursement is not “a break-even opportunity,” according to Cook, who stated that it can be “very difficult to serve patients and families in their home with palliative care and get enough volume to cover the services that are provided.”

Models newly open to hospice include the direct contracting program and the value-based insurance design (VBID) model, often called the Medicare Advantage hospice carve-in. The carve-in took effect this year, with hospices leveraging palliative care to meet the program’s participation requirements. Direct contracting programs allow hospices to receive reimbursement for primary care services or partner with physician practices, offering palliative care to their patients. Payment in direct contracting is typically done on a per-patient, per-month basis.

Medicare Advantage is “wide open” to hospice when it comes to potential reimbursement of palliative care services, according to Cook. Medicare Advantage plans typically negotiate for payment rates that are lower than the per diems hospices receive through the traditional Medicare Hospice Benefit.

Providers and payers have thus far had varying perspectives of where hospices can fit palliative care into the mold of value-based payment arrangements. Some providers are seeing gaps between how the hospice carve-in is designed and how it is performing. Some have said that they are not seeing the results they expected in the VBID demo when it comes to palliative care. The model requires MA plans to cover palliative care as a supplemental benefit, though many of the payers have not been contracting with the hospices in their preferred provider networks.

Meanwhile, payers such as Humana (NYSE: HUM) are encouraged by the demonstration’s progress thus far. Kirk Allen, senior vice president of Human’s hospice segment, recently indicated to Hospice News that a great deal of opportunity exists in evolving hospice provider and payer relationships within VBID.

Hospices will need to work in concert with payers and other care providers further to move care further upstream, according to Tiffany Hughes, nurse practitioner and chief operating officer at PalliCare. Launched last year, the community-based palliative care company provides services across the northeast region of Texas.

“As far as the payment model, when you start talking about [palliative care] within value-based care, it’s important that hospices have an understanding that it’s bigger than just payment,” said Hughes. “My advice to hospices is that you’ve got to invest in that piece and in making it something that shows value. As a side thought, it’s not going to work. It’s also important to not be scared and not look at the past with how things used to be because they’re changing. Looking at the big payment system of how to save money in general, the more people you get to the table to talk about that, the better and the more we can all do together.”

Hospices should ensure that they know the financial risks of value-based palliative care. Knowing what the key indicators of success are in value-based care prior to embarking on palliative care service lines, such as quality measures and varying payment designs, will be crucial to coming to negotiating tables with value, according to Cook. Patient outcomes that payers are trying to achieve can sometimes vary from program to program, Cook stated.

“Palliative care services that might be included or bundled into value-based payment models can be completely different from one another, and aren’t always at the full discretion of the provider,” said Cook. “The payer may be mandating certain things that they want to see in that model and providers need to understand how to make sure that they’re putting together a program that manages that. There’s some pitfalls in palliative care that you need to watch out for and you need to understand how best to position yourself to talk with payers and negotiate payment in value-based settings.”

Payment negotiations often come down to a provider’s ability to demonstrate the value of their services. This tends to involve some education, as some payers have little experience working with hospice or palliative care providers. Negotiating key measures often involves whether a provider offers a better quality of care, and reducing spending and utilization of high acuity care.

Though palliative care is building steam in value-based care for hospices, this is just a drop in the bucket of what hospices have to offer further upstream in an evolving payment landscape, according to PalliCare CEO Jonathan Fluhart.

“Being reactive doesn’t do any good, you’ve got to be proactive and get out ahead of this if you’re going to stave off that cost that they’re trying to avoid,” said Fluhart. “What we’re doing within health care systems increases that value, because whether they’re part of an [accountable care organization (ACO)] or they’re a [direct contracting entity (DCE)], they’re being held to [different] risk factors in these value-based circumstances. There’s a big gap right for hospices to be a part of a value-based solution. Having that per patient, per month per diem, that’s a drop in the bucket compared to what the money that they’re saving by using us in that capacity.”

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