New Research Proposes ‘Sustainable’ Palliative Care Payment Model

A group of researchers have modified a proposed reimbursement system for palliative care that they say would improve access for patients and make the service more lucrative for providers.

The American Academy of Hospice and Palliative Medicine (AAHPM) in 2017 proposed that the U.S. Department of Health & Human Services’ (HHS) consider the Patient and Caregiver Support for Serious Illness (PACSSI) model.

At the time, HHS suggested that the PACSSI had “the potential to deliver high-value care,” but the payments could be either overly generous or possibly decline over time.

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CMS actuaries suggested that the model may pay out more for shared savings early on, but less later, according to Bruce Steinwald, a consultant with an HHS Physician-Focused Payment Model Technical Advisory Committee (PTAC).

Now, researchers have developed a new version designed to meet the same objectives while addressing the agency’s concerns, dubbed PACSSI-Flexible (PACSSI-F).

PACSSI would offer a capitated per-member, per-month (PMPM) payment for palliative care services. The amount would be based on a six-month eligibility period in which patients are divided into two-tiers.

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Patients in Tier 1 would be deemed “moderately complex” and reimbursed at a monthly rate of $450. Tier 2 patients would be considered “high complexity” and come with a $600 monthly reimbursement.

In response to the questions raised by HHS, PACSSI-F was designed to match reimbursement for patients who moved between the two levels during the eligibility period. In this model, payers are allowed to drop reimbursement from Tier 2 rates to Tier 1 rates when a patient’s functional status improves.

This “tier reclassification” would generate savings of about 28.6% (or $69.92 PMPM), according to a recent study published in the American Journal of Managed Care (AJMC). Payers stand to see an annual cost reduction of $259,805 for patients aligned with this model, study findings estimated.

“PACSSI and PACSSI-F are a substantial and necessary improvement for palliative care reimbursement when considering the need for individualized care for patients with serious illness,” researchers wrote. “Under the alternative reimbursement structure, palliative care services will be reimbursed appropriately to provide the necessary physical, psychological, social, spiritual and cultural care for patients and their family contending with a serious illness.”

Researchers applied the alternative payment models to a sample size of 234 seriously ill patients in a nationwide study that compared estimated reimbursement for a provider’s first year of participation.

“We believe that PACSSI-F may be more acceptable to payers while providing improved reimbursement for sustainable palliative care structures and services,” the AJMC study’s researchers wrote. “Key to this discussion is the importance of the support that the seriously ill and their families will obtain from a specialized, trained interdisciplinary palliative care team at an estimated overall annual cost range of $6,500.”

These alternative reimbursement structures may provide palliative care programs with an opportunity to be financially sustainable while encouraging expansion in ambulatory, acute and post-acute care settings — including hospice, the study indicated.

As demand for palliative care rises, providers continue to seek a sustainable reimbursement structure that supports the full range of interdisciplinary care. Development of such a model has been a priority for the hospice community for several years. This includes numerous calls for dedicated community-based palliative care benefit within Medicare.

Currently Medicare reimburses for palliative care physician and licensed independent practitioner services through fee-for-service payment programs that do not adequately cover the full range of interdisciplinary care. Additionally, the U.S. Centers for Medicare & Medicaid Services (CMS) allows Medicare Advantage plans to cover palliative care as a supplemental benefit.

Fee-for-service reimburses for only 20% to 60% of a palliative care program’s actual operating expenses, said the AJMC researchers.

“AAHPM developed PACSSI to overcome barriers and create an accountable payment system to deliver community-based palliative care to high-need patients who are not yet eligible or ready to elect hospice care,” said Dr. Phil Rodgers, an associate professor and co-director of the clinical palliative care program at the University of Michigan.

Rodgers provided this commentary in support of the model at a public HHS meeting in 2018.

At the time, HHS suggested that PACSSI’s provision of care management payments to interdisciplinary palliative care teams had “the potential to deliver high-value care.” But concerns were raised about the cost structure’s sustainability.

HHS has described it as “overly generous” according to researchers.

Under PACSSI-F, payers stand to see a cost reduction of $259,805 annually for covered patients, study findings estimated.

This could create an opportunity to help allocate reimbursement resources to patients in greatest need, researchers stated.

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