Recognition of palliative care’s value has been steadily gaining among stakeholders in the form of improved patient outcomes and cost savings through reduced hospitalizations.
But despite the upswing in profile, insurance coverage and payment for palliative services remain difficult to come by. Traditional Medicare only covers physician consults and doesn’t support the full range of interdisciplinary care.
Two emerging pathways to payment include supplemental benefits within Medicare Advantage and relationships with Accountable Care Organizations (ACOs).
Partnering with ACOs can give palliative providers an opportunity to be paid properly for the full scope of what they do, according to Sue Lyn Schramm, founder and principal of Schramm Consulting, LLC.
“The reimbursement through Medicare’s fee-for-service program is terrible. A number of my clients tell me that they get reimbursed for approximately 60% of their actual costs of providing the care,” Schramm told Palliative Care News. “But I think that if you’re contracting with an ACO that’s under one of these arrangements with Medicare, you do have the opportunity to actually get paid for the care management you’re providing. It does create that alignment of incentives in a way that I think is very positive for the palliative provider.”
ACOs are groups of doctors, hospitals and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients. On Jan. 1, 2023, Medicare launched a new type of ACO program called ACO Realizing Equity, Access and Community Health (ACO REACH), which is gaining a lot of interest.
Patients aligned within ACO REACH have access to help them navigate the health system and manage their conditions. They may have greater access to enhanced benefits, such as telehealth visits, home care after leaving the hospital and help with copays, according to the U.S. Centers for Medicare & Medicaid Services (CMS).
ACO partnerships benefit both sides
Health care providers and ACOs can collaborate to better manage goal-concordant care to support patients’ overall health, as well as manage the associated costs.
Often, they can give providers access to some data they may not otherwise have, such as details about a region’s patient population and prevalent health conditions.
They can offer flexibility by allowing the two parties to customize their agreements to the needs of their patient population. ACO partnerships can also promote more effective communication with patients’ primary care providers.
ACO partnerships can boost value-based care rewards for providers and payers, Dr. Tom Cornwell, national medical director of Village Medical at Home in Chicago, indicated.
“With value-based care you really want to give the patient the best care, even if you’re not paid much fee-for-service for it, as long as it creates great outcomes,” Cornwell told Palliative Care News. “Under a fee-for-service structure, [palliative care providers] are not rewarded. But if they can join with an ACO who does get rewarded for better care and lower outcomes, and they can have a shared savings agreement, they can get rewarded for the better outcomes they create.”
Partnering with palliative care providers offers ACOs advantages as well, including significant cost savings, according Schramm.
She pointed to a 2016 study in the Journal of Palliative Medicine that showed organizations could save as much as $10,000 a month at the end of life for patients who were getting in-home palliative care.
“Palliative care, if it’s provided to the right population, can really cut costs in a very measurable way,” Schramm added.
Cornwell added that palliative care programs can help an ACO by showing Medicare how sick patients really are.
“In value-based care, you’re given a certain amount of money to care for patients. The sicker the patients, the more you’re reimbursed by Medicare and the more money you’re given upfront to take care of them. So, the main thing we can do is show Medicare how sick our patients are,” he said. “We get adequate dollars just by doing that. The palliative care program will more than pay for their services by just making sure that the ACO gets the appropriate revenue for these sick patients.”
For those providers looking for an ACO partnership, both Schramm and Cornwell stressed the importance of demonstrating the quality of their care.
Schramm said all providers need to be thinking about excellent quality ratings, not only for ACO contracts, but also for Medicare HMOs and Medicare Advantage plans. Hospice organizations should have four or five stars and palliative care providers must have good survey results and patient outcomes.
Having a sophisticated electronic medical record to provide quality reporting of data and statistics that a partner asks for, according to Schramm.
“I think you’ve got to be able to demonstrate your efficiency and your low cost. One of the key ways to do that is [reducing] rehospitalizations. Are you successful in keeping patients from going back into the ER? From going in for hospital admissions?” Schramm said. “And then I think one of the other keys is being able to match your geographic coverage to your contracting partner. Can you provide care everywhere that they have covered lives or they have the lives assigned? I think this is going to really encourage some of the best palliative providers to expand quickly so that they can do a better job of meeting that need for geographic coverage.”
Another key: Providers should capture hierarchical condition category (HCC) scores, which are sets of medical codes linked to specific clinical diagnoses, Cornwell said.
HCCs are used by CMS as part of a risk-adjustment model that identifies individuals with serious acute or chronic conditions. They allow Medicare to project the expected risk and future annual cost of care.
“Have high patient satisfaction and then do whatever you can to show reduced hospitalizations and emergency room visits,” Cornwell added. “Show quality palliative or end-of-life care that reduced hospitalization in the last 90 days or reduced ICU use in the last 30 days. Show increased deaths at home, as well as increased hospice use, that demonstrates that your patients are getting loving care and receiving a peaceful death in the manner that they desire.”
Navigating contracts and risk
ACO partnerships also come with risks.
Schramm told Palliative Care News that providers should understand the risk structure of any ACOs they work with.
“There’s a range of levels of risk that these ACOs in the ACO REACH program may be taking on,” Schramm said. “They might have 50% cost risk in the lower tier. They might have 100% of the cost risk if they’re in the globally capitated professional side of it.”
“The amount of cost risk that the ACO is taking on can range tremendously,” she continued. “It always sounds like a great idea to push that risk to the providers, because that’s where the care happens. That’s where the decisions are made that influence the cost.”
The actual contracts can be complex.
For starters, they are still quite green under the new ACO REACH program, which launched at the start of the year.
Providers must also be aware that there are regulations for certain types of ACO REACH contracts that impose limitations. For example, a CMS directive requires that skilled nursing facilities need to be three stars or greater in order to contract with an ACO.
Schramm said she’s seeing a number of different contracts develop from the ACO REACH rollout. Some involve full capitation with a per patient, per month rate, while others are fee-for-service.
Hybrid models have also been introduced, in which post-acute providers receive a portion of their reimbursement on a fee-for-service basis, as well as additional payments determined by performance.
“Medicare HMOs have a demonstration project right now to include things like hospice and palliative in their service offerings. Up until two years ago, that was always carved out. If you wanted your hospice benefit, you had to go back to fee-for-service, even if you were a Medicare HMO enrollee. Now they’ve got the opportunity to include that,” Schramm said. “I think Humana is writing a lot of contracts with providers for palliative care in particular. The incentives are the same for these Medicare HMOs as they are for the ACOs. It’s to control costs for your most expensive patients and those are often at the end of life.”
Despite the ever-evolving structures of ACO partnerships and the risks that come with them, Schramm said she’s optimistic that these collaborations will work better than they did 30 years ago. For one, the organizations signing the contracts have much better access to claims-related data and patient-specific information to help them anticipate costs.
Providers must develop a more sophisticated understanding of issues like reinsurance, out-of-area coverage, and other arcane elements, according to Schramm.
“I think that in theory and on paper, this payment mechanism still makes a ton of sense. It’s always the devil in the details though, that can get you,” she said. “If you’re either an ACO that’s taking on these risk-based contracts or you’re a palliative provider that’s being asked to take on risk, make sure you do your homework. Please go back and take a look at some of these cases from the late 90s. Take a look at some financial guidance. Read the fine print really carefully to make sure that you’re going into this with your eyes open.”