Where the Buck Stops, Starts in Hospice Reimbursement and Beyond

Providers and payers alike are strategizing ways to tackle current reimbursement challenges and anticipate hospice payment’s future direction.

The lines between traditional fee-for-service and value-based payment systems will begin to blur as regulators seek to balance rising demand with the associated costs, according to Burke Wise, cofounder of Empassion Health.

Regardless of where value-based payment is heading in the larger Medicare reimbursement landscape, hospices can anticipate some lasting impacts within their payment realm, including the possibility of more upfront financial risks, Wise indicated.


“Within fee-for-service, [the U.S. Centers for Medicare & Medicaid Services (CMS)] has expressed the goal of increasing the number of patients who are under value-based care,” Wise told Hospice News during the ELEVATE conference. “So, increasingly there will be a lot of talk in traditional Medicare … Hospice is part of that risk side of things.”

Value-based opportunities

Hospice reimbursement entered the Medicare Advantage arena with CMS’ introduction of the value-based insurance design (VBID) model demonstration in 2021, often called the hospice carve-in. CMS included a hospice component in the model that allowed providers to step into value-based payment for the first time.

Originally slated to complete next year, CMS expanded the hospice program through 2030.


During the extension years, patients of participating providers will be able to receive some forms of curative treatments alongside hospice care. However, the agency will also permit health plans to further restrict the utilization of out-of-network providers.

Hospice providers are seeing growth opportunities in value-based care while navigating the financial risks carefully, according to Jessica McGlory, CEO of the tech-enabled hospice startup Guaranteed.

“Our focus as we get bigger and bigger and as we take on more value-based opportunities is to really say we’re happy to take on that different risk, because we believe that we’ll be able to evaluate any different patient, family member or staff and come in with technology as it learns over time,” McGlory told Hospice News at ELEVATE. “This is more of a hypothesis that hasn’t been done much in this space. Hopefully [regulators will be] able to see the value [to] build up the best hospice path that is as specific to the patient as possible.”

Jessica McGlory Hospice News / RoboToaster
Jessica McGlory, CEO, Guaranteed. (Hospice News photo.)

Among the forthcoming changes in the hospice carve-in is a requirement that participating health plans offer supplemental benefits to address health-related social needs in at least two of three categories: food, transportation and housing insecurity and/or living environment.

As VBID proceeds, providers should also have their eyes on other value-based payment programs, including the Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) model, according to Wise.

“One is [that] there’s the ACO REACH high-needs program, which is expressly designed for the serious illness population where bespoke provider groups and ACOs are being created that only deal with patients who are going to expire in the next 20 or 36 months,” Wise said. “They have to manage and work with hospices, that’s part of the whole thesis.”

Empassion operates four regional Accountable Care Organizations (ACOs) oriented around home-based care and hospice. Members include AccentCare, Agrace Supportive Care, Compassus, Enhabit Inc. (NASDAQ: EHAB), Pathways, Transitions and Three Oaks Hospice, among many others.

Hospices are increasingly exploring alternative payment models, often for diversified services like palliative care, such as ACO REACH and the Medicare Shared Savings Program (MSSP), according to Wise.

Upstream services such as palliative care, social determinant programs and Programs for All-Inclusive Care of the Elderly (PACE) are part of the forces widening hospice reimbursement channels, he added.

ACOs and payers participating in the MSSP models are increasingly recognizing the value of working with hospice providers when it comes to reducing the total cost of care, Wise stated.

Burke Wise Hospice News / RoboToaster
cofounder, Empassion Health. (Hospice News photo.)

“Also, on the broader, standard ACO REACH side, the MSSP side, those organizations are realizing that their next set of savings opportunities can come from the end of life,” Wise said. “It’s taking them a long time to work through the other opportunities they have along the way. But they’re going to have this conversation in a real way, too, perhaps even faster than in VBID. The payment service in the palliative world is doing this, and they end up with a lot of customers.”

Weighing the risk

As far as the challenges and opportunities in value-based payment, providers and payers aren’t quite seeing eye-to-eye, according to Dr. Payam Parvinchiha, corporate vice president of network quality and innovation at SCAN Health Plan.

Medicare Advantage payers in VBID set reimbursement rates based on many variables such as average length of stay and utilization costs around each level of care.

The ability to demonstrate the value of those metrics and costs can be challenging for hospices with smaller census volumes and margins, Parvinchiha explained. Taking on financial risk is a common concern that many hospices face when entering the value-based payment sphere, he stated.

“I’m still struggling to see how, without volume within VBID, hospices take risk, because risk requires large populations that you can compare the financial risk on sort of the outliers on each end,” Parvinchiha said during the conference. “On the other end, with the small volumes that a lot of [hospices] are dealing with, taking risks is going to require a lot more of a creative approach.”

Larger conversations are needed among payers and providers to learn and understand how risk is “delegated” and defined in hospice care, he added. The hospice carve-in has been among the discussion levers bringing Medicare Advantage organizations greater knowledge of the services involved in the end-of-life care, as well as how they can drive cost savings and quality, according to Parvinchiha.

Dr. Payam Parvinchiha Hospice News / RoboToaster
Dr. Payam Parvinchiha, corporate vice president of network quality and innovation at SCAN Health Plan. (Hospice News photo.)

VBID has been “sort of the tool” to create a vision of what value-based payment could look like in hospice, he said.

“I think what will be an interesting conversation is, do the payers think, ‘Okay, we can delegate risk here now to the hospice in VBID.’ That’s not going to work,” Parvinchiha told Hospice News. “There’s some decent angst around the experience [of participating in VBID]. On [the payer] side, it’s because it’s been difficult to replicate the existing payment structure from CMS. The ability to really look at how you all are getting paid and turn it into a more simple, more efficient and more value-driving where you can know what the revenue stream is, and then plan accordingly for care delivery, for coordination of patients.”

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