The First Year of Hospice VBID Is the Hardest for Payers and Providers

Implementation of the Medicare Advantage hospice carve-in has been challenging for both payers and providers, though a recent analysis indicates that it may get easier over time.

The U.S Centers for Medicare & Medicaid Services (CMS) commissioned the RAND Corp. to conduct the analysis of the program, formally called the hospice component of the value-based insurance design model (VBID). CMS launched the carve-in in 2021. The RAND analysis released this week covers the calendar year 2022.

The results suggest that the first year of participation is the hardest for both payers and providers.


“Hospices and new insurers reported substantial implementation challenges, but insurers with more than one year of experience with VBID reported fewer challenges, suggesting that implementation is becoming easier over time,” CMS indicated in a fact sheet.

In 2022, 13 insurance companies offered hospice VBID benefits through a total of 109 health plans. For more than half of these plans, 2022 was their first year of participation. The payer participants tended to be large national organizations with higher average plan enrollment, according to CMS. 

Payer companies reported greater challenges in 2022 than those who participated in 2021, according to the RAND report.


Among the top roadblockss for payers was the need to build out a network of hospice providers and development of payment contracts with those agencies. Another difficulty was the retooling of some administrative processes, including claims processing.

Hospice participants likewise encountered challenges when it came to claims processes as well as plans’ adjudication of denied claims, which they found to be time consuming and resource intensive. They also indicated that their payments from MA plans were often delayed, which put constraints on their cash flow.

However, hospices also reported that things became easier in their second year of participation compared to their first, CMS indicated.

The program’s 2021 results showed a modest, across-the-board improvement in care quality, but to date these data were not assessed for 2022.

“The hospice benefit component was not associated with changes in hospice enrollment or care patterns in 2021,” RAND said in the report. “However, participation was associated with a small, statistically significant increase in care quality (about 3% in 2021), as assessed by a summary measure of caregiver-reported hospice care experiences based on the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey.”

A common conundrum during 2022 was confusion around which patients were eligible for other services included in the program, including palliative care, transitional concurrent care and hospice supplemental benefits. One contributing factor was that eligibility requirements can differ from plan to plan, CMS reported.

Consequently, though participation in the hospice component rose between 2021 and 2022, uptake of palliative care, transitional concurrent care and hospice supplemental benefits remained low.

Palliative care utilization was lower than insurers expected, according to RAND, and less than 1% of beneficiaries received transitional care. About 6.5% of hospice VBID patients received supplemental benefits associated with the program.

More than 1,100 hospices provided care to at least one VBID beneficiary during 2022. Almost half were providers who were members of insurance company networks, compared to only 37% in 2021, RAND reported.

In-network providers were more likely to be large companies that were part of a national chain. Many participants voiced concerns about Medicare Advantage plans’ tendency to negotiate for lower rates.

“Hospices joined insurers’ networks primarily to maintain long-term business viability, expressing concern that being left out of a network could result in hospice closure,” CMS noted. “While the vast majority of sampled in-network and out-of-network hospices indicated their intent to continue or begin contracting with participating [insurance companies], some hospices expressed reservations about reimbursement rates below that of traditional Medicare Hospice, and some expected that expansion of the model would reduce financial viability of hospices and decrease access to hospice care.”

Companies featured in this article: