U.S. health care is moving steadily towards value-based reimbursement, and having a robust palliative care program can help hospices ensure they are not left behind.

The U.S. Centers for Medicare & Medicaid Services (CMS) is working to ensure that 100% of Medicare beneficiaries are aligned with a risk-based payment model by 2030. This can include Medicare Advantage (MA) and Accountable Care Organization (ACO) programs.

With hospice reimbursement confined to the traditional Medicare benefit, a palliative care program is a likely entry point for those providers to access value-based reimbursement, Sue Lynn Schramm, a partner of the hospice and palliative care consulting company Confidis LLC, said in a presentation at the National Hospice and Palliative Care Organization Annual Leadership Conference.

This may be even more the case now that the hospice component of the value-based insurance design model (VBID), often called the Medicare Advantage Hospice Carve-In, is ending on Dec. 31, Schramm said.

“Now that the carve-in is not happening as we expected, [hospices] have a greater risk of being shut out from upstream care management,” Schramm said during the presentation. “It’s going to be harder for us as hospice providers to be relevant and to get attention from those contracting partners. But it doesn’t mean you can’t do it, and community-based palliative care could really be your ticket to remaining relevant.”

Hospices provide about 50% of palliative care in the United States, according to the Center to Advance Palliative Care. These are typically services provided in the home, though some operate palliative care clinics as well.

Palliative care made its first strides into the value-based care arena in 2020 when CMS allowed MA plans to start covering it as a supplemental benefit.

The following year, CMS launched hospice VBID, intended to test the inclusion of hospice within Medicare Advantage. The Center for Medicare & Medicaid Innovation included elements of palliative care in the program’s design.

These models, along with a few Accountable Care Organization arrangements, are the only reimbursement systems to date with the potential to support a full interdisciplinary approach for palliative care reimbursement. The CMS fee-for-service model only covers physician and licensed independent practitioner services.

Palliative care providers now also have the option of pursuing contracts through the new ACO Realizing Equity, Access, and Community Health (REACH) model, particularly the high-needs track.

“Palliative care is something that there’s going to be a stronger and stronger incentive towards having contractual relationships, very much something that should be on your strategic planning radar screen …” Schramm said. “CMS still has some really intense goals to go ahead and increase continuity of care, to reduce health care costs and to push the risk for the cost of care to other entities outside of Medicare. … Medicare Advantage plans and Accountable Care Organizations have a strong incentive to reduce the costs of care.”

Risk-based contracts are structured around estimates of the expected costs necessary to address patients’ health care needs. This typically involves capitation, bundled payments and shared-savings arrangements.

The provider could receive a percentage of any savings, called upside risk, or losses, known as downside risk. In downside risk, the provider may be required to cover the difference if actual costs of care exceed what was budgeted.

This emphasis on controlling costs is driving payer interest in palliative care due to those services track record on reducing hospitalizations and emergency department visits, as well as other forms of high-acuity care.

Expanded access to palliative care could reduce societal health care costs by roughly $103 billion during the next 20 years, according to researchers from Florida TaxWatch. Palliative care could drop health care costs by more than $4,000 per patient, according to a July 2017 study in Health Affairs.

“The movement towards risk for accountable care organizations, in fact, means more opportunity for hospice and palliative care providers,” Schramm said. “Palliative care — it’s been demonstrated numerous times — can help reduce total cost of care for accountable care organizations. Palliative care can reduce hospital readmissions, keep patients out of expensive hospital settings. You’re talking about a way that you can really help manage chronically ill patients in their communities, in many cases, long before they approach death.”