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MedPAC Approves Recommendation To Revise Medicare Reimbursement System

Ruzanna Harutyunyan's picture

The Medicare Payment Advisory Commission on Friday approved a set of recommendations that would revise the current Medicare payment system, which was implemented in 1983, for hospice care providers serving terminally ill patients, CQ HealthBeat reports. The recommendations will be included in a report to be issued in March to Congress and take effect in 2013.

According to CQ HealthBeat, MedPAC has been concerned that for-profit businesses have been driving growth in Medicare spending by targeting hospice patients who need relatively long periods of care. The new payment system intends to remove incentives for long hospice stays.

The official language of the recommendations states, "Congress shall direct the secretary (of HHS) to change the current Medicare payment system for hospice to include: relatively higher payments per day at the beginning of the episode, and relatively lower payments per day as the length of the episode increases; include a payment for the higher costs associated with patient death at the end of the episode; [and] implement the payment system changes in 2013, with a brief transitional period." The recommendation also states that "these payment system changes should be implemented in a budget-neutral manner in the first year."

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Under the current payment system, hospice care was designed to be delivered mainly by not-for-profit groups with affiliations to religious and community groups, but a June 2008 MedPAC report found that since 2000 mostly for-profit companies and hospices have been providing such care. The report also found that hospices with longer lengths of stay are more profitable; length of stay in a for-profit hospice is about 45% longer than the length of stay in a not-for-profit facility.

The National Hospice and Palliative Care Organization, along with other hospice organizations, issued a "consensus" statement saying, "Payment reforms should be incremental, based on adequate data analysis, and need to be undertaken carefully, with effects on the patient and family in mind," adding that while the recommended payment system has benefits, "there are key issues in developing such a design that need to be substantiated and tested against comprehensive and broad-based data. Only after such data is collected, analyzed, and understood, can it serve as the basis for rational and appropriate payment reform."

MedPAC also recommended that the HHS Office of Inspector General conduct various studies on the Medicare hospice benefit, including any financial relationships between hospices and long-term care facilities that might be conflicts of interest (Reichard, CQ HealthBeat, 1/9).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.