Each year the Medicare Payment Advisory Commission (MedPAC) submits its annual report to Congress which contains information and recommendations related to Medicare fee-for-service (FFS) programs. This year, MedPAC recommended the elimination of the fiscal year (FY) 2019 update to the Medicare payment rates for hospice. This is the same recommendation MedPAC has made since 2014. Congress does not have to act upon the recommendation and has not done so in years past and is not expected to do so this year.

In addition to the recommendation, MedPAC provides a summary of its analyses pertaining to hospice. The analyses cover many topics and are contained in Chapter 12 of the full report. Highlights of the analyses are listed below.

1. There was more than a 7% increase in the number of for-profit hospice providers between 2015 and 2016 while the number of nonprofit hospices and government hospices declined by roughly 2 percent.

2. The aggregate 2015 Medicare margin, which is an indicator of the adequacy of Medicare payments relative to providers’ costs, was 10.0 percent, up from 8.2 percent in 2014. The projected 2018 aggregate Medicare margin is 8.7 percent.

3. Studies have been mixed on whether hospice has saved the Medicare program money in the aggregate compared with conventional care. Recent research by a Commission contractor examined the literature and conducted a new market-level analysis of hospices’ effect on Medicare expenditures. That study found that while hospice may produce savings for some beneficiaries (such as those with cancer), overall, hospice does not appear to have produced aggregate savings for the Medicare program because of very long stays among some hospice enrollees (Direct Research 2015).

4. The Commission considers the hospice aggregate cap as the only significant fiscal constraint on the growth of program expenditures for hospice care and found that more hospices are exceeding the aggregate cap. In 2016, above-cap hospices had favorable margins even after the return of overpayments, going from a margin of slightly more than 20% before the return of the overpayment and down to about 10% after the return of the overpayment.

5. The hospice payment system was reformed in 2016 with the addition of a service intensity add on (SIA) during the last seven days of a patient’s life and the implementation of a higher routine home care rate for the first 60 days of hospice care and a lower routine home care rate for days 61+. The Commission analyzed the impact of these changes, and found that under the new payment system, providers with the fewest long-stay patients had higher payments, while those with the most long-stay patients had lower payments than they would have had under the old payment structure.

6. MedPAC shares CMS’ concern over the number of hospices not participating in the Hospice Quality Reporting Program. The percentage of hospices getting hit by the 2% annual payment update penalty for not participating has risen from about 6 percent in 2014 to 14 percent in 2016. The hospices not participating tend to be small hospices.

7. MedPAC also shares CMS’ continuing concerns about hospices with high rates of live discharge and/or long lengths of stay. CMS is considering adding claims-based measures to the HQRP related to live discharges, specifically live discharges followed by acute care or death.


HPS can help you with live discharges, long length of stays, as well as revenue cycle management. Schedule a call with us to find out how!