Key Trend for Hospices to Watch: Managed Care Becomes a Juggernaut

Key Trend for Hospices to Watch: Managed Care Becomes a Juggernaut – Hospice News

As the health care ecosystem changes, hospices will have to evolve. Going forward, this will likely include more engagement with managed care organizations.

Though hospices operate within the dedicated Medicare benefit, market forces in the system at large wield considerable influence on how they operate — including the meteoric rise of managed care. This is the second of three articles that will explore some of these trends. The first, published last week, addressed the intersection of hospice care, behavioral health and chronic disease management.

Among the biggest considerations is the nation’s steady drive towards managed care and value-based reimbursement, often with Medicare Advantage behind the wheel. With the hospice component of the value-based insurance design (VBID) model now in its third year, providers see a need to adapt.

However, managed care plans also have a learning curve as more care moves into the home, according to AccentCare CEO Steve Rodgers.

“The big one is the continued growth of managed care. The reality is, with that continued growth, they still have not evolved their strategies very effectively around how they’re engaging with home-based care companies,” Rodgers told Hospice News. “Especially with some of the pressures coming out of Washington associated with the rate environment and everything else, there just needs to be a different level of engagement.”

Most MA plans have little experience working with hospices after a patient becomes eligible for the benefit. When you couple that with widespread misconceptions about hospice services, providers will likely need to add payers to the list of stakeholders they will need to educate as part of their business development strategies.

While the ultimate outcome of the VBID demonstration is years away, the ever-increasing popularity of MA makes it virtually impossible to ignore.

Close to 31.5 million beneficiaries are currently enrolled in Medicare Advantage, according to the U.S. Centers for Medicare & Medicaid Services (CMS) data released this week. This nearly half of all Medicare enrollees, just a few decimal points shy of 50%.

The growth looks more profound in retrospect. During the past 16 years, MA enrollment has grown 337%, while traditional Medicare saw a decline of nearly3%, according to a recent study in Health Affairs.

The MA carve-in, according to CMS, is intended to increase access to hospice services and facilitate better coordination between patients’ hospice providers and their other clinicians. However, thus far, reactions to the demo have been mixed.

Among their concerns is the potential for reduced payments, which some plans contend would be offset by greater volume.

“We don’t shy away from managed Medicare. It’s coming; we’re embracing it. It’s coming. It’s what the hospitals went through 10 to 12 years ago and what home health went through wealth three to five years ago,” Traditions Health CEO David Klementz told Hospice News. “We need to be paid appropriately for the level of care we provide, and that’s got to be a collaboration with managed care. And they should, in return, expect certain quality results from us. I think the space in general needs to learn to navigate that different business model.”

Generally, MA plans are oriented around financial risk.

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

In these arrangements, providers must understand how to manage their anticipated utilization and the related expenses, with efficiency and cost control essential to maximizing their margins.

In some contracts, the aforementioned 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 the budgeted costs.

??Hospice providers who help payers understand the cost-effectiveness of the care they provide will be better positioned to negotiate. And when they come to the table, hospices will need to bring an arsenal of data.

“From my perspective, I agree with the philosophy of value-based programs to optimize high quality and decrease health care costs,” Dr. Joseph Shega, executive vice president and chief medical officer for VITAS health care, a subsidiary of Chemed Corp. (NYSE: CHEM). “[When working with payers] we spend most of our time now with our at-risk partners trying to get them to understand the benefits of hospice from that perspective, along with educating them on when and how to have that conversation.”

CMS requires MA plans to ensure they are working with providers of high-quality care. To gauge this, plans look closely at star ratings, quality data like the Hospice Item Set, and Consumer Assessment of health care Providers and Systems (CAHPS) scores when determining which providers to include in their networks.

But when working within Medicare Advantage, hospices will also need to measure their performance on additional criteria to remain competitive. This will likely include data on length of stay and utilization of non-hospice services, as well as information used to gauge health equity.

A key consideration for the health plans will be providers’ track records on reducing hospitalizations, emergency room visits and readmissions. This applies not only to hospice care itself, but also to the upstream services many operators provide, such as palliative care and PACE, for which Medicare Advantage is one of the few pathways to reimbursement.

“MA plans are very used to these types of newer and collaborative models on the provider side, just not yet in our space as much. So I think it really gives us the opportunity to come to them with solutions,” Jordan Holland, vice president of value-based contracting for Compassus, said at the Home Care 100 Conference in Orlando. “First, listen to them, what’s important to your MA plan, partner, then help them develop the right solution — actually help them meet the goals and the objectives of the program, which is increased hospice access, increased length of stay, which decreases total cost of care, which is a lot of what they want.”