January 1, 2016: Huge Day for Medicare End of Life Policy Changes

January 1, 2016 will be a huge day of changes for Medicare end of life policy. As noted earlier, Medicare will begin paying for advanced care planning and will begin a concurrent hospice care demonstration on New Year’s Day. We now know that on the same day the program will institute the most consequential change in Medicare hospice payment policy since the beginning of the benefit in 1982:

  • Medicare will move from a straight per diem base payment for hospice, to a two-tiered base payment of $187.54/day for the first 60 days in hospice, with a lower payment of $145.15 for subsequent days (column 6 below from August 6, 2015 Federal Register).

2015HospiceFinalrule

Section 1814(i)(6)(D)(ii) of the ACA required the Secretary of HHS to consider a new payment methodology for hospice, and the primary discussion by MEDPAC and others had been the development of a so-called “U shaped” payment approach that better matched the differential intensity of care across different links of hospice use. The primary goal of the payment changes seems to be better alignment of the payment methodology with the actual resource use of hospice providers, with tremendous interest in reducing very long hospice stays that many view as fraudulent, or at least not in keeping with the best use of hospice. However, very short hospice stays are also a problem.

The actual payment change is simpler than a U shape payment would have been (higher in the first few days and the last few days and lower in the middle) approach suggested by MEDPAC, though they have publicly supported the change as a first step.

My guess is that it won’t be 3 decades before the next hospice payment approach change is announced by Medicare, and that we are likely entering a period when change is relatively common. I hope we are also going to be clear about policy goals, and collecting data to inform evaluations of same.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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