Guide to Value-Based Hospice Care (2021)
Written by the Open Caregiving Team - Last Updated: October 7, 2021
Comparing Value-Based Hospice Models
The CMS Innovation Center (CMMI) is currently testing 3 value-based models that eligible hospice providers can participate in.
- Direct Contracting for Hospice: Providers come together to create a Direct Contracting Entity (DCE). CMS then contracts the DCE to deliver value-based care to a certain population of Medicare fee-for-service beneficiaries.
- Medicare Advantage Hospice Carve-in: Allows Medicare Advantage Organizations (MAOs) to directly contract with hospice providers and offer the hospice benefit to MA beneficiaries bridging the gap between curative and hospice care.
- Primary Care First (SIP): Incentivizes advanced primary care clinicians to achieve patient-centered care that reduces acute hospital utilization and per person costs. *Currently paused for review.
|Direct Contracting||MA Hospice Carve-in||Primary Care First (SIP)|
||High||Based on MAO contract||Low|
||Overspending penalties||Not hitting goals of MAO contract||Up to 10% performance-based penalties|
||Retain 50-100% of cost savings||Contract specific performance-based upside||Up to 50% performance-based upside|
||Monthly capitation + bonus or penalty||Based on contract with MAO||Capitation + population & performance-based adjustment|
||Traditional Hospice + upstream services||Traditional Hospice + upstream services||Traditional Hospice + upstream services|
|Referrals||Yes – from CMS||Yes – from MAO||Yes – from CMS|
|Payer||CMS –> DCE –> Provider||MAO –> Provider||CMS –> Provider|
|Participants||53 DCEs (6 High Needs Population DCEs)||19 MAOs (9 in MA Hospice Carve-in)||827 providers (overall)|
Direct Contracting Model for Hospice
What is the Direct Contracting Model?Direct contracting is a CMMI risk-sharing initiative aimed at lowering costs and improving the outcomes for beneficiaries currently being served by Medicare fee-for-service programs. The latest program is officially referred to as the Global and Professional Direct Contracting (GPDC) Model.
How does the direct contracting model work?Individual healthcare providers (Direct Contracting Participant Providers) come together to create a Direct Contracting Entity (DCE). CMS then contracts the DCE to deliver value-based care to a certain population of Medicare fee-for-service beneficiaries.
What are the goals of the Direct Contracting Model?
- Create new provider risk-sharing models for Medicare FFS
- Predictable spending patterns and monthly payments for (capitated and partially capitated)
- Financial alignment to deliver cost-efficient, quality care
- Grow provider participation in innovative VBID models
- Broaden access to new risk-sharing arrangements for provider types and sizes that do not typically participate in CMS innovation center models.
- Increase participation appeal by minimizing administrative burden
- Increase beneficiary choice and participation
- Incentivize beneficiaries to engage in their healthcare decisions
- Chose providers they want to build a long-term relationship with
- Minimize administrative work provider
- Remove procedural processes/metrics that are not directly related to quality
- Allow providers to spend more time focusing on beneficiaries
What are the two direct contracting payment models?Each Direct Contracting Entity (DCE) agrees to one of the below risk-sharing options for their provider participants.
- Accepts 50% of the shared savings or losses
- Primary Care Capitation (a risk-adjusted monthly fee per patient equal to ~7% of the total cost of primary care)
- Accepts 100% of the shared savings and losses
- Can choose between Primary Care Capitation or Total Care Capitation (a risk-adjusted monthly payment for all care provided equal to ~7% of the total cost of care)
What are the Quality Measures used for Direct Contracting Entities?
CMMI is proposing a first set of 3 core quality measures in Performance Year 1 that will affect payments in year 2 which include:
- Risk-Standardized All-Condition Readmission (ACR) – The number of hospital stays that result in a readmission within 30 days after the patient is discharged
- All-Cause Unplanned Admissions for Patients with Multiple Chronic Conditions (UAMCC) – Unplanned hospital admissions for beneficiaries 65 years+ of age with multiple chronic conditions
- Days at Home for Patients with Complex, Chronic Conditions (DAH) – The number of days that beneficiaries with complex, chronic disease spend at home rather than in acute and post-acute care settings. For High Needs Population DCEs ONLY*
CMMI also proposed two more measures for Performance Year 2 that will affect payments in year 3 which include:
- Timely Follow-Up (for Standard and New Entrant DCEs ONLY*) – is the percentage of ER visits or hospitalizations related to one of six chronic conditions where a planned, out-patient follow-up was conducted in the specified time-window recommended by clinical practice guidelines. The six chronic conditions include
- Heart failure
- Coronary artery disease
- Chronic obstructive pulmonary disease
- Type I/II diabetes mellitus.
- Consumer Assessment of Healthcare Providers & Systems (CAHPS) – the survey is similar to the Clinician and Group (CG)-CAHPS Survey with additional questions to gauge the DCE’s ability to deliver a quality patient/caregiver experience with highly coordinated care.
- DCEs must contract with a CMS-approved CAHPS Survey vendor for each reporting year to administer the CAHPS Survey.
What is a High Needs Population DCEs?
A high needs population DCE services patients with a hierarchical condition category (HCC) score higher than 3. There are also scenarios where they can serve patients with an HCC score equal to or lower than 3 if the patient has experienced numerous unplanned hospital admissions or has a qualified disability.
How can hospice providers prepare for Direct Contracting?A crucial step for Hospice providers prior to joining a Direct Contracting Entity (DCE) is to expand your services and skill sets further upstream than traditional hospice care. This means becoming the main point of contact for patients and families in the years before they enter hospice care and taking total responsibility of a patient’s needs including:
- In-home primary care
- Palliative care
- PACE programs
- Care coordination
Hospice Pros and Cons of a Direct Contracting Entity (DCE):Pros:
- Expand your business upstream into programs and services that are not covered by hospice Fee-for-service
- Minimize procedural administrative work often associated with Medicare fee-for-service programs
- Build relationships and serve high-needs patients over a multi-year period
- Develop a consistent referral stream
- Maintain a predictable cash-flow model with the upside of bonuses
- Opportunity to innovate in your care delivery
- Need the capital to invest in new programs outside of traditional hospice and hire specialized healthcare workers to build them out
- Need to develop business analytics to manage risk and optimize your spending
- Potential penalties if spending exceeds CMS targets
- Must learn a totally new insurance model that has operational, financial and quality implications
- Take on the risk of other providers in the DCE
The Medicare Advantage Hospice Benefit
What is the Medicare Advantage Value-Based Insurance Design Model (VBID)?The Medicare Advantage (MA) Value-Based Insurance Design Model is a CMMI program testing new components with the goal of reducing costs and improving the health outcomes for MA beneficiaries.
What is a Medicare Advantage Organization (MAO)?A Medicare Advantage Organization (MAO) is a private company approved by Medicare to offer Medicare Advantage plans (also known as Part C) to Medicare beneficiaries.
What is the Medicare Advantage Hospice Benefit Component?The Medicare Advantage Hospice Benefit Component (also known as the MA Hospice Carve-in) is a CMMI test that allows Medicare Advantage Organizations (MAOs) to directly offer the hospice benefit to MA beneficiaries.
Does Medicare Advantage Cover Hospice?
Outside of the MA Carve-in test Original Medicare manages the beneficiaries hospice services while the Medicare Advantage Organization manages supplemental benefits. According to CMS “This hospice carve-out from MA results in a convoluted set of coverage rules for MA enrollees who elect hospice and fragments accountability for care and financial responsibility across the care continuum.”
How can hospice providers work with Medicare Advantage Organizations (MAOs)?Medicare Advantage Organizations (MAOs) and hospice providers in their service area must work together to forge partnerships around the MA hospice carve-in. It is up to the hospice providers to prove their value and negotiate directly with MAOs on the details of the partnerships.
- Will accept a risk-based payment to help the MAO limit their risk and costs
- Have predictable analytics and financial models for the care they provide
- Score highly on quality measures
- Can deliver a high volume of diversified services further upstream from traditional hospice care
- Can build patient-specific care plans of how they will transition the patient across curative, palliative and hospice settings
- Will be innovative on their care delivery to find areas of cost and quality improvement
- Have interoperable systems set up
How should hospice providers prepare to start working with MAOs?There are key operational and organizational transformations hospice providers need to make when preparing to participate in the MA hospice carve-in. Some important changes traditional hospice providers will need to consider before contracting with an MAO are:
- Diversifying services further upstream to palliative and primary care
- Staffing up workforce to serve more patients earlier on in their care
- Implementing a powerful data collection and reporting system
- Bringing interoperability into their electronic systems
- Becoming comfortable managing risk
- Adjusting to a business model that revolves around capitation and shared savings/losses
- Reevaluating their expenses and costs to make sure they can accurately predict spending and are operating the most cost-efficient model
- Develop KPIs and competitive benchmarks to prove to MAOs they deserve to be a preferred provider
Primary Care First
What is Primary Care First (PCF)?Primary Care First is a 5 year CMMI program for healthcare practices and clinicians that want to participate in advancing the delivery of primary care for Medicare beneficiaries with serious illnesses.
What are the goals of Primary Care First?The goal of PCF is to improve patient experience and outcomes while reducing the costs associated with delivering advanced primary care. This is accomplished by:
- Focusing on the clinician-patient relationship
- Allowing clinicians the flexibility to design their own practice and care delivery based on the population they are serving
- Incentivizing clinicians to achieve patient-centered care that reduces acute hospital utilization and per person costs.
- Access and continuity of care
- Care management
- Comprehensiveness and coordination
- Patient and caregiver engagement
- Planned care and population health
What is the Primary Care First Payment Model?The payment model for practices participating in the PCF demonstration is based on 3 inputs:
- A flat payment for an in-person primary care visit
- A population-based payment in addition to a flat primary care visit fee
- A quarterly performance-based adjustment with an upside of up to 50% and downside of 10% (based on transparent benchmarks of how they well they achieve the goals of the program relative to other clinicians)
Is Primary Care First an Alternative Payment Model (APM)?
Yes, Primary Care First is an APM. Unlike Medicare Fee-For-Service, the Primary Care First payment model incentivizes added clinicians to provide high-quality and cost-efficient care
What are the three Primary Care First Options?Clinicians may only participate in one of the three options.
- General Component – for advanced primary care practices that want to take on financial accountability in the form of performance-based payments while minimizing their administrative work.
- Seriously Ill Population (SIP) Component – for advanced primary care practices that want to participate in developing a more patient-centered, coordinated and cost-effective primary care program for seriously ill populations (SIP).
- Both General and SIP Components – for practices that want to participate in both the general component and SIP component.