MedPAC Recommends Hospice Freeze and Aggregate Cap Cut for FY 2022 

Situation Report | December 14, 2020

The Medicare Payment Advisory Commission (MedPAC) last week reviewed the latest data on Medicare hospice utilization and discussed potential hospice payment recommendations for fiscal year (FY) 2022 with an eye toward including those recommendations in MedPAC’s annual March Report to Congress.

MedPAC’s recommendations are advisory in nature, and any payment changes would require an act of Congress.   

MedPAC members expressed preliminary support for inclusion of the following recommendations: 

  • For fiscal year 2022, eliminate the update to the 2021 Medicare base payment rates for hospice.
  • Wage adjust and reduce the hospice aggregate cap by 20 percent.

MedPAC staff indicated that the aggregate cap policy would reduce total hospice outlays by about 3 percent. It is anticipated that the Commission will conduct a formal vote on the recommendations at its January meeting. 

HCA will examine these proposals carefully and will oppose any recommendations that adversely impact hospice finances at a time when 72 percent of New York hospices have negative margins and face extraordinary new pressures in the COVID-19 pandemic that are not accounted for in the historical data on which MedPAC bases its analysis.

Indeed, at the meeting, staff discussed several COVID-19 pandemic impacts on hospice services, including an initial decline in patient volume, a decrease in nursing and assisted living facility patients, varied impact on length of stay, and additional costs linked to supplies and testing, some of which have been eased by federal grants and loans and temporary regulatory flexibilities, according to MedPAC.

Having acknowledged these impacts, MedPAC must also ensure that such considerations are incorporated into its payment recommendations.

MedPAC staff also provided the following significant data elements for hospices nationally in 2019:

  • Over 1.6 million beneficiaries received services.
  • Over 51 percent of Medicare 2019 decedents (51.6 percent) received hospice care.
  • More than 4,800 Medicare certified hospices were in operation.
  • Medicare expended $20.9 billion in payments for hospice services.

Staff also outlined the following four factors that MedPAC examined to determine adequacy of Medicare payments:  

  • Beneficiaries’ access to care. MedPAC says hospice use continues to grow, as demonstrated by an increase in the percent of decedents who have used hospice and an increase in the average length of stay (from 90.3 days in 2018 to 92.6 days in 2019).
  • Quality of care. Hospice quality data is limited, but available measures show generally positive findings. Reports issued by the U.S. Office of the Inspector General (OIG) in 2019 found concerning deficiency and complaint data for a subgroup of providers (approximately 300).
  • Hospices’ access to capital appears positive for for-profit providers, although there is less information on access to capital for non-profit providers, according to MedPAC.
  • Medicare payments and operating margins. Medicare margins vary by type of provider but averaged 12.4 percent in 2018. Again, HCA notes that this aggregate national data, however, is not consistent with the experiences of hospices in New York, where HCA has determined that over 72 percent of hospices experience negative margins.

The next meeting of MedPAC will occur on January 14 and 15, 2021 and HCA will update the members after that meeting.