What do hospice agencies need to know?

Value-based care (VBC) seeks to improve health outcomes while controlling costs, and rewarding providers for the quality of care they deliver, rather than quantity. Various models have emerged under the VBC umbrella, such as Accountable Care Organizations (ACOs), Patient-Centered Medical Homes (PCMHs), and bundled payment models. Each of these models emphasizes care coordination, patient engagement, and outcomes.

At the same time, disruptive changes in hospice reimbursement are on the horizon. The Hospice CARE Act and CMS’s strategic plans to move to value-based care will reshape the way hospices are paid for the services they provide. While most hospices still rely on the Medicare Hospice Benefit, frontrunners in the industry have been exploring new opportunities in the VBC arena.

VBC Is the Future

CMS’s 2021 “strategy refresh” aims to “achieve equitable outcomes through high quality, affordable, person-centered care.” As part of this effort, some hospices participated in the Value Based Insurance Design (VBID) model, which allowed Medicare Advantage (MA) plans to include the hospice benefit. Due to operational challenges and decreasing MA plan participation, CMS announced that the VBID program would end on December 31, 2024. With VBID sunsetting at the end of 2024, in what other ways will VBC impact hospice agencies?

The Value Proposition of Hospice in VBC

Hospices are uniquely positioned to contribute to various VBC models, due to their emphasis on quality of life, patient-centered care, and experience managing costs within a fixed per diem payment framework. Hospices already focus on outcomes rather than volume—a key characteristic of VBC. Hospices bring to the VBC table:

• Hospices prioritize quality by controlling symptoms, managing pain, and providing emotional support. This holistic approach aligns with the goals of ACOs and PCMHs, which emphasize patient satisfaction and outcomes. By emphasizing comfort, hospices significantly enhance the quality of care for patients with advanced illnesses.

• Cost Savings. Hospice care can generate substantial cost savings for healthcare systems. By providing comprehensive care in a home setting, hospices reduce costly hospitalizations and emergency room visits. They can also facilitate shorter length of stay in the costly acute care setting. This resonates with ACOs, for whom cost control and high-quality care are crucial.

• Care Coordination. Hospice agencies excel at acting as a central hub for managing patient care. Hospice agencies work closely with hospitals, primary care physicians, specialists, and others to ensure patients receive care aligned with their preferences. Hospices routinely coordinate drug and DME delivery, and care provided by multidisciplinary teams.

Ways Hospices Are Participating in VBC

In addition to experience containing costs such as unnecessary hospitalizations, ED visits, and readmissions, hospices already have the infrastructure in place to take care of patients in their homes. ACOs participating in shared savings payment models, where the ACO receives a portion of cost savings it generates, should be particularly interested in partnering with hospice providers.

Additionally, the Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) program includes a high needs track for seriously ill patients that fits well with hospice service offerings.

Hospices have an opportunity to enter into preferred provider relationships with ACOs. Under such arrangements, the ACO essentially becomes payer to the hospice. ACO partnerships can result in less fragmented care, shared data, and mutually beneficial payment terms. Hospices have greater flexibility in designing their contracts with ACOs than they do with traditional payers.  

ACOs have incentives to choose a high-quality hospice agency partner. This has the potential to shift market share away from other hospice providers, such as poorer performers or those hospice agencies not proactively looking into VBC options. As ACOs continue to expand, they can become a major community referral source for hospice admissions. Therefore, a hospice contract with an ACO could have the potential to change market share in a service area. VBC also offers incentives to provide palliative care, and some state Medicaid plans have expressed interest in palliative care services for members.

Positioning for Success in Value Based Care

Given the clear message from CMS that VBC is the future, what should hospice agencies be doing right now to position themselves for success?

• Proactively scan for VBC opportunities. Forward-thinking hospice leaders should proactively look for VBC opportunities.

• Monitor reimbursement changes in order to identify and model any impact on operations and billing.

• Use technology. Data analysis lies at the core of managing quality and cost. Investing in technology like hospice software and other tools for data processing and analytics can help hospice agencies achieve the outcomes needed to become a provider of choice to ACOs. Data also helps communicate the value that a particular hospice has to offer. Having the right technology partners is critical to succeeding in VBC.

• Offer training. VBC emphasizes quality and patient satisfaction. Staff training plays a key role in delivering the service needed to succeed in VBC. Changes to reimbursement models will necessitate changes in billing and other processes as well, requiring additional training.

• Be able to communicate the value they offer. Hospice leaders need to be able to communicate the value they provide and what differentiates their services.

• Skill sets and knowledge in the VBC. Whether through consultants or through hiring, hospices should tap into expertise in negotiating and implementing alternative payment arrangements.

The Takeaway

The role of hospice is evolving within the changing healthcare landscape. As CMS continues the push towards value-based reimbursement models, hospices have an opportunity to play a key role in increasing quality while decreasing costs. Visionary hospice leaders will find opportunities in the form of new revenue streams and partnerships.

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