U-Shaped Two-Tiered Level of Intensity

Based on the FY 2015 Final Rule released on 8/5/2015, CMS implemented changes as to how hospice agencies are paid for the Routine Home Care (RHC) level of care. This change goes into effect on January 1, 2016, and complies with Section 3132(a) of the Affordable Care Act. It was implemented in response to MedPACs analysis of the rapid growth of for-profit hospices and longer lengths of stay. These findings raised concerns regarding a per diem payment structure that encouraged inappropriate utilization of the benefit. The new payment structure is intended to promote consistency with meeting the eligibility requirements of a medical prognosis of 6 months or less if the illness runs its normal course.

MedPAC’s analysis described the level of intensity of hospice services to largely represent a U-Shaped pattern. The intensity of services is higher at admission and near death and lower during the middle period of the hospice episode. MedPAC reported that since hospice care is most profitable during the longer and lower-cost middle portions of an episode, longer episodes with long middle segments are most profitable. By adjusting payment for RHC so that less payment is made for visits in the middle segment, the goal is to discourage inappropriately long hospice admissions. MedPAC recommended that payments near the beginning and end of a hospice episode are set at higher levels (weighted upwards) and payments during the middle portion of care are set at lower levels (weighted downwards) to better mirror the intensity of hospice services.

Another aspect of the research done on the utilization of hospice services found that a relatively large number of hospice patients received few or no services during the immediate days before death. While this may be partially explained by patients who die suddenly and unexpectedly, there was a concern that many patients were not receiving needed hospice care and support at the very end of life. An adjusted, tiered payment model that incentivized services before death would likely increase services at the end of life when the patient and family needs care most.

As the basic level of care under the Hospice benefit, RHC reimburses hospices per day regardless of the volume or intensity of services provided to a beneficiary on any given day. To better align with the intensity of services, a two-tiered payment model for RHC will be implemented effective January 1, 2016. The new model will result in a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for days 61 and beyond of hospice care. A payment episode that extends from admission to death or discharge will be used to determine the payment rate in place.

Utilizing 2015 payment rates for RHC, along with adjustments for budget neutrality and non-labor portions, the two-tiered rates beginning January 1, 2016 will be: $186.84 for days 1-60 and $146.83 for days 61 and beyond.

To compensate agencies for the increased intensity of services at the end of life, a Service Intensity Add-On (SIA) Payment applies if the following criteria are met: 

  • The day is a RHC level of care day;

  • The day occurs during the last 7 days of life (and the beneficiary is discharged dead); and 

  • Direct patient care is provided by an RN or a social worker that day.

The SIA payment will be equal to the Continuous Home Care (CHC) hourly payment rate ( $38.75 per hour in 2015), multiplied by the amount of direct patient care provided by an RN or social worker for up to 4 hours total, per day.  The SIA payment will be paid in addition to the current per diem rate for the RHC level of care.

CMS will only pay a SIA for those social work services provided during an in-person visit and will not apply to phone visits. In addition, services provided by LPNs, hospice aides, chaplains and bereavement coordinators will not apply to the SIA add-on. Given that CMS intends the SIA add-on to promote direct patient care in the 7 days prior to death, visits for the pronouncement of death will not be included as eligible visits for SIA payments. The SIA add-on will be calculated based on the number of hours in 15-minute increments of service provided by an RN or social worker during last 7 days of life for a minimum of 15 minutes and up to 4 hours total per day.

RHC and SIA Payments

Although CMS is evaluating a short stay add-on for patients who die early in their hospice episode, this incentive is currently not in place. However, since the SIA payment will be applicable to any 7-day period of time ending in a patient’s death, hospice elections with short lengths of stay are eligible to receive an additional payment that will help mitigate the marginally higher costs associated with short lengths of stay. In addition, any stay of 7 days or less before death will be eligible for SIA payment on all RHC days.

For hospice patients who are discharged and readmitted to hospice within 60 days of that discharge, the patient’s prior hospice days would continue to follow the patient and count toward his or her patient days for the receiving hospice upon hospice election. For these purposes, a hospice “episode” of care is a hospice election period or series of election periods separated by no more than a 60-day gap.