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Volume 22.01

The Medicare Payment Advisory Commission (MedPAC) is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC provides information on access to care, quality of care, and other issues affecting Medicare.

MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress. During these meetings, Commissioners consider the results of staff research, and comments from interested parties.  Commission members and staff also seek input on Medicare issues through frequent meetings with individuals interested in the program, including staff from congressional committees and the Centers for Medicare & Medicaid Services (CMS), health care researchers, health care providers, and beneficiary advocates.

Two reports—issued in March and June each year—are the primary outlets for Commission recommendations. In addition to these reports and others on subjects requested by the Congress, MedPAC advises the Congress through other avenues, including comments on reports and proposed regulations issued by the Secretary of the Department of Health and Human Services, testimony, and briefings for congressional staff.  The regulation establishing the Medicare Payment Advisory Commission (“MedPAC”) is available here

On January 13-14, 2022, MedPAC held their most recent public meeting, which will lead to their formal recommendations to Congress in March 2022.

According to MedPAC, “Hospices that exceed the cap have long lengths of stay and high margins.”  For that reason, MedPAC continues to pursue wage-adjusting the CAP and reducing it by twenty percent (20%).  “Changing the cap in this way would make it more equitable across providers and would reduce aggregate Medicare expenditures by focusing payment reductions on providers with long stays and high margins.”  Fortunately, for the hospice industry, Congress has not acted on this past CAP recommendation, which was made in March 2020 and 2021, and will be made again in March 2022.  According to MedPAC, “In 2019, about 19% of hospices exceeded the CAP” and about returning the CAP overpayments, the Medicare margin for these hospices is approximately 10%.  In January 2021, MedPAC reported that 16.3% of hospices exceeded the CAP in 2018.  The January meeting did not address why the number of hospices exceeding the CAP increased by nearly 3% in one year.

The Health Group, LLC previously reported that it was our expectation that the number of hospices exceeding the CAP would continue to increase because of many factors.  MedPAC continues to focus on hospices exceeding the CAP without researching the underlying causes of the increase in the number of hospices exceeding the CAP.

Furthermore, the January presentation includes, “In lieu of an across-the-board payment reduction, in March 2020 and 2021 the Commission recommended the cap be wage adjusted and reduced 20%”.

The draft recommendation, presented at the January meeting, reads “For fiscal year 2023, the Congress should eliminate the update to the 2022 Medicare base payment rates for hospice and wage-adjust and reduce the hospice aggregate cap by 20 percent”.  This recommendation was unanimously agreed to by MedPAC commissioners.

MedPAC expects that Medicare beneficiary access to care would not change; however, Medicare spending for hospice services would decrease between $250 million and $750 million over one year and between $5 billion and $10 billion over the next five years.

MedPAC also focused on telehealth services as hospice patient care visit activity has decreased during the COVID-19 PHE.  Data is not readily available regarding the extent of visit activity that has been offset by telehealth services.  MedPAC will present the following recommendation to Congress, which was unanimously agreed to at the January meeting:

“The Secretary should require that hospices report telehealth services on Medicare claims.”

We appreciate the efforts of MedPAC in meeting their regulatory responsibilities; however, the hospice industry has an ongoing responsibility to communicate with MedPAC to assist them in meeting these responsibilities through increased industry understanding.  We thank NAHC and NHPCO for their continued efforts to educate MedPAC and encourage hospices and professionals serving hospice providers to be involved.

Hospice providers, as well as national and state associations representing hospice providers and the hospice community, must remain vigilant and express their opinions to MedPAC regarding the continued recommendation for an across-the-board percentage reduction to the CAP, regardless of the percentage, as well as the impact such a reduction would have on highly vulnerable hospice providers.  The facts clearly indicate that the CAP has not kept pace with the changing underlying terminal diagnosis of terminally ill hospice patients (over CAP hospices continue to increase, now at 19%) and the CAP for certain geographies is significantly inadequate, thereby creating a discriminatory payment limitation for certain providers.

An across-the-board reduction to the CAP merely represents a simple approach to reducing total Medicare payments to hospices serving Medicare program beneficiaries.  While a wage-adjusted CAP makes sense, the implementation of such a change becomes extremely important as rural hospices could be significantly impacted.  Any negative impact on rural hospices is in direct conflict with MedPAC’s recent focus on rural hospice providers.  More information on MedPAC, its activities, reports, and public meetings is available here.