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Show Me the Money: New Study Confirms Hospice Saves Money for Medicare



A study published by NORC at the University of Chicago, a nonpartisan research organization, concluded that the Hospice Benefit saved Medicare $3.5 billion in 2019. The data behind that figure, and the study’s related findings, show that the value of the Medicare Hospice Benefit appears to be at odds with CMS’s regulatory priorities. In this episode, Husch Blackwell’s Meg Pekarske and Bryan Nowicki dig into the numbers, talk about the NORC study, and its potential impact on hospices and the Hospice Benefit.

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00;00;05;01 - 00;02;47;01
Meg Pekarske
Hello and welcome to Hospice Insights, The Law and Beyond, where we connect you to what matters in the ever changing world of hospice and palliative care. Show me the money. New study confirms Hospice saves money for Medicare. Bryan this was an exciting day when this report got released. We're talking about the research branch of the university of chicago published a paper or a data analysis about the cost savings of Medicare. And I think this is exciting because I feel, you know, for the last decade or so, folks who were doing all the data analysis was the government. And so there have been a number of app reports and other contractors hired by the government to analyze the hospice benefit. And this was funded in part by the national associations. I can't remember if there's anyone else there is. NIAC and HP CEO, I think were the primary funders of this, but really, these are very, very interesting things about the hospice benefit. And I think we're recording this podcast on the heels of it being released there in the VA bed that got extended till I think is it 2030. Bryan But that in the extension period, which I think starts in 2026, they're going to allow concurrent care. When you're on hospice, they're also making some changes to you need to be, you know payers can make you be in their network too in order to you know, access hospice. They need to use an end network provider. And I raise that only because I think we see a real shift here going on about where is the hospice benefit going. And we've talked about needing to modernize this and it's nearly 40 years old and what's not working with this. And I also think remember V bid is value based, and value based care is how can we provide more effective care in a less costly manner. And so I think this research report really add something to the dialog that's important and so, Bryan, let's kick it off about the cost savings of hospice. And maybe I want to start with the very most interesting point is that hospice saves money even when someone is on service greater than six months.

00;02;47;02 - 00;04;29;28
Bryan Nowicki
Yeah, absolutely. That was a very interesting finding. When you go with the longer lengths of stay up to 12 months is what I think they reviewed. Hospice has saved more money and they did what they they identified what they called I think a cut off date or a kind of a turning point date. And that is after two patients, one who's on hospice and one who is not with similar situations are on hospice. You know, you mark 11 days from the one patient being on hospice. After that point, the hospice starts saving money and that's up until 12 months. So it only takes 11 days for a hospice to start saving Medicare money. And the most savings they found were with end stage renal disease. So if you look at that time frame, it was a 25% cost savings for that patient to be in hospice as opposed to regular Medicare. But even for neurodegenerative diseases, there was a 4% cost savings for this category of patients who are on hospice for up to a year compared to Medicare patients. And so really what it tells you is that earlier enrollment in hospice helps reduce Medicare spending and longer lengths of stay reduce Medicare spending. I think, Meg, you and I have always talked about in with our clients that hospice, a lot of people come to hospice too late. And this really confirms that what was a big surprise in was the extended cost savings for even the longer length of stay patients very interesting study of broke it down by diagnosis type and all sorts of ways and I think it reaches that pretty compelling conclusion.

00;04;30;00 - 00;06;25;04
Meg Pekarske
Well, and I guess what was frustrating when you read this is you see the data analysis. We know that the government is very focused on value based care. How can we provide higher quality at a lower cost? And I feel like we've been here on the sidelines for years saying that's what hospice does, right? We have a really high patient satisfaction, right? We're dealing with the whole person, the physical, the emotional, the spiritual and medical parts of people's care and we do it in a really cost effective way. But when you look at in contrast, enforcement is is essentially and I think MedPAC, too, in terms of wanting to reduce the cap about everything's about you, it almost feels like they're encouraging and wanting people to be on hospice for only days. Or I'd like if I could stay under the audit radar, I'm going to have such a low length of stay that people will, you know, leave me alone. And, you know, MedPAC is saying, yeah, we think we should, you know, cut the cap amount for hospice as well. And it just sort of feels very disconnected from the larger goals The government has in terms of, well, are we really saving money now around in the background? There's the spending outside. The benefit and all these other things that, you know, continue to be an area of focus. But this, I think, was so heartening for so many people to read because it's what we've been trying to say and I think have been saying. But now we have proof behind us. So I think it was a real seminal moment when this report was released.

00;06;25;04 - 00;07;55;14
Bryan Nowicki
Yeah, I agree. And I think spending outside the hospice benefit is a concern. The data that was used for this report really was around 2019. I think that's when they had the most recent data available. And what they found is in 2019, hospice saved Medicare 3.5 billion. That's one year alone. I read an article this morning that talked about the spending outside the benefit. And over a course of a number of years, that amount totaled I think between six and 7 billion. So if you look at the hospice savings, it's even covering the payment outside the benefit. Not that we don't need to be concerned about that or that Congress isn't going to see that as a way to save more money. But it really puts stuff into a pretty good expensive, pretty good perspective. And Meg, I think like you were suggesting, it really makes you think about the enforcement priorities of MedPAC and CMS auditors when they're going after seemingly longer length of stay patients or expecting everybody to be on hospice a day or two. It's kind of shooting themselves in the foot. They are disincentivizing the most those kinds of claims where the cost saving is the greatest. So hopefully this kind of report will cause CMS to rethink its priorities and kind of rethink where the money really is that it's looking for to try to save taxpayer dollars.

00;07;56;11 - 00;11;06;19
Meg Pekarske
Well, and something that that struck me in the report, too, is utilization of hospice by Medicare decedents. I mean, it's moved a little, but not significantly. So in 2019, 51.6% of Medicare beneficiaries use the benefit. Now, I think COVID skewed things for a number of years and whatnot. So this is obviously before that. But I mean, I think it is slowly increase, but I think it's sort of stayed stuck at around 50%. And obviously utilization, you know, by different racial or ethnicity groups is also really variable. And and in terms of the administration's focus on health equity, I think even in the new wage index rule, I mean, how are we reaching out to community is that we have underserved and all that stuff because I think there should be higher utilization of of hospice because 51% still only half. Right. So and you know, people die in different ways. So not everyone will have the chance to be on hospice. But I think that, you know, if there is you know, and if the Carvin, I guess, happens, that may change utilization, too. I mean, that's the hope, right? Is that if were carved into Medicare Advantage, that perhaps people will come on earlier and maybe more people will act because they're informed about really what the benefit is involved in. And so so anyway, I think that that there's still a lot more work to be done in terms of utilization. And I think that the frustrating thing about this report is what we've already touched on is just that you have a disconnect between, you know, one side of the mouth is saying, hey, this is this actually supports cost savings, but then we're going to audit the heck out of that same population and create disincentives to to care for these patients. Because when you have these these audits that obviously we talk about a lot on these podcasts and many of them are extrapolated audit findings, I mean, hospices are really left holding the bag for the most expensive time in someone's life because they're essentially saying, I'm going to pay, you know, money for this patient. Even though you provided all these services, the government got the benefit of the cost avoidance, right? They didn't go to the E.R., They weren't in the ICU. So they're not going to pay us for our services. And also, they didn't have to pay for these other costs. And so there's really this sort of incentive by the government to to audit this as additional cost savings that isn't even really reflected in here when they do audits and claw back all this money.

00;11;06;19 - 00;13;03;08
Bryan Nowicki
Right, I mean, it becomes very counter intuitive with the way the government is behaving here, because when you look at the conclusion of this report that hospice saved 3.1% to Medicare, when you compare hospice and non hospice patients, so when a hospice gets audited, they're already going in there knowing that this hospice saved the Medicare trust money. And you know we come up with ALJ is we get involved with ALJ is who really emphasized their goal of protecting the trust fund and wanting to make sure they're not Medicare is not paying for inappropriate services. Well, when they deny hospice claims, they seem to be failing to see what happens next. And that is they're incentivizing patients or providers to tighten up the hospice benefit. Have these people go on regular Medicare for longer to cost the Medicare benefit even more money than if they were to go on hospice? And some of the figures here kind of play out that hospice is underutilized and not really being allowed to perform at its best the way it should. Hospice saving, Saving started day 11, like I said, but the median median hospice stay is 18 days. So, you know, that's a result of, you know, physicians exercising their clinical judgment, but doing so in a climate of audits and contractors, telling hospices that you're admitting ineligible people, 75% of hospice patients die within seven to die within 87 days. And this is for a 180 day benefit. You know, you need to be have a six month prognosis, not a three month prognosis. And yet the vast majority die within 87 days. Again, they're not allowing the hospices to achieve the kinds of cost savings that are additional cost savings that are out there through these kinds of enforcement practices.

00;13;03;12 - 00;16;13;05
Meg Pekarske
And while this study didn't get into to this, I guess that's my closing thought is I just think what we provide as hospices is exceptional care. So suggests cost saving and all this stuff. But to really humanize what we're doing at the bedside as we are leaning in to help people at a time in their life that is scary and difficult and can feel like it existentially. Crisis, right? And so not just having, you know, your medical needs addressed. Right. But it's the spiritual, the emotional support for not just you. I mean, I, you know, have friends and family who, you know, when this is happening to you, you know, having someone to help be a guide in what it feels like, very uncharted territory is just exceptionally important. So not only are we because so much of the time when I hear cost savings, I'm worried that I'm going to get less, not more. But I think what with hospice, we are saving money and people are getting more and they're getting I think patient satisfaction for hospice is incredibly high and I just think this model of care needs to be preserved and expanded, and I think that this report helps support that. So I think it's really helpful. I mean, everything's about data these days. And so I think it's a, you know, tremendous benefit to the industry, to have this report and have it. I mean, I think this was a long time in the making, too, to get this, you know, report and to do this analysis because it's really very much needed because I feel like we've been on our heels to saying, but we do show value because, you know, when the discussion is very one sided, it can be difficult. I think it will be interesting with the new wage index for 2024, they're asking the industry for a lot of comments about certain data points in terms of utilization and other things and how the benefit work. So I think that this is an important piece in the ongoing dialog of what should hospice look like in the future and who is it for and what should it be doing. I just hope that that nucleus of what hospice is, which is caring for the four quadrants of our being and that the unit of care is the patient and the family does not go away as we you know, look to what does the future look like. So this is probably something I'm most excited about that's happened in a number of years. So I guess any closing thoughts from you, Bryan? I got on my soapbox there for a little bit, so I was very probably glazed over. I've heard that some other times.

00;16;13;05 - 00;17;03;13
Bryan Nowicki
Like but but it's important to say and I think it's great to have some some pushback, as you said, because I think there were some older studies that suggested hospice saved money and then there were some counter studies to that. But this is very, very thorough. It's recent. Now, maybe CMS or other folks would push back on it. But I think the word is hospice. It does great things for people and it's a program worthy of government support. And that does that deserve a lot of the regulatory enforcement measures that are cast with such a broad net, such a wide net that catches a lot of really quality hospice in its scope. So the government should be a little bit more focused and kind of consider the economic impact of what its enforcement measures are going to result in.

00;17;03;17 - 00;17;14;10
Meg Pekarske
Yeah. So while this is great news to to share and look forward to using this and our future advocacy for the industry.

00;17;14;20 - 00;17;19;06
Bryan Nowicki
Absolutely. Thanks, Meg.

00;17;19;06 - 00;17;36;22
Meg Pekarske
Well, that's it for today's episode of Hospice Insights, The Law and Beyond. Thank you for joining the conversation. To subscribe to our podcast, visit our website at or sign up wherever you get your podcasts. Till next time, may the wind be at your back.