Care Management

Hospice Programs Save Costs, Reduce Readmissions

August 10, 2017 10:25 am

Applying hospice home-based skills to hospital care and strategic planning may reduce patient stays.

“There are many lessons hospitals can learn from hospice providers,” says John Mastrojohn III, executive vice president and COO of the National Hospice and Palliative Care Organization in Alexandria, Va. “Hospice providers are skilled in managing pain and symptoms at home, and they’ve been doing that for a long time. Applying these home-based skills more generally across the population could reduce hospital stays.”

What are the various ways hospitals interact with hospice?

Mastrojohn: There are a variety of hospital-hospice relationships. Some hospitals or health systems have their own hospice programs. Like any other hospice programs, they have to be licensed by the state and certified by Medicare as hospices. And they provide the same services as community-based hospices.

In other cases, hospitals may contract with outside hospice organizations. In those cases, the relationships can vary. Some hospitals will work with every hospice provider in the community—while others will opt to work with a smaller number of hospices. When hospitals work with outside partners, the hospices bill Medicare, and if patients are admitted to hospitals, contracts spell out payments to hospitals for those inpatient days.

Who are the payers in hospice situations?

Mastrojohn: The majority payer for hospice services is Medicare, through the Medicare Hospice Benefit. That’s a specific benefit that pays for the care of anyone on Medicare with a terminal illness who agrees to receive comfort-oriented care rather than curative care. For those not on Medicare, many health plans have coverage for hospice, and those benefits are often modeled on the Medicare Hospice Benefit. Medicaid will also pay for hospice services for those who are eligible.

The Medicare Hospice Benefit is a per diem payment. There are four levels of hospice care—routine home care, inpatient care, respite care, and continuous care—and the per diem compensation is based on level of care. Hospice is designed to manage care based on that payment. Some hospices will also rely on donations, which will fund care for those who don’t have insurance or for programs that are not traditionally covered.

By the way, one requirement that Medicare has for hospice is that a certain percentage of the work be done by volunteers.

Besides the payments, what is the financial impact of hospice?

Mastrojohn: Studies show that patients in hospice experience a cost savings when they receive hospice care at home because obviously that’s less expensive than being in a hospital. Also, hospice pays for medications and treatments related to patients’ terminal illnesses. Sometimes a family will say, “We didn’t realize hospice would pay for that—we’ve been paying hundreds of dollars a month for those medications.”

Another important financial impact for hospitals can be reductions in readmissions. If something happens to hospice patients in the middle of the night, these patients’ families don’t call 911. Instead, they call hospice. Hospice care was developed to allow people to stay in their homes, and hospice providers can manage many issues effectively at home, thereby making a visit to the emergency department or a hospital admission unnecessary.

How does a hospital choose a hospice partner?

Mastrojohn: There is so much emphasis on quality these days, and hospitals want to partner with hospice organizations that have demonstrated quality in care. There are several organizations that accredit hospices, including the Accreditation Commission for Health Care (ACHC), the Community Health Accreditation Program (CHAP) and The Joint Commission (TJC). In addition to asking about accreditation, hospitals need to be very clear with potential hospice partners about the issues they are facing—for example, “How can you help us with issues that impact our readmission rate or other issues important to the hospital?”

Ed Avis is a freelance writer and editor and a regular contributor to HFMA publications.

Interviewed for this article:

John Mastrojohn III is executive vice president and COO, National Hospice and Palliative Care Organization, Alexandria, Va..


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