By Maya Goldman
As Medicare Advantage grows bigger and bigger, there’s one area the industry and regulators haven’t figured out how to make work yet: hospice.
Why it matters: The end-of-life care option is the only Medicare service that can’t be offered in the private-run alternative, which now covers over half of enrollees.
- Medicare is winding down an experiment — years earlier than expected — that let some Medicare Advantage plans offer a hospice benefit, citing operational challenges and limited interest from insurers and hospices.
Catch up quick: Usually, when a Medicare Advantage beneficiary decides to enter hospice after receiving a terminal diagnosis, traditional Medicare pays for this care while they remain enrolled in their private plan.
- That could make navigating insurance “very, very clunky” for hospice patients, especially when they have health care needs unrelated to their terminal illness, said Lynne Sexten, CEO of Agrace Hospice.
- And this affects a lot of people. Nearly half of the 1.7 million Medicare Advantage beneficiaries who died in 2022 used hospice services, according to the Medicare Payment Advisory Commission (MedPAC).
- Experts say the roots of this awkward arrangement likely goes back about 40 years, when private Medicare first became a permanent offering. At the time, traditional Medicare had just started covering hospice, so officials had limited data on how much it cost.
What they did: Medicare’s Innovation Center began an experiment in 2021 that allowed Medicare plans to contract directly with hospice providers.
- It aimed to test whether that could make end-of-life care transitions more seamless for Medicare Advantage patients while reducing costs and improving care quality.
- Participating health plans also covered palliative care and transitional care, where patients continued curative treatments like dialysis or chemotherapy temporarily during their hospice stay.
The Innovation Center announced abruptly in March that it would end the program in December, a year after officials said it would run through 2030.
- The news came after two major insurers — UnitedHealth Group and Elevance — pulled out of the model. Only 13 insurers participated this year.
- Hospices largely cheered the decision. Lower reimbursement rates, delayed payment from insurers and burdensome quality reporting made the experiment difficult for hospices that chose to contract with insurers, an independent evaluation of the program found.
- The Centers for Medicare and Medicaid Services stressed that its decision to end the experiment doesn’t mean it failed, and the agency in a statement to Axios said it will continue to evaluate results.
Many insurers also faced a learning curve on how to work with hospice for their Medicare enrollees. Hospice is delivered and paid for differently than other Medicare benefits.
- The experiment tried to do too much too fast, said Kevin Kappel, vice president at SCAN Health Plan, a nonprofit insurer that joined Medicare’s hospice experiment last year.
- “I think people underestimated how complex it was to do. … We’ve learned a lot,” Kappel said.
Yes, but: Hospices and insurers said they still need to figure out how to make care more seamless for Medicare Advantage beneficiaries.
- “This is by no means the end of the story for end-of-life care providers and MA plans,” said Ethan McChesney, policy director at the National Partnership for Healthcare and Hospice Innovation.
- It’s been a full decade since MedPAC, the congressional advisory committee, recommended including hospice in Medicare Advantage, warning that excluding it “fragments care accountability and financial responsibility for MA enrollees who elect hospice.”
What we’re watching: Industry leaders say hospice doesn’t necessarily have to become part of Medicare Advantage to improve care integration, or at least not right away.
- Ohio’s Hospice, a nonprofit provider that participated in the Medicare experiment, said it will continue working with Medicare plans to extend palliative care and symptom management to more patients, CEO Kent Anderson said.
- While Anderson said some peers worry about the growth of Medicare Advantage, “the longer we sit outside the managed care world, the less relevant we’ll become.”
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