Hospice inpatient centers have proliferated since the U.S. Centers for Medicare & Medicaid Services (CMS) rebased payment rates in 2020. While reimbursement increases can foster growth, a convergence of factors complicate providers’ ability to balance a healthy margin with the expanded access to care.
The 2020 rebasing instituted a 2.7% payment increase in payments for three levels of care: general inpatient care, inpatient respite care and continuous home care. This came with a 2.7% cut to routine home care to maintain budget neutrality.
The reimbursement adjustment has allowed hospices to expand their inpatient care programs, according to Todd Stern, executive vice chair of AccentCare.
“We’ve seen an increase in people providing inpatient level of care. The rate adjustment certainly helps with that,” Sterns told Hospice News. “We will continue to develop more and more of that capability as the needs of our communities and the number of communities we serve expand. The change of reimbursement was fair and thoughtful in allowing us to do that.”
AccentCare last year built a new facility in Phoenix. At the time, the facility operated under the auspices of Seasons Hospice & Palliative Care, but the company later unified all of its brands under the AccentCare name.
Like AccentCare, a growing contingent of hospice providers have prioritized greater access to inpatient care.
Among these is VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHEM), which earlier this year opened two inpatient centers in Florida. The company anticipates care for upwards of 900 patients annually. This follows an additional inpatient unit that VITAS opened in the same state the prior year.
Also in 2021, ProCare Hospice of Nevada and CareOusel Pediatrics opened a new unit in its home state’s southern region.
Other 2021 openings included an Ohio’s Hospice of Miami County facility in the city of Troy on the campus of Upper Valley Medical Center.
While 2.7% sounds like a small number, prior to the rebasing, the cost of providing those three levels of care exceeded the amounts hospices were paid.
But the additional dollars did not guarantee smooth sailing. Providers still contend with regulatory and labor pressures, rising costs and the pandemic’s toll on facility-based services.
On the regulatory front, CMS and its Medicare Administrative Contractors have prioritized audits for general inpatient care (GIP) stays that are longer than seven days, though CMS has no rules that limit the time patients can receive those services.
General inpatient care remains expensive compared to the services hospices provide in the home. In addition to across-the-board expenses like wages and salaries, medications and supplies, hospices that operate freestanding facilities must pay to maintain them. To open a new facility, construction costs also come into play.
Meanwhile, hospices are seeing higher price tags for building supplies as inflation balloons, while the workforce shortage pushes up wages, according to Stern.
“The cost to develop inpatient facility structures has risen, as well as wage inflation. These are universal challenges that affect the development of these types of facilities,” said Stearn. “There’s no question that it’s a complex and expensive level of care to provide, but the reimbursement adjustment offsets the costs and makes it more accessible to ensure that we can deliver inpatient care to those who need it.”
Some fear that these concerns create a chilling effect that deter hospices from offering robust inpatient services.
Data from the analytics firm HealthPivots show that among 4,750 separate providers for Medicare-certified hospices in calendar year 2020, about 48% reported no general inpatient care stays that year.
The firm also found that while between 15% and 20% of hospice patients spend some time in a hospice inpatient center, that level of care represents only roughly 1% of care days.
One might assume that this was a result of pandemic-related disruption, but data from the National Hospice and Palliative Organization show that 2020 was not an outlier year. Inpatient stays represented 1.7% of patient care days in 2014 and incrementally dropped to 1.2% by 2018.
Nevertheless, COVID-19 did cause widespread disruption..
The accelerated workforce shortages caused North Carolina-based hospice provider Amorem to temporarily close two of its inpatient care units, consolidating those operations into a single facility.
The outbreak likewise forced HMC Hospice of Medina County to shut down a facility in 2020, though it was able to reopen early this year. The Ohio-based hospice provider is an affiliate of Hospice of the Western Reserve.
Florida-based Community Hospice & Palliative Care, an affiliate of Alivia Care, also recently reopened an inpatient center that temporarily closed to boost capacity for an adjacent hospital during a COVID surge.
But inpatient growth did not stop altogether.
Texas-based Abundant Hospice opened a general inpatient unit in San Antonio last year. Rising need stemming from the pandemic led the hospice to open the facility “sooner rather than later,” CEO and Co-founder Denise Jawarski told Hospice News, though COVID did cause some complications.
“So many people were separated from their families because of the pandemic and their loved ones were dying alone,” Jawarski said. “We opened Abundant Hospice Home in 2021 and are providing a service to patients and their families so they’re able to have a better end-of-life experience. Looking back at the launch, we faced some delays with the government and state agencies [such as] getting licensed with Medicaid for example, due to the pandemic and related shut-downs.”