3 Potential Policy Options for High-Acuity Palliative Services

Why It Matters

Expanding reimbursement could close a critical access gap for terminal patients needing intensive palliation, while reshaping Medicare’s hospice spending and provider incentives.

Key Takeaways

• MedPAC evaluating outlier, add‑on, and case‑mix payment models.
• High‑acuity services currently underused due to cost uncertainty.
• CMS 2025 rule sought provider input on service feasibility.
• Patient eligibility may shift if services classified as palliative.
• Goal: efficient payments while preventing fraud and abuse.

Pulse Analysis

Hospice care has traditionally focused on comfort measures, yet many patients with end‑stage illnesses require high‑acuity interventions—radiation, chemotherapy, dialysis, or transfusions—to manage symptoms. Because Medicare’s hospice benefit bundles payments into a per‑diem rate, providers often face a financial disincentive to offer these costly therapies, leading to patients forgoing hospice enrollment out of fear of losing access. This tension highlights a broader policy dilemma: how to preserve the efficiency of bundled payments while accommodating the clinical reality of complex palliative needs.

MedPAC’s three proposed pathways each aim to reconcile cost and care quality. An outlier payment would reimburse providers for expenses exceeding a predefined loss threshold, targeting only the most expensive cases. A guaranteed add‑on offers a fixed supplemental amount for each high‑acuity service, simplifying administration but risking overpayment if services are underutilized. The case‑mix adjustment would raise the bundled per‑diem rate for hospices that demonstrably deliver these services efficiently, aligning incentives with outcomes. Each model balances the desire for fiscal responsibility against the risk of creating loopholes for fraud, a concern explicitly noted by MedPAC analysts.

If adopted, any of these mechanisms could reshape the hospice marketplace. Providers equipped to deliver high‑acuity care would gain a competitive edge, potentially expanding hospice enrollment among patients with renal disease or hematologic cancers who currently avoid hospice due to treatment restrictions. For Medicare, the reforms promise better alignment of payments with actual service intensity, but they also introduce new budgeting variables that Congress will scrutinize. Ultimately, the success of these policies will hinge on robust data collection, transparent eligibility criteria, and vigilant oversight to ensure that expanded access does not compromise the program’s sustainability.