Payment ‘Patchwork’ Limiting Near-Term Scalability of Home-Based Palliative Care

Home-based palliative care is an untapped business opportunity for many home health and hospice providers in the U.S., but multiple factors continue to hinder near-term scalability.

Data on the availability of home-based palliative care is limited, so it’s difficult to pinpoint just how large the market really is. Experts familiar with the space have previously estimated that about 50% of all counties have access to at least one community-based palliative care program, however, with hospice and home health organizations often being the main service providers.

To dramatically boost access and expand the market, policymakers will need to rethink traditional Medicare benefits and launch new demonstration programs, while simultaneously monitoring the ever-evolving role of Medicare Advantage (MA).

“What needs to happen is a mobilization on the scale of what … created the hospice benefit to begin with, first as a demo in 1978 and then as a benefit actually 40 years ago,” Edo Banach, president of the National Hospice and Palliative Care Organization (NHPCO), said last week at the Hospice News Palliative Care Conference.

Additionally, private investors will need to further support emerging palliative care startups to fuel innovation.

“That is a massive market,” Chris Booker, a partner at Frist Cressey Ventures, said at the event. “And there hasn’t been a lot of innovation for a while in this space.”

I explore the current state of home-based palliative care in this week’s exclusive, members-only HHCN+ Update, sharing these and other insights from the Palliative Care Conference.

Multiple payment pathways

Across the globe, home- and community-based palliative care has been shown to improve patient outcomes and quality of life. It has also been found to lower health care costs by reducing hospital and emergency department utilization, especially near end of life.

Despite benefits, the delivery of home-based palliative care in the U.S. is still paid for through a complicated “patchwork” of different reimbursement sources. And it’s not uncommon for providers to treat home-based palliative care as a loss leader, either, financing it out of their own coffers.

“It is a patchwork that doesn’t quite meet the need,” Banach said.

PalliCare is among the up-and-coming home-based palliative care players actively navigating that patchwork. The company launched late last year in the Texas market, but has since expanded to other states.

To support its model, PalliCare has partly leaned on Medicare Part B and strategic partnerships, according to COO Tiffany Hughes, an adult geriatric nurse practitioner with experience working in both hospice and home health care. In addition to the home, PalliCare sees patients in assisted living communities and nursing homes.

“We’ve had to build all that out,” Hughes said at the Palliative Care Conference. “And then just start from scratch on things that we might have had to borrow from hospice. We had to figure out who was going to wear those hats.”

Recently, PalliCare has seen more demand from its strategic partners, particularly those operating within value-based care arrangements that are willing to make investments around care quality. To emphasize that point, Hughes recalled a conversation she had with a colleague.

For years, the colleague had struggled making home-based palliative care inroads with a local hospital, which always seemed to put palliative care on the back burner while withholding funding on new initiatives. Yet its tune quickly changed when it got into the value-based care game.

“When value-based [care] came out, she said, ‘I kind of felt like we were like a brand new baby all of a sudden,’” Hughes said. “‘They were like pinching our cheeks. Oh, you’re so cute, palliative care. You fit in great in this value-based world.’”

Banach shared a similar experience. He described how strategic partnerships with managed care organizations and hospitals were critical to the community-based palliative care program he helped establish at a large nonprofit provider years ago.

“I worked at the Visiting Nurse Service of New York, and in 2006, we stood up a community-based palliative care benefit,” he explained. “We had arrangements with managed care and hospitals, and we kind of made it work.”

Accountable Care Organizations (ACOs) and alternative payment models, such as ACO REACH, are additionally playing greater roles in supporting home-based palliative care programs. Specialty providers and risk-based primary care groups are likewise emerging payment sources as well.

“These specialty care providers are starting to take risk and figuring out what their more holistic approach to their clinical side is going to be,” said Booker, whose firm invested in palliative care provider Aspire Health before it was eventually acquired by Anthem Inc. “And then there’s the rise of all these at-risk primary care groups. I think partnering with those groups to create a robust program around what you guys have is meaningful.”

The palliative care investment opportunity

As Booker mentioned, savvy investors recognizing a growing market have become more interested in home-based palliative care.

In February, the home-based, interdisciplinary senior care provider ConcertoCare announced a $105 million Series B funding to scale its platform, for example. The previous month, end-of-life care startup Vynca announced raising $30 million in growth capital, specifically highlighting palliative care as an area it planned to prioritize.

Vynca acquired palliative care provider ResolutionCare in June 2021.

“It is well-known that the vast majority of palliative care consultations are for advance care planning and goals of care conversations,” CEO and co-founder Dr. Ryan Van Wert told Hospice News at the time. “So moving into palliative care was a natural extension, and we are now able to support health care providers and health plans in providing the highest quality care for individuals with serious illness.”

Again emphasizing the value-based care appeal, some of the early-stage health care companies in Frist Cressey Ventures’ portfolio have themselves explored palliative care capabilities, Booker noted. Examples, he said, include Thyme Care and Monogram Health.

“Palliative care has really been a fantastic service for a lot of the value-based companies we invest in,” he said.

More investors are likely to target home-based palliative care moving forward, Booker added, viewing it as a potential solution to health care’s workforce crisis and the need to refocus on “patient choice.” Generally, clinicians feel extremely rewarded when given the chance to deliver home-based palliative care, he said.

A Medicare refresh

Home health providers, hospice agencies and freestanding home-based palliative care businesses have been able to stay afloat through that patchwork of different payment sources. To seriously scale the market and meet demand, though, policymakers need to consider a Medicare refresh.

“What needs to happen is a mobilization on the scale of what … created the hospice benefit to begin with, first as a demo in 1978 and then as a benefit actually 40 years ago.”

– Edo Banach, president, National Hospice and Palliative Care Organization

The biggest catalyst for home-based palliative care would be a formal community-based palliative care benefit, experts believe.

“I think that will make a big, big difference, if we could have that,” Hughes said.

Banach – who previously served as senior advisor and deputy director of the Medicare-Medicaid Coordination Office at the Centers for Medicare & Medicaid Services (CMS) – has been among those calling for a community-based palliative care benefit for a decade.

The rationale for such a benefit has long existed, he said at the Palliative Care Conference, but it has only grown since the COVID-19 pandemic, which left “a lot of people who had a serious illness” with “no real way to actually get the care” they needed.

“It was during a meeting that I had, actually at the White House, where I called CMS, and I said, ‘I worked on a home-based, community-based palliative care benefit when I was at CMS in 2012 and 2013,’” he explained. “‘What’s going on with that? Because we needed it then. We need it even more now.’”

Structurally, Banach believes a community-based palliative care benefit should be developed out of the Medicare hospice benefit, as opposed to the home health benefit.

“I think the better chassis on which to build the palliative care program is where it emanated from, which is the hospice program,” he said. “But as I said before, it’s going to take everybody, meaning home health-only providers, hospice providers and standalone palliative care providers, to meet the need out there.”

Before a benefit could be created, CMS and the CMS Innovation Center would need to craft a demonstration program.

As far as what a community-based palliative care benefit would look like, it would have to be truly interdisciplinary, giving providers flexibility to send all sorts of people into the home, from nurses and caregivers to social workers and chaplains. It would also need to be person-centered and equitable, Banach said.

While some believe the current patchwork and support from private investors is enough, the NHPCO leader argues a Medicare benefit would create a definitive floor for home-based palliative care programs.

“I think laissez faire only gets us so far,” Banach said. “Saying, ‘Look, government, get out of the way. Let the private sector figure this out.’ That only works so far. And I would argue we’ve been doing that for the last 20 years. Now it’s time to have some sort of organized floor.”

Medicare Advantage’s promise

Another layer in home-based palliative care’s payment patchwork is MA.

Since 2019, CMS has gradually expanded Medicare Advantage, giving MA organizations more flexibility in designing supplemental benefits. Prior to 2019, MA plans could provide additional benefits over traditional Medicare benefits, but they had to be primarily health-related and available to all members.

With this added runway, 61 plans opted to offer home-based palliative care in 2020, according to ATI Advisory data. That number increased to 134 in 2021, then to 147 in 2022.

“Medicare Advantage plans can offer supplemental benefits,” Fred Bentley, managing director at ATI Advisory, explained at the Palliative Care Conference. “The idea is that they can offer vision, dental, hearing, other services that make Medicare Advantage enticing – and more enticing than the kind of traditional Medicare fee-for-service program.”

Some of the MA organizations offering home-based palliative care in 2022 include Cambia Health Solutions Inc., Henry Ford Health System, Kaiser Foundation Health Plan and UPMC Health System, according to ATI Advisory.

Overall, home-based palliative care benefits under MA are being offered in 11 states.

“One of the most popular benefits that plans have started to offer – and it’s not every Medicare Advantage plan, but a growing number of them – [is] home-based palliative care,” Bentley said.

Initially, home-based palliative care stakeholders had hoped this MA expansion would increase utilization and access across the U.S. Thus far, that hasn’t happened, according to Banach. What is also becoming increasingly clear is that MA plans are offering “home-based palliative care,” with different definitions of what constitutes such services.

“There’s very little evidence that the promise of the program is being … manifested with the care that people are getting on the ground,” Banach said. “Very spotty access to palliative care. Again, what is palliative care? There’s no uniform definition.”

Medicare Advantage will continue to play a role in advancing home-based palliative care, but even Bentley acknowledged it’s fairly early in this new era of MA expansion.

“I think there is a lot of innovation,” he said. “It’s still early innings, but there’s a lot of opportunity there.”