Wendy Weingart, MS, RPh

Through recent issuances, CMS has exhibited serious concern about the appropriate billing of services, including prescription drugs given to beneficiaries in hospice care. This is one part of the “beam of scrutiny” now focused on the Medicare hospice program because of coverage discrepancies that will have a significant impact on prescription drug plans (PDPs), Medicare Advantage plans offering prescription drug benefits (MAPDs), and prescription benefit management companies (PBMs) providing Part D services.

Hospice care is an interdisciplinary approach to providing end-of-life care for terminally ill individuals. Using a broad spectrum of professionals and other caregivers, the goal is to help these individuals to continue life with palliative care primarily in their homes, without the inconveniences and disruptions of a nonhospice inpatient environment. Although the concept of hospice care in the United States was introduced in 1963, Congress did not expand the scope of benefits under Medicare Part A to authorize coverage for hospice care until nearly 20 years later, in 1982.

 Since implementation of the hospice benefit, a greater percentage of individuals in hospicecare are dying in the comfort of their homes instead of in hospitals or other institutional care settings.

By design, hospice coverage is an elective for those individuals with a life expectancy of 6 months or fewer if the terminal illness runs its normal course. By electing coverage, the beneficiary is deemed to have waived payments for certain other benefits, except in “exceptional and unusual” circumstances.1 In return, hospices are expected to cover all services, including drugs and biologics, that are used for the palliation and management of the terminal illness and related conditions.

 Payment for these services is reimbursed to hospices through a fixed, per day, per level of care payment structure (per diem payment). This fixed-payment system results in hospices being financially responsible for costs exceeding the payment amount, but able to profit from costs that are below the fixed payment amount. An aggregate cap exists to limit the total payments an individual hospice can receive in a fiscal year for all patients under its care. Hospices are responsible for reimbursing Medicare for any payments that exceed the aggregate cap. This fixed payment structure has been in place since 1983, with little change since that time.

The Affordable Care Act authorized the Secretary of Health and Human Services to collect additional data and information to revise payments for hospice care and for other purposes beginning no later than January 2011. Furthermore, it required the Secretary to use the data to implement changes to the payment system for hospice care no earlier than October 1, 2013.4

Consulting with hospice programs and the Medicare Payment Advisory Commission, and working with its hospice reform contractor, CMS analyzed potential hospice payment system vulnerabilities. Results thus far have identified utilization trends that cause concern about the viability of the Medicare hospice program. These include a 153% growth in hospice beneficiaries and a 421% growth in hospice expenditures between fiscal years 2000 and 2013. Also of concern is a 45% drop in the mean daily hospice drug costs per patient day between 2004 and 2012, a period that includes the start of the Medicare Part D drug benefit.

One area of serious concern was the amount of nonhospice spending on prescription drugs for hospice beneficiaries. Analysis of data for calendar year (CY) 2012 showed more than $1.2 billion in nonhospice expenditures for hospice beneficiaries during a hospice enrollment (

	Digging deeper into CY 2012 Part D drug data, it is estimated that more than $108 million of the total Part D drug expenditures were for likely covered hospice drugs in the following categories: analgesics; antiemetics; drugs used to treat constipation; drugs related to chronic heart failure, chronic obstructive pulmonary disease, and other noninfectious respiratory conditions; and any other drug filled for a patient admitted with diagnosis of debility or adult failure to thrive. Of this gross amount, it is estimated that $86.6 million was paid for by Medicare, $13.6 million by beneficiaries, and $5.4 million by other payers.

		In a March 10, 2014, memo to Part D plan sponsors and hospice providers, CMS issued its final 2014 guidance regarding Part D payment for drugs for beneficiaries enrolled in hospice care.

Numerous hospice and healthcare organizations opposed this guidance and gathered congressional support in an attempt to get CMS to immediately suspend it.

 Driven by concerns surrounding impacts to beneficiary access and operational challenges for hospice providers, Part D plans, PBMs, and pharmacies, CMS met with key industry stakeholders in late June 2014. As a result, CMS issued a memorandum in mid-July 2014 containing revised guidance that supersedes portions of the March guidance and restated guidance from March that remains in effect. Although the effective date of this new “blended guidance” is immediate, CMS expects plan sponsors to have it implemented by October 1, 2014.

 Key highlights of this blended guidance relate to payment responsibility, administrative procedures, the standardized hospice prior authorization form, network pharmacy involvement, and best available evidence.

			The guidance outlines in clear terms the respective drug payment responsibilities among “parties” and under what specific circumstances each party is responsible for the drug costs:

			• Hospices are responsible when a drug is used for the palliation and/or management of the beneficiary’s terminal illness or related conditions.

			• Part D is responsible when a drug is used for the treatment of a condition that is completely unrelated to the terminal illness or related conditions.

			• Beneficiary is responsible (1) when hospice determines a drug is not reasonable and necessary for the palliation of pain and/or other symptom management, but the beneficiary still chooses to have the medication, and (2) when the beneficiary opts to use a nonformulary drug to manage the terminal illness or related condition without trying a hospice formulary alternative first.

	After notification of a Medicare member’s hospice election, CMS strongly encourages Part D plans to implement point-of-sale, beneficiary-level prior authorizations on the following 

 categories of prescription drugs: analgesics, antiemetics, laxatives, and anxiolytics. Drugs within these 

 categories are typically used to treat common symptoms experienced by hospice beneficiaries during the end of life, regardless of the type of terminal illness. Therefore, these drugs would most often be expected to be covered under the hospice per diem, not the Part D prescription drug benefit.

 This is a change from earlier guidance, which encouraged prior authorizations on all drugs used by beneficiaries who have elected hospice.

	Additionally, plans are expected to communicate with hospices and prescribers to make appropriate determinations of payment and must have procedures in place to handle the following types of determinations

. Prior to a claim submission, hospice organizations may initiate communication with a Part D plan to provide documentation that satisfies the beneficiary-level prior authorization requirements.3 To avoid any negative impact on beneficiary access, CMS encourages hospices to initiate communication proactively with Part D plans.

. Originally, the guidance indicated that after submission of a claim, the prior authorization should be subject to Medicare Part D coverage determination requirements (including appeals) and should be processed accordingly by Part D plans.

 Although a coverage determination could still be initiated if circumstances warrant, CMS will now allow hospices to provide information—similar to the prospective method described above&mdash;after submission of a claim and before submission of a coverage determination to satisfy the beneficiary-level prior authorization requirements. Part D plans should accept this documentation without requiring the beneficiary, or other applicable parties, to request a coverage determination.

. In the event a Part D plan has already paid claims before receiving the notification of hospice election for a given individual, it must conduct retrospective reviews of all Part  D claims for drugs in the 4 designated categories previously described for that individual and coordinate efforts to reconcile payments with  hospice providers and/or beneficiaries.3,8 Because of the recent CMS guidance change from placing edits on all drugs to only drugs in the 4 categories, there may be outstanding claim rejections or pending coverage determinations for drugs outside the 4 categories.8 Because of the focus on the beneficiary’s access to care, it is the authors’ opinion that plans should conduct retrospective reviews of these claims to determine coverage as part of their transition plan to the new guidance. In addition, there may be scenarios whereby drugs are provided by the hospice as “compassionate first fills” to beneficiaries at point of sale that require retrospective review and possible reconciliation between the hospice and Part D plan sponsor.

Standardized Hospice Prior Authorization Form

		Included with the July guidance is a draft standardized prior authorization form for use by the hospice or prescriber to communicate information for drug approval, including prospective or concurrent requests.8,9 The first page of the form contains the information necessary to indicate Part D drug coverage as well as hospice election/ termination. Part D sponsors must accept this form but cannot solely require the use of this form. Regardless of the form used, Part D plan sponsors must accept any statement indicating the “unrelatedness” of the drug to the terminal illness or related condition.

 Unlike previous 2014 guidance that required documentation of a “clinically coherent reason,” this documentation could be as simple as including the letter “U” or word “unrelated,” as well as merely listing the drug on the first page of the draft standardized form.

	Part D plan sponsors should encourage network pharmacies to assist beneficiaries in their understanding of the point-of-sale rejection, and direct them to initiate a coverage determination or have the hospice provide information to satisfy the beneficiary-level prior authorization. Also, plans should encourage network pharmacies to assist plan members by faxing any documentation or evidence (eg, prescriber-initiated prior authorization form, hospice benefit termination) to Part D plans that would help provide beneficiaries with immediate access at point of sale.

		Seventy percent of all medication-related hospice beneficiary complaints submitted in May 2014 were related to issues regarding the beneficiary’s hospice election/termination. The majority of these complaints came from beneficiaries unable to receive medications because of point-of-sale edits, despite claiming their hospice benefit terminated.

 Until future rule making can create specified time frames for the submission of the hospice notice of termination/revocation, Part D plans should accept any of the following as evidence of termination submitted by a beneficiary, hospice provider, or prescriber: beneficiary’s written statement of revocation, proof of submission of a final claim indicating revocation, notice of Medicare noncoverage, discharge summary from hospice provider, or page 1 of the draft standardized prior authorization form.

			On May 8, 2014, CMS released for public comment a proposed rule on hospice payment and other provisions for 2015.

 When released, the proposed rule supported and expanded upon the guidance released in March. At the time of this writing, it is unclear how this new July 2014 blended guidance will impact CMS’ final rule making. In the proposed rule, CMS introduced numerous changes impacting the hospice program, including the following 3 key provisions related to Part D:

The cornerstone to an appropriate determination starts with a clear definition of the terms “terminal illness” and “related conditions.” Current regulations define terminal illness as “the individual has a medical prognosis that his or her life expectancy is 6 months or less if the illness runs its normal course.”

Through this proposed rulemaking, CMS suggests the definition for terminal illness be expanded to:

	Abnormal and advancing physical, emotional, social and/or intellectual processes which diminish and/or impair the individual’s condition such that there is an unfavorable prognosis and no reasonable expectation of a cure; not limited to any one diagnosis or multiple diagnoses, but rather it can be the collective state of diseases and/or injuries affecting multiple facets of the whole person, are causing progressive impairment of body systems, and there is a prognosis of a life expectancy of 6 months or less.

		Although related conditions have not previously been defined, CMS is now proposing the following definition:

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Recent guidance and proposed rules for the Medicare hospice program will have a profound impact on plans providing Medicare Part D services.