Medicare-Paid Hospice Services and Reimbursement

Four Hospice Patient Service Levels Medicare Requires and Reimburses

Aug 14, 2009

When Medicare pays for hospice, providers must offer patients routine visits, continuous around-the-clock care, inpatient care and respite, a "vacation" for caregivers.

According to the US Department of Health and Human Services (HHS), hospice care is a basic elected benefit under Medicare Part A – and under some Medicare Advantage plans – for individuals with a terminal illness expecting to last six months or less. The patient's attending physician and a hospice doctor must certify the illness. Hospice patients waive ordinary Medicare benefits for treatment of the terminal condition, and effectively forgo seeking a cure and settle for comfort measures only. They may revoke hospice at any time and return to standard Medicare-reimbursed coverage that pays for treatment of the disease.

Medicare-Reimbursed Hospice Services

Medicare and Medicaid pay for all hospice treatment.There is no time limit on the benefits.

Hospice programs must provide all four of the following service levels, for which Medicare pays them amounts* noted below, or risk losing their Medicare-approved status:

Routine Home Care Services (2009 reimbursement: $139.97 each day the patient is enrolled): This is the most common level of hospice care, accounting for 95.6% of total US hospice patient care days in 2007.* Routine home care, available to patients residing in a facility or at home, offers these benefits when symptoms are manageable and not "out of control:"

Continuous Nursing Care (2009 reimbursement: $816.94 per day): All hospices, except some small rural providers, must provide in-home around-the-clock services and make a good faith effort to control medical symptoms that "go out of control" and cannot be treated by routine visits. Only 0.9% of total US hospice patient care days in 2007 were for continuous care, indicating few patients were offered or opted for this level of care, or knew it was available.

Medicare defines in-home as an ordinary residence, foster care home, assisted living facility, or even a nursing home. Crisis" symptoms that require continuous nursing care include uncontrolled pain, nausea and vomiting, terminal restlessness or agitation, bleeding and acute respiratory distress.

Continuous nursing services are based on patient and family need, and must be staffed by licensed nurses (not aides) at least 50% of the time. A short-staffed hospice may subcontract needed services, but must orient and coordinate care with the outside provider.

General Inpatient Care (2009 reimbursement: $622.66 per day): When symptoms become uncontrolled, and the patient or family requests an aggressive approach to overcoming barriers to comfort, a suffering patient can be placed in a hospice or acute care facility. Then, extra staff and attention will be provided to meet the patient's needs in an often intense, moment-to-moment assessment of what's occurring and measures to be employed. Hospice staff and the patient's attending physician typically work closely to achieve patient comfort, often by medication adjustment. Hospice may broach the option of terminal (palliative) sedation when a death is imminent.

In 2007, 3.3% of total US hospice patient care days were for general inpatient care.

Respite Care (2009 reimbursement: $144.79 per day): Respite care is for a suffering hospice patient's family who often become exhausted from the many demands and activities of tending to the in-home care of a loved one, and need a break. The patient is temporarily placed in a facility for up to five days so caregivers can take a "vacation," after which the patient is transferred back home.

How Medicare Reimburses Hospice Agencies

Whereas Medicare uses a complex set of diagnostic codes to pay doctors and hospitals specific amounts for "ordinary" sickness, infirmity and injury treatments and procedures, it does not use a fee-for-service model in reimbursing hospices. It pays agencies a daily rate for each day a beneficiary is enrolled in hospice regardless of the actual amount of services furnished on a given day. For example, if a hospice ministers to an in-home patient for 67 days (the Medicare-computed average length of stay in 2005), Medicare pays the agency $9378 (67 days x $139.97) whether the hospice provided one-star or five-star service.

Critics of this per diem system, and the "cap" discussed below, argue that the Medicare payment model is flawed, because it gives hospices a disincentive to provide all services well and completely, and may tempt some agencies–half of which are for-profit operations – to beef up their bottom lines by skimping on quality.

An iteration of Medicare's reimbursement system is its "cap," the maximum yearly aggregate amount it will pay hospices to prevent them from enrolling non-terminal patients who live longer than the suggested six months standard longevity of a terminally ill patient. HHS set the 2009 cap at $23,014.50 per patient, meaning Medicare would reimburse a hospice that enrolled 100 individuals in the "cap year" up to $2,301,450 (100 x $23,014.50), irrespective of actual services rendered or how long it cared for any individual patients.

Hospice agencies serving fewer long-term patients generally fare better financially under this system. For example, a Medicare reimbursement of $36,762 for 45 days of continuous care ($816.94 x 45) would exceed a hospice's average "cap" by nearly $14,000. The cap, like all averages, can be manipulated by raising the water or lowering the bridge. In this example, the hospice could try to compensate for the single-patient "loss" by emphasizing the enrollment of other patients expected to expire quickly and/or require less costly care.

Patients and families considering hospice should interview providers and ask them to disclose the services they provide, their overall philosophy and mission, and additional charges. For example, a hospice may charge a daily rate of several hundred dollars for inpatient care in its own facility.

View with some suspicion an agency reluctant to advertise and offer all four service levels described in this article.

*Medicare payment amounts cited are subject to yearly and/or legislative change and local variation.

The copyright of the article Medicare-Paid Hospice Services and Reimbursement in Hospices is owned by George Daleiden. Permission to republish Medicare-Paid Hospice Services and Reimbursement in print or online must be granted by the author in writing.