From the Guidelines
Hospitals receive payment for hospice care primarily through Medicare's Hospice Benefit, which covers most hospice services in the United States, with payments made directly to the hospice organization, not to the hospital itself, unless the hospital owns the hospice. When a patient elects hospice care, Medicare pays the hospice provider a daily rate based on four different levels of care: routine home care, continuous home care, inpatient respite care, and general inpatient care 1. These payments are predetermined and adjusted for geographic differences in wages. Private insurance companies, Medicaid, and the Veterans Administration also provide hospice benefits, typically following Medicare's payment model. The hospice provider is responsible for covering all services related to the terminal illness, including medications, medical equipment, nursing visits, social services, chaplain services, and bereavement support.
Some key points to consider in the payment for hospice care include:
- The payment system is designed as a capitated model, meaning the hospice receives the same daily rate regardless of the specific services provided each day, which encourages efficient resource use while meeting patients' needs 1.
- Hospitals that provide inpatient hospice care through contracts with hospice organizations receive payment from the hospice provider, not directly from Medicare or other insurers.
- Palliative care has been shown to reduce costs and improve patient outcomes, with a savings of more than $8,600 per Medicare beneficiary 1.
- Inpatient palliative care consultation can improve care and reduce costs, with a 30-day readmission rate cut from 15% to 10% if a goals-of-care discussion is conducted 1.
Overall, the payment for hospice care is designed to provide comprehensive and efficient care to patients with terminal illnesses, while also reducing costs and improving patient outcomes.
From the Research
Hospice Care Payment
Hospitals and hospice care providers get paid for hospice care through various payment systems, including:
- A per diem payment system, where a fixed daily rate is paid for each patient, regardless of the actual cost of care 2, 3
- A capitated payment system, where a fixed payment is made for each patient, regardless of the actual cost of care 4
- Medicare payments, which are made based on a patient's diagnosis, demographics, and length of stay 5
Payment Structure
The payment structure for hospice care can create financial incentives for providers to select patients who require less resource-intensive care and have longer hospice stays 6. For example:
- For-profit hospices may be more likely to select patients with diagnoses associated with lower-skilled needs and longer lengths of stay, such as dementia or other non-cancer diagnoses 6
- Nonprofit hospices may be more likely to select patients with cancer or other diagnoses that require more resource-intensive care 6
Factors Affecting Payment
Several factors can affect the payment for hospice care, including:
- Patient diagnosis and demographics 2, 5
- Length of stay 4, 6
- Location of care (e.g. home, nursing home, hospital) 6
- Type of care provided (e.g. routine home care, inpatient care) 3
- Profit status of the hospice provider 6
Payment Efficiency
The efficiency of the payment system for hospice care can be improved by: