Medicare Hospice Benefit
According to estimates of the National Hospice and Palliative Care Organization, there were approximately 4,100 hospice programs in the United States in 2005. In that year, more than 1.2 million patients received hospice services, with approximately 800,000 deaths, or one-third of all deaths, in the United States occurring under hospice care. Hospices provided care for patients with various terminal illnesses (e.g., cancer [46% of all admissions], heart disease [12%], dementia [9.8%], debility [9.2%], lung disease [7.5%]). Pediatric patients accounted for <1% of the hospice population, although the number of pediatric programs is growing. About 80% of hospice patients were 65 years of age or older, and one-third were 85 years or older. Under the Medicare Hospice Benefit, 82.4% of hospice patients received coverage in 2005.11
The Medicare Hospice Benefit, implemented in 1983, is funded from Part A (the hospital portion) of Medicare.12 Patients are eligible for this benefit if, in the opinion of two physicians (i.e., patient's primary care physician and hospice medical director), the natural course of their disease will result in death within 6 months. Other insurance payers generally follow this criterion. In electing this benefit, patients must agree to relinquish their regular Medicare benefits, as they relate to the terminal illness, and agree not to seek curative treatment. This benefit links all care related to the terminal illness to the selected hospice program, which coordinates and provides the care. Hospice programs, therefore, have some latitude to establish policy on what they will and will not pay for within the context of the Medicare Hospice Conditions of Participation.13 Hospice care is provided at four levels as follows, all of which can be modified based on a patient's condition or caregiving needs:
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| Table 6-1 Example of Hospice Daily Payment Rates for Routine Level of Care, 2008 Fiscal Year (October 1, 2007-September 30, 2008) | |||||||||||||||||||||||||||||||||||
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- Routine level of care (day-to-day care in the home)
- Continuous level of care used when more skilled care in the home is required
- General inpatient care (reimbursement for a hospital stay related to symptoms that cannot be managed in the home)
- Respite care (up to 5 days in a skilled nursing facility) to give the caregiver a break or respite
Patients may freely visit their primary care provider (i.e., physician or nurse practitioner) for any reason, including reasons unrelated to their terminal illness. The primary care provider will be paid directly by Medicare. Patients may choose to use their Medicare benefits for other unrelated illnesses or to revoke their election to the Medicare Hospice Benefit at any time (e.g., to pursue curative treatment or seek treatment outside the hospice plan of care). Patients may at a later date, choose to return to hospice care or change to a different hospice program, without restrictions or loss of benefits.14
Hospice programs receive a fixed daily payment to provide all care related to the terminal diagnosis (e.g., medications, supplies, durable medical equipment, procedures, home health aides, provider visits, spiritual care, bereavement services). The reimbursement rates for the four levels of hospice care under the Medicare Hospice Benefit are established each summer for the following fiscal year, effective October 1.15 A baseline reimbursement rate is set, along with an adjustment for wage differentials based on the local cost of living.16 As an example, Table 6-1 shows the different reimbursement rates for the provision of routine level of care in San Francisco, California, and Jefferson City, Missouri.
Historically, hospice reimbursement rates have been low and have not kept pace with rising costs. Programs generally have high costs at the start of care because of personnel costs involved in the admission, assessment, and development of the initial plan of care, and obtaining medications, medical equipment, and medical supplies. High costs are also encountered nearer to the end of life, when new problems can appear and symptoms often intensify. In addition, it is becoming more common for patients to be referred to hospice when death is imminent. Median lengths of stay have declined, from 71.8 days during the Medicare demonstration project (1980-1982) to 26 days in 2005 (i.e., half of all patients in 2005 were on service <26 days, half were on longer).11,17,18,19 Furthermore, drug costs have outpaced increases in hospice reimbursement by at least a factor of two based on the average wholesale price (AWP) and wholesale acquisition cost (WAC). These variables (i.e., referrals to hospice later in the course of terminal illness, higher costs at the start of care, shortened lengths of stay, higher drug costs) have placed intense pressure on hospice programs to manage expenses.
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