Hospice:
For Better Or Worse, Hospices Face Uncertain Payment Future
Published on Thu Oct 21, 2004
CMS could decide hospice rates are too low - or too high. One way or another, changes to Medicare hospice payment rates will be coming down the pike.
The Government Accountability Office urges the Centers for Medicare & Medicaid Services to take a long, hard look at the appropriateness of current hospice payment rates in a new report, "MEDICARE HOSPICE CARE: Modifications to Payment Methodology May Be Warranted" (GAO-05-42).
And if CMS fails to follow up, Congress is apt to reduce hospice payment rates anyway, predicts Janet Neigh with the Hospice Association of America. "I think something is going to happen and it is kind of scary," Neigh tells Eli.
Many hospices would welcome a payment review, believes Heather Wilson, president of hospice consulting firm Weatherbee Resources in Centerville, MA. "The world in which hospices operate has changed so significantly since 1983" when the Medicare benefit began, Wilson notes. CMS should update payment rates to reflect those changes, she says.
The GAO points out some of those changes in its report. "Several aspects of the hospice per diem payment methodology may not reflect how hospices currently deliver services," it says.
One of the most relevant differences between 1983 and now is the ratio of services providers offer under routine home care (RHC). The costliest items and services (nursing, social services, drugs and medical equipment) have gone up while the less expensive services (aides, supplies and outpatient services) have decreased, the GAO found.
"The largest cost increase occurred for drugs, which rose from 3 to 15 percent of RHC costs," the GAO explains. Hospice officials told the GAO drugs have become one of their greatest cost pressures.
"We have definitely seen an increase in costs of routine care related to medications and treatments," says Meredith Goodrick, hospice director for Munson Home Health in Traverse City, MI.
Lengths of stay have decreased as well, the report adds. In 1983 the mean LOS was 70 days but it is now 50 days. That's another pressure on hospices, because services are mostly concentrated in the first and last days of the stay.
Decreasing LOS is what has most affected Munson's operating margin, Goodrick relates. "The short lengths of stay are very costly."
"It is hard to believe that a per diem rate of $122 per day for routine home care ... covers the cost of care provided," Wilson says. The GAO urges CMS to collect some solid data to make future payment adjustment decisions. Data would most likely show "the current payment rates do not adequately compensate hospice programs for the costs of the comprehensive services provided," Wilson expects.
Payments Exceed Hospice Costs, GAO Says Goodrick thinks it's time to reevaluate hospice payments. But "I fear that it would be a vehicle to reduce payment," [...]
