The Medicare Hospice Payment System

A Preliminary Consideration of Potential Refinements

by Nancy Nicosia, Elaine Reardon, Karl Lorenz, Joanne Lynn, Melinda Beeuwkes Buntin

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Recent changes in the patient population and provision of care have generated interest in re-evaluating Medicare’s per diem payment system for hospice. Given the limitations of the Medicare data with respect to patient-level resource utilization, the authors rely on visit data from a large national chain of hospice providers. The findings suggest that the hospice payment system reflects resource use and that available case mix adjusters would not substantially improve the system’s performance. However, they also find that the per diem system could be adjusted to more accurately capture variation in costs within stays. Future data collection and analysis efforts should focus on more detailed and comprehensive measures of patient-level utilization and on patient characteristics that relate directly to necessary care.

The research described in this report was prepared for the Medicare Payment Advisory Commission and conducted by RAND Health.

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