A new report by the Government Accountability Office (GAO), “Medicare Hospice: Action Needed to Pay More Efficiently for Routine Home Care” (GAO-26-107585), said billions could be saved if Medicare paid for hospice in a different way.

GAO said Medicare covers hospice care—through nurse, aide, and social worker home visits—for terminally ill beneficiaries and spent $27.5 billion on hospice in 2024.

Medicare also pays for similar care through its home health benefit for beneficiaries who aren't in hospice. But Medicare pays daily rates for hospice care (regardless of the number of visits) and it pays per-visit rates for certain other home healthcare.

“If Medicare paid per-visit payment rates for hospice care, it would have paid $7.6 billion less for a group of beneficiaries receiving hospice care in 2024,” GAO said. “We recommended that Congress consider directing Medicare to revise its payments.”

Payment Method in Question

GAO said it found that in 2024 for selected beneficiaries and hospices, low-visit hospices—the 20 percent of hospices that delivered the fewest visits per week per beneficiary—averaged about half as many visits per week as high-visit hospices—the 20 percent that delivered the most visits per week.

Low-visit hospices delivered a total of 2.5 visits per week on average, compared to a total of 5.5 visits per week on average for high-visit hospices.

“Because Medicare’s hospice daily payment rates are the same regardless of the number of visits delivered, Medicare effectively paid low-visit hospices twice as much per visit as high-visit hospices, on average,” the report said.

Also, Medicare effectively paid more per visit under hospice payment rates than it would have under rates for comparable home health visits. Hospice routine home care visits and home health visits are comparable because they involve similar services provided by the same types of health care professionals.

“GAO’s analysis of claims from 2022 through 2024 showed that Medicare paid about $16.7 billion for the hospice routine home care but estimated Medicare would have paid about $9.1 billion if the care had been reimbursed under the home health per-visit payment rates for comparable services—a $7.6 billion difference,” the report said.

Though GAO found Medicare spending for routine home care is higher than what it would be under home health per-visit rates, Centers for Medicare and Medicaid Services (CMS) officials said the statute requires daily hospice payment rates and does not provide flexibility for further refinements to the payment structure beyond those made in 2016 and 2020.

GAO said CMS officials also said they will continue to monitor hospice utilization to determine if there is a need for further refinements consistent with their statutory authority.

Reasons for the Report

GAO said its report originated from the fact Medicare’s hospice benefit has seen increased volume in recent years, with Medicare’s spending on hospice care nearly doubling from $15.5 billion in Fiscal Year (FY)2015 to $27.5 billion in FY2024.

“For routine home care provided through its hospice benefit, Medicare generally pays a set amount per day regardless of the number and type of visits delivered. A daily rate may create financial incentives for hospices to provide a limited number of visits, which could affect the quality of hospice care,” GAO said.

GAO was asked to review Medicare hospice services and payments for those services. In the report, GAO analyzed Medicare claims for routine home care from 2022 through 2024 for a selection of 1,225,049 beneficiaries discharged from hospice in 2024 and a selection of 4,340 hospices that served more than 30 beneficiaries. GAO also reviewed documents and interviewed researchers and national organizations and CMS officials on hospice payment reform.

Comments or questions on this article? Contact Patrick Connole at pconnole@parkplacelive.com.