This Insight is part of our Medicare Payment Primers series.
Hospice care is specialized medical care that focuses on comfort, quality of life, and symptom management for individuals with terminal illnesses who are expected to live six months or fewer if their illness runs its natural course. It shifts the focus from curing the illness to providing relief from pain and other symptoms, while also offering emotional, spiritual, and practical support for both the patient and their loved ones.
Patients with Medicare Part A can get hospice care benefits if they meet the following criteria:
- They get care from a Medicare-certified hospice.
- Their attending physician (if they have one) and the hospice physician certify them as terminally ill, with a medical prognosis of six months or fewer to live if the illness runs its normal course.
- They sign an election statement to elect the hospice benefit and waive all rights to Medicare payments for the terminal illness and related conditions.
Items & Services Included in the Hospice Benefit
The Medicare hospice benefit includes these items and services to reduce pain or disease severity and manage the terminal illness and related conditions:
- Services from a hospice-employed physician, nurse practitioner (NP), or other physicians chosen by the patient
- Nursing care
- Medical equipment
- Medical supplies
- Drugs to manage pain and symptoms
- Hospice aide and homemaker services
- Physical therapy
- Occupational therapy
- Speech-language pathology services
- Medical social services
- Dietary counseling
- Spiritual counseling
- Individual and family or just family grief and loss counseling before and after the patient’s death
- Short-term inpatient pain control and symptom management and respite care
Hospice Coverage
After certification as terminally ill, the patient may elect the hospice benefit for
- Two 90-day periods followed by an unlimited number of subsequent 60-day periods.
- After the second 90-day period, the recertification associated with a hospice patient’s third benefit period, and every subsequent recertification, must include documentation that a hospice physician or a hospice NP had a face-to-face encounter with the patient with resultant documentation of clinical findings supporting a life expectancy of six months or fewer.
All hospice care and services offered to patients and their families must follow an individualized written plan of care that meets the patient’s needs.
Hospice Levels of Care
Generally, Medicare pays hospice agencies a daily rate for each day a patient is enrolled in the hospice benefit. Medicare makes this daily payment regardless of the number of services provided on a given day, including days when the hospice provides no services. The daily payment rates cover the hospice’s costs for providing services included in patient care plans.
Medicare makes per diem payments based on one of four levels of hospice care, distinguished by the location and intensity of the services provided:
- Routine home care (RHC): The hospice is paid the routine home care rate for each day the patient is under the care of the hospice and not receiving one of the other categories of hospice care. This rate is paid without regard to the volume or intensity of routine home care services provided on any given day and is paid when the patient is receiving hospital care for a condition unrelated to the terminal condition. Medicare pays two per diem rates for RHC—a higher rate for the first 60 days during a hospice episode and a lower rate for days 61 forward.
Medicare also pays a Service Intensity Add-on along with the daily RHC rate during the patient’s last seven days of life for registered nurse and social worker visits. - Continuous home care: The hospice is paid the continuous home care rate only during a period of crisis, defined as a period in which a patient requires continuous care that is primarily nursing care to achieve palliation or management of acute medical symptoms.
The continuous care rate is divided by 24 hours to arrive at an hourly rate. A minimum of eight hours must be provided. For every hour or part of an hour of continuous care furnished, reported in increments of 15 minutes, the hourly rate is paid for up to 24 hours a day. - Inpatient respite care: The hospice is paid at the inpatient respite care rate for each day the beneficiary is in an approved inpatient facility and is receiving short-term inpatient care provided to the individual when necessary to relieve the family members or other persons caring for the patient at home.
- General inpatient care: General inpatient care may be required for procedures necessary for pain control or acute or chronic symptom management that cannot feasibly be provided in other settings. Examples of appropriate general inpatient care include a patient in need of medication adjustment, observation, or other stabilizing treatment, such as psycho-social monitoring, or a patient whose family is unwilling to permit needed care to be furnished in the home.
Hospice Payment Rates
The hospice payment rates for each service level are published annually. Hospice payment rates are updated annually by the hospital market basket, reduced by a productivity adjustment. Hospices that do not report specified quality data see a 4-percentage point reduction in their annual payment update.
To account for differences in wage rates across markets, the payment rates are adjusted by the area wage index for the location where the services are provided. The amount adjusted for wages varies for each level of service and is based on the pre-floor, pre-reclassified hospital wage index.
Hospice Caps
There are two caps under the hospice program that impact hospice payments by addressing overall costs and payments:
- Inpatient Cap: Medicare limits the number of inpatient care days hospices may provide to 20% of a hospice’s aggregate Medicare hospice days.
- Aggregate Cap: If a hospice’s total Medicare payments exceed its total number of Medicare patients served multiplied by an annual cap, it must repay the excess to the program. This cap is not applied individually to the payments received for each patient, but rather to the total payments across all Medicare patients during the cap year.
Resources
Hospice https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice
Code of Federal Regulations https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-418#se42.3.418_156&node=pt42.3.418&rgn=div5#se42.3.418_156
Medicare Benefit Policy Manual https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c09.pdf
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