Changing how Medicare pays for hospice care could save the U.S. $7.6 billion a year - but at what cost to patients?

By Jessica Hall

The hospice industry argues that the current payment system allows for providers to create individual care plans that meet patients' specific needs

Hospice provides care for people with terminal illnesses who have a prognosis of six months or less to live.

Medicare spending on hospice care is rising faster than enrollment in the end-of-life care. Now the government is proposing a change to the way Medicare pays for hospice care, a move that could save as much as $7.6 billion a year but that the industry says could harm patient care.

Hospice provides care for people with terminal illnesses who have a prognosis of six months or less to live. The goal is to manage pain and symptoms, rather than curing the illness, in the patient's final months, weeks or days before death.

Medicare pays a set dollar amount per day regardless of the number of visits a patient gets or whether the care is provided by nurses, aides or social workers. The daily amount depends instead on the type of care, such as nursing care or home healthcare services such as bathing and dressing. The U.S. Government Accountability Office recently recommended that the payment method for hospice be revamped to pay for the number of patient visits rather than total days a patient spends in hospice.

The industry argues that the current payment system allows for hospice providers to create individual care plans that meet patients' specific needs.

"If we start looking at per-visit reimbursement models, it might open the door to more potential fraud and abuse and have the potential for eroding the quality of care," said Skelly Wingard, chief executive officer of By the Bay Health, a nonprofit that provides hospice, palliative care, skilled homecare and pediatrics services in the San Francisco Bay area. "Providing the right care at the time to the right patient is critical for quality hospice care. Moving to a per-visit model would be drifting so far away from what hospice care was originally intended to be."

A per-visit system would pay the hospice provider for each visit rather than a monthly overall allowance that allows it to adjust care based on the needs of the patient.

The hospice industry has grown, fueled in part by the aging U.S. population, and there has been a boom in for-profit companies entering the industry. Medicare spending on hospice care nearly doubled from $15.5 billion in 2015 to $27.5 billion in 2024, according to MedPAC, the independent agency that advises Congress on Medicare issues. Yet the number of Medicare beneficiaries enrolled in the hospice grew at a slower rate of 32% - from 1.4 million in 2015 to 1.8 million in 2024, MedPAC found.

A per-visit system

Medicare generally pays a set amount per day regardless of the number and type of visits made to a patient, a method of payment that may create financial incentives for hospices to provide a limited number of visits, which could affect the quality of hospice care, the GAO said.

The number of visits per week varies dramatically among hospice providers. In 2024, for example, low-visit hospices delivered a total of 2.5 visits per patient per week on average, compared with a total of 5.5 visits per week on average for high-visit hospices, the GAO found. While the difference may be due to the severity of a given patient's illness, it may also be the result of profit-seeking, the GAO said.

Over half of the "low-visit hospices" were concentrated in seven states - including California, which had 35% of the total low-visit hospices, according to the GAO. Four of the states with 20 or more low-visit hospices have been selected by CMS for enhanced oversight of new hospices due to the rapid growth of hospice businesses in those states.

"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," according to the GAO.

If Medicare had paid by visit rather than under the current model, it would have saved $7.6 billion on hospice care in 2024, the GAO said.

"Our analysis shows that hospices' daily payment rate - in contrast to a per-visit payment rate - likely creates an incentive for longer lengths of stay, fewer visits, or less expensive aide visits because the daily payment rate does not change regardless of the number and type of hospice visit provided," the GAO said.

Hospice in the U.S.

The hospice industry has come under increased scrutiny. As of December, newly licensed hospices in Georgia and Ohio have faced a provisional period of extra oversight, and heightened scrutiny is already in place in hospice-heavy states such as Arizona, California, Nevada and Texas, the Centers for Medicare & Medicare previously said. In May, CMS set a six-month national moratorium on hospice-provider enrollment in Medicare.

The government has been ramping up its investigations of improper care - such as leaving patients in unnecessary pain, signing people up without their consent or failing to properly screen and train employees. Reports of such abuse have become more common as hospice companies proliferate, according to the U.S. Department of Health and Human Services' Office of Inspector General.

The industry trade group for hospice providers, the National Alliance for Care at Home, is against the change recommended by the GAO.

"The GAO report highlighted that low-visit hospices are overwhelmingly concentrated in certain geographic areas that have been prone to fraud, waste, and abuse. The Alliance urges that efforts be directed at rooting out bad actors, whose data informed the GAO report and its findings, and ensuring legitimate, high-quality hospices can continue providing needed end-of-life care," the National Alliance for Care at Home said in a statement. "Discussions of hospice reform should be focused on first stopping any fraudulent activity from wasting Medicare dollars, which would result in greater savings than those identified in this report."

-Jessica Hall

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08-08-26 1004ET