Why It Matters

A Government Accountability Office (GAO) report, published June 9, found that Medicare paid approximately $7.6 billion more for hospice routine home care over a three-year period than it would have under comparable home health payment rates, for a selected group of beneficiaries. The structural cause is that Medicare pays hospice providers a flat daily rate regardless of how many visits nurses, aides, and social workers make.

The Big Picture

Medicare's flat daily payment rate means low-visit hospices and high-visit hospices receive identical reimbursement. The report found that low-visit hospices, the bottom 20 percent of providers by visits per week per beneficiary, averaged 2.5 visits per week in 2024. High-visit hospices, the top 20 percent, averaged 5.5 visits per week. Because the daily rate was the same for both, Medicare effectively paid low-visit hospices twice as much per visit as high-visit hospices, on average.

GAO analyzed Medicare claims from 2022 through 2024 for 1,225,049 beneficiaries discharged from hospice in 2024 and 4,340 hospices that served more than 30 beneficiaries. For that group, Medicare paid approximately $16.7 billion for hospice routine home care. Under home health per-visit payment rates for comparable services, when adjusted to account for differences between the two programs, the report estimated the cost would have been approximately $9.1 billion, a $7.6 billion difference.

Medicare hospice spending nearly doubled over the past decade, rising from $15.5 billion in fiscal year 2015 to $27.5 billion in fiscal year 2024; routine home care makes up the bulk of that spending. The report was asked to review hospice services and the payments for those services, examining both how frequently visits are delivered and how per-visit payment rates compare across hospices and against home health rates.

The Centers for Medicare & Medicaid Services (CMS) officials said they will continue to monitor whether further changes need to be made to their existing statute, requiring daily hospice payment rates and providing zero flexibility. The report noted that excess hospice spending "may have negative implications for the sustainability of the Medicare program" and is inconsistent with Medicare's responsibility to be an efficient purchaser of health care services.

Because CMS lacks the statutory authority to restructure payments on its own, GAO issued a Matter for Congressional Consideration, not a standard agency recommendation, calling on Congress to direct the Secretary of Health and Human Services to "revise the hospice payment system for routine home care services to better promote payment efficiency and realize savings for the Medicare program." That matter remains open.

The Bottom Line

Until Congress acts, the payment disparity between low-visit and high-visit hospices remains, and Medicare continues to pay more per visit for hospice care than it would for equivalent home health services.

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