Modernizing the Medicare Hospice Benefit

The Medicare Hospice Benefit is aging along with the patients it is designed to serve. Nearly 40 years since its inception, it may be time to re-examine aspects of the program in light of the ways that patient populations and the larger health care system have changed. 

The hospice benefit was established as a demonstration project in 1970 and became a formal part of Medicare in 1983. At the time, nearly all of the patients who enrolled in hospice were suffering from cancer, and the U.S. Centers for Medicare & Medicare Services (CMS) and its collaborators designed the program around the needs and illness trajectory of those patients. 

Though cancer remains the most prevalent diagnosis among hospice patients, the proportion it represents has shrunk.


Of the 1.49 million Medicare decedents who enrolled in hospice during 2017, cancer patients represented only 30%. Patients with cardiac conditions, such as congestive heart failure, accounted for nearly 18% of enrollees. For more than 15% of patients, their principal diagnosis was dementia, according to the National Hospice & Palliative Care Organization (NHPCO).

“When the benefit was set up, and they were putting those constructs in place, it was exclusively for cancer, which has a very predictable decline and a very predictable median length of stay,” Nick Westfall, CEO of VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), told Hospice News. “Now we are caring for patients with neurological conditions, the Alzheimer’s and dementia components, patients with cardiac conditions, typically in the home, and we do what we can to help keep them in their homes. It’s become more complicated. We have an opportunity to start a dialogue about ways we could consider enhancing the benefit.”

One aspect of the program that some stakeholders would like to see revised is the requirement that a patient must have a terminal prognosis of six months or less in order to access hospice care.


Hospice providers and advocates have called for the loosening of the six-month limitation to allow patients to access interdisciplinary, person-centered care earlier in the course of their illnesses, be it through an expanded hospice benefit or via a new palliative care benefit.

“Limiting hospice to six months really never made sense to begin with; it was a budgetary measure designed to constrain costs, but arguably it does the opposite because what you have is programs that are fixated on low or high lengths of stay compared to an arbitrary number, which is six months,” Edo Banach, president of the NHPCO told Hospice News. “Much better would be an assessment on the front end as to whether someone is eligible or not for a hospice benefit based on the patient’s needs.”  

Palliative care, though distinct from hospice, is often considered a precursor to hospice due to its shared focus on symptom management in accordance with patients’ goals, while still allowing for concurrent curative care.

Rising numbers of hospices nationwide are launching palliative care programs, though few, if any, are turning a profit, leaving the sustainability of some programs in question. In many cases palliative care programs are financed through philanthropy.

But recognition is growing among providers, payers and policymakers of the benefits of palliative care to patients and families as well as the substantial cost savings that such programs can yield.

Home-based palliative care could reduce societal health care costs in the United States by $103 billion within the next 20 years, the nonprofit economic research group Florida TaxWatch said in a report.

Palliative care in general can reduce health care costs by more than $4,000 per patient, according to a July 2017 study in Health Affairs. It can also reduce the frequency of 911 calls, emergency department visits, and unnecessary hospitalizations. Close to 60% of patients who would benefit from palliative care do not receive those services, despite the availability of community-based palliative care as well as hospital-based palliative care, according to a recent report from the New England Journal of Medicine Catalyst Insights Council.

“We need a palliative care benefit where people can access pre-hospice care without having the conversation of six months or less of life,” said Keith Meyers, CEO of LHC Group (NASDAQ: LHCG). “It would most likely be something that would have limited reimbursement, fee-for-service palliative care visits. It wouldn’t be a per diem. Many of these patients in our model come from home health, and our home health nurses know the patients that are on that slope towards hospice, and they can initiate those conversations about end-of-life care. If patients could be introduced to palliative care while receiving home health care that would be a great expansion of the benefit.” 

Though no promises have been made by policymakers about an eventual reimbursement model, they are starting to take up the banner of palliative care as awareness grows of its potential economic value. Several states have passed legislation to increase access to those services, and a group of U.S. Senators in July established a new Comprehensive Care Caucus to address hospice and palliative care issues. 

One barrier to the development of a benefit is the lack of a standardized definition of palliative care. “If you ask 10 people to define palliative care, you will get 13 different answers,” Westfall said during a hospice panel at the Home Health Care News Summit Conference.

“I don’t care what you call it. I care that people are able to get it,” Banach told Hospice News. “There is no Medicare payment for community-based palliative care, and we need one. Then we can determine where palliative care leaves off and hospice lifts off.”

A key differentiator between palliative care and hospice is the ability to continue receiving concurrent curative care, which currently is not an option for hospice patients. This is another point that some stakeholders would like CMS to reconsider.

CMS has explored the idea of allowing hospice patients to receive concurrent care through the test of its Medicare Care Choices Model, which the agency launched in 2016 and plans to conclude in 2020. The model allows participating hospices to provide services that are currently available under the Medicare hospice benefit, but cannot be separately billed under Medicare Parts A, B, and D, while enrollees are also pursuing curative treatments.

CMS pays participants a fee ranging from $200 to $400 per patient, per month while they are delivering services under the model, including care coordination, case management, symptom management, and other support for beneficiaries and families. Unfortunately, many consider the program to be a failure due to low enrollment.

Some have argued that the absence of concurrent care dissuades patients from electing hospice. 

“If you ask my great aunt Ruby why she doesn’t choose hospice — she has end stage COPD — it’s because she doesn’t want to give up anything,” Banach told Hospice News. “It doesn’t matter that there is really nothing for her to give up. There is no curative care for her condition. But it’s the idea of losing curative care that prevents a lot of people from electing hospice.” 

In terms of payment rates themselves, LHC Group’s Myers said he felt that policymakers should revisit the per diem rates for providing routine home care level of service in different settings, such as a nursing home versus a private residence.

“We are paid on a per diem basis, and patients that are seen in their private homes are paid the same per diem rate as patients in nursing homes. There is a huge incentive for people to treat patients in nursing homes and not treat patients in their homes, because think about it, nurses driving from home to home can see fewer patients in a day. The nursing home is the most profitable setting. If I were the payer, I would do a study and bifurcate the payments, especially when it comes to nursing homes where you have other health care services being provided.”

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