To Per Diem or Not Per Diem: That Is the Question
My grandson Caleb turns 4 in a few weeks, and I am very excited about the whole thing. I am trying to decide what I should give him. He likes Spider-Man, monster trucks and, somehow, Michael Myers from the Halloween movies. He has never seen those movies.
But I must turn to a somewhat dryer subject, although one that might scare some hospice providers even more than another Halloween film: a recent Government Accountability Office (GAO) report recommended that the U.S. Centers for Medicare and Medicaid Services (CMS) transition hospice reimbursement to a per-visit system rather than a per diem. This would apply to routine home care.
Medicare spent about $27.5 billion on hospice care in 2024, according to the report. GAO estimated that for a large subset of routine home care services, Medicare would have spent roughly $7.6 billion less if payments were based on individual visits rather than a fixed daily rate.
We covered this on Hospice News here.
Proponents of these changes would say that per-visit payment would better align reimbursement with the actual services delivered and could reduce overpayments to providers that furnish relatively few visits. Medicare also could save billions of dollars and improve program efficiency.
However, I think this would be a bad move. Hospice and home health function very differently in terms of reimbursement, and they are not interchangeable.
Some have called hospice “the original value-based care.” The hospice benefit is a bundled, capitated payment system in which the provider assumes essentially the total cost of care. Home health doesn’t work that way. For one, hospice per diems include things that home health visits do not, such as durable medical equipment and medications.
Hospice care involves more than face-to-face visits, including care coordination, on-call availability, family support and interdisciplinary team management, among other things. Not to mention travel costs.
A per-visit model also could create incentives to increase visit counts rather than focus on patient needs, and major payment changes could affect access to hospice services, especially in rural or underserved areas.
GAO’s recommendation doesn’t really take the full picture into account.
Anyway, it would require an act of Congress to change the payment system so dramatically, and that seems unlikely to me.
Do you think that the hospice payment system needs reform? What kind? Drop a comment!
Also, here is a picture of Caleb to cheer us up:
First, Caleb is adorable. And Grandparenting is the best! I'm so glad you're there for him.
On the "dryer" side, as you so aptly described it, yanking holistic care from hospice by reducing it to per-visit reimbursement would be like taking the water out of the ocean and counting only the islands as valuable. Such a bad idea!
Beth