How Does Hospice Get Paid?
Caregivers who have researched private care services are often perturbed that their hospice agency is receiving such a "high" rate of reimbursement from Medicare. They look at the amount of caregiving help they could purchase at an hourly rate, and they wonder why the hospice agency is getting so much. Some caregivers have asked whether these reimbursement rates might almost be the equivalent of fraud.
Hospice services are covered by Part A of Medicare. This is the same "part" that covers hospital care, and the way Medicare covers hospice is similar to the way hospital care is covered. Medicare pays hospitals according to a patient's diagnosis. In very simple terms, a broken hip is reimbursed at $X, and a heart attack is reimbursed at $Y. If the hospital can successfully treat and discharge a patient in fewer days than expected, the hospital will make money. If the patient must stay in the hospital longer than average, the hospital will "lose" money treating that patient. The hospital uses the money they made when they treated the first patient to cover the additional costs of treating the second patient.
Medicare pays hospice agencies a flat daily rate. In return for that flat daily rate, the hospice agency provides *Physician services * *Pharmacist and pharmacy services *Nursing care *Medical equipment and supplies *Medications for symptom management and pain relief *Home health aide/homemaker services *Therapy services *Social work and counseling services *Short-term inpatient or respite care *Pastoral care *Volunteer services *Bereavement services for up to one year
The flat daily rate is the same, no matter how much care the hospice agency provides or what the patient's diagnosis may be.
The first few days of hospice care are often very labor intensive and costly for a hospice agency. The nurse may spend several hours over several days setting up a care plan, working with family caregivers, communicating with the doctor and the pharmacist, and coordinating the other disciplines who will be helping with care. Because they are new to the patient and family, all the other hospice caregivers may need more time than usual to familiarize themselves with the home and the needs of their patient. Social workers, chaplains and other support personnel will be making initial visits.
If death is not imminent and the patient is doing well, the amount of time the hospice nurse and other caregivers are in the home will usually decrease after that initial flurry. If there is an emergency or crisis, however, they will return as needed and stay as long as necessary.
As the patient more actively approaches death, hospice caregivers will step up their presence. The nurse may increase visits from weekly to every other day, and then to daily. The aid, who may have initially come several times a week, will come every day and stay longer to provide personal care. Ancillary staff members, such as the chaplain and the social worker may come more often. Additional medication and equipment may be needed as the patient's condition declines.
During the last few days several shifts of trained aids may be at the patient's bedside around the clock, with the nurse always only a phone call away.
Although the hospice is providing a great deal more care in the very beginning and at the very end of their time with the patient, the reimbursement they receive does not change.
So, although it may appear that a hospice provider is being overpaid for the amount of time they spend in a patient's home during the "easier" periods, they must keep these funds in reserve to cover their costs during periods of intensive care.
Obviously, hospice providers have a greater opportunity to make a profit if a patient enrolls sooner rather than later. If a patient is very close to death before enrolling in hospice, admission and final days' expenses will be high. There will be no opportunity for the hospice agency to cover some of these expenses during the quieter "middle" period. No hospice agency can survive if all of their patients are near death before they enroll.
Medicare pays non-profit and for-profit hospice agencies the same. There should be no difference in the kind and quality of the care provided by for-profit and non-profit hospice agencies. The difference between the two is that a non-profit hospice agency is required to use any funds remaining after they cover all of their costs to provide extra services or indigent patient care. The for-profit agency may also provide indigent care. They also have owners or stockholders who receive a portion of any remaining profits.