[UPDATED] GAO: Hospices Should Switch to Per-Visit Reimbursement

Why It Matters

A per‑visit payment structure promises significant Medicare savings and a tool to curb fraud, but it also demands congressional action and could force costly operational shifts for hospice providers.

Key Takeaways

• GAO projects $7.6 B savings with per‑visit hospice payments.
• Low‑visit hospices receive double payments compared to high‑visit providers.
• Congressional approval needed; current law blocks per‑visit transition.
• Fraud‑prone markets host many low‑visit hospices, driving excess costs.
• Industry groups call for broader reforms beyond payment methodology.

Pulse Analysis

Medicare’s hospice benefit has ballooned to $27.5 billion, driven largely by routine home‑care services that are reimbursed on a per‑diem basis. Critics argue that this flat rate fails to reflect actual service intensity, rewarding providers that deliver fewer visits while penalizing those offering more comprehensive care. By aligning hospice payments with the home‑health per‑visit model, the GAO estimates routine‑care costs would drop from $16.7 billion to $9.1 billion, delivering a $7.6 billion saving in a single year.

The proposed shift also shines a light on systemic fraud concerns. GAO data reveal that the 20 % of hospices with the lowest weekly visit rates receive roughly twice the per‑beneficiary payment of their high‑visit counterparts, a discrepancy concentrated in markets already flagged for abuse. Reducing payments to low‑visit providers could deter exploitative practices, yet opponents warn that the per‑diem design intentionally accommodates the unique, interdisciplinary nature of hospice care. Any reform must balance cost containment with preserving the flexibility that allows high‑quality providers to tailor services to terminal patients.

Policymakers face a dual challenge: securing congressional authority to modify the payment structure and addressing broader industry calls for expanded hospice options, such as inpatient respite and high‑cost palliative therapies. Stakeholders like LeadingAge emphasize that payment reform should be part of a larger strategy that improves beneficiary access while safeguarding provider sustainability. As Medicare grapples with rising expenditures, the per‑visit debate underscores a pivotal moment for hospice financing, where targeted savings, fraud mitigation, and care quality must be negotiated in tandem.