Hospital, Hospice Care Payment Changes Could Save Medicare Millions

The Medicare system could save millions of dollars by scaling back payments made to acute-care hospitals that discharge patients early to hospice care, according to a report from the HHS Office of Inspector General.

Within the past decade, hospice care for the elderly has skyrocketed. Medicare Part A payments made to hospitals for discharging patients to hospice care have increased 80 percent between 2007 and 2010, totaling $2.7 billion in 2010, according to the OIG report. Medicare pays hospitals a flat rate when inpatients are discharged early to another provider, such as a skilled nursing home, but this does not apply for hospice care. Medicare typically doles out full payment to acute-care hospitals for inpatients who are sent to hospice care.

The OIG looked at Medicare payments made to hospitals between 2009 and 2010 for transferring patients to hospices, and the agency found that 30 percent of all hospital discharges to hospice care were "early discharges" — meaning hospitals still received full payment but would have received the smaller, flat rate if the patients were sent to another clinical setting. The OIG estimated Medicare could have saved more than $602.5 million over those two years if the policies for early discharge were the same across the board.

The OIG recommended CMS pursue a policy so hospitals receive flat payment rates for discharging Medicare patients early to hospice care, similar to the policy for other clinical settings. However, CMS said adopting this type of policy could have unintended consequences.

For example, if this policy existed, hospitals may extend inpatient care unnecessarily before sending a patient to hospice in order to receive full payment and avoid any payment reductions. CMS also said it needs to determine if it has the authority to expand this type of policy to hospice care.

More Articles on Hospitals and Hospices:

Government Sues Largest For-Profit Hospice Chain for Alleged False Claims
CMS Proposes 1.1% Increase to Hospice Medicare Payments in 2014
The Value of Hospice for Cancer Care

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