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Report (OEI-02-10-00070)

07-18-2011
Medicare Hospices That Focus on Nursing Facility Residents

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Summary

Medicare spending on hospice care for nursing facility residents has grown nearly 70 percent since 2005. Additionally, hundreds of hospices had a high percentage of their beneficiaries residing in nursing facilities, and most of these hospices were for-profit. Compared to hospices nationwide, these high-percentage hospices received more Medicare payments and served beneficiaries who spent more time in care. High percentage hospices typically enrolled beneficiaries whose diagnoses required less complex care and who already lived in nursing facilities before they elected hospice care.

Medicare currently pays hospices the same rate for care provided in nursing facilities as it does for care provided in other settings, such as private homes. Unlike private homes, nursing facilities are staffed with professional caregivers and are often paid by third party payers, such as Medicaid. These facilities are required to provide personal care services, which are similar to hospice aide services that are paid for under the hospice benefit.

Some hospices may be seeking beneficiaries with particular characteristics, including those with conditions associated with longer but less complex care. Such beneficiaries are often found in nursing facilities. By serving these beneficiaries for longer periods, the hospices receive more Medicare payments, which can contribute to larger profits.

We recommend that CMS (1) monitor hospices that depend heavily on nursing facility residents and (2) modify the payment system for hospice care in nursing facilities. CMS concurred with both of our recommendations. It also agreed that the current payment structure may provide incentives for hospices to seek out beneficiaries in nursing facilities, who often receive longer but less complex care.

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