The Impact of New Hospice Reimbursement Rates in 2016

As of January 1, 2016 Medicare is reimbursing hospices differently for routine home care, which is the basic level of care for hospice patients. Instead of the single daily rate of approximately $160 for the entire time a patient is on hospice, the new system implements a two-tiered payment. For the first 60 days a person is on hospice, payment will be about $185 a day. After that, the hospice will receive about $145 a day, for the rest of the time a patient is on service.

There is one other addition to this payment schedule that allows for greater reimbursement. It is called the Service Intensity Add-On (SIA). Under this rule, the hospice will be reimbursed an additional $38.75 per hour, up to four hours per day, for visits from a nurse or social worker, on any of the last seven days of life.

The impact of these payment changes is hard to predict. Certainly for short-stay patients hospices will do better—but even with the increase, hospices will continue to lose money for patients who don’t live beyond 15 days, which is the average break-even point. Bear in mind that 32% of hospice patients die in the first 7 days, and 60% within the first 30 days. The median length of stay for hospice patients is currently 17 days.

These rule changes were implemented as a result of a Medicare study implying that hospices were taking on patients too early in their illness, because they made more money with longer stay patients.

My concern about the new rules are two fold:

1. The hospice length of stay will drop even further, since the most lucrative cases will be those that last 60 days or less. With the new payment structure, hospices will make less money in 2016 than they did before for patients who are on service longer than 5 months and a week or so. And hospices are already struggling with the reimbursements they receive.The shorter length of stay will make the model of care even more oriented to the medical model. In this regard, it is interesting that the SIA rate will be paid for the visits of only nurses and social workers, not chaplains, even though chaplains are considered a core team member for hospice care and are so important for spiritual support in the dying process. And, less time to work with a patient and family also means it will be harder to do work around meaning and legacy that is a key part of the end-of-life doula program.
2. On the other hand, I believe that the SIA rule is an incentive for hospices to create an end-of-life doula program. As the eyes and ears of the staff, the end-of-life doulas could contact the nurse and social worker during a vigil to call them in when appropriate, thus promoting better use of the SIA payment schedule. And eventually, the increase in payments to hospice might allow them to hire in-house end-of-life doulas to do the lead doula work.

Only time will tell us if these potential positives for the new rules come to be.