The U.S. Government Accountability Office (GAO) has recommended that Congress re-evaluate the Medicare payment structure for hospice routine home care, suggesting that transitioning to a per-visit reimbursement model could have generated approximately $7.6 billion in federal savings between 2022 and 2024. The federal watchdog argues that comparing hospice payments to adjusted home health per-visit rates reveals significant discrepancies in how Medicare compensates for end-of-life care, according to a GAO report released on Tuesday.
Medicare expenditures for the hospice routine home care beneficiaries analyzed in the report totaled roughly $16.7 billion. By applying a hypothetical per-visit payment model similar to home health, the GAO estimated the cost would have been $9.1 billion, a difference of $7.6 billion. This analysis highlights a growing tension between federal oversight bodies seeking to curb spending and industry stakeholders who maintain that hospice care requires a fundamentally different, holistic financial framework.
The Debate Over Payment Models
At the center of the GAO’s findings is the “low-visit” hospice model, which the report suggests receives disproportionately higher effective payments per visit compared to providers with higher visit volumes. The GAO identified these payment patterns by adjusting its model to create what it described as an “apples to apples” comparison with home health services. The goal was to remove variables that typically differentiate the two benefit structures, such as the comprehensive nature of hospice palliative care.
Mollie Gurian, vice president of policy and government affairs for LeadingAge, noted that while the GAO’s comparison methodology is a departure from historical standards, it could serve as a “helpful starting point” for future policy discussions. According to Gurian, the report does not claim to replace the entire hospice payment system but rather provides a framework to move the conversation away from purely theoretical budget modeling. However, she indicated that members of her organization are likely to scrutinize the report for flaws, particularly regarding whether the benchmark home health rates themselves are adequate to cover the costs of care, including travel time and staff resources.
Industry Concerns Regarding Hospice Reform
Industry groups, including the National Alliance for Care at Home, have pushed back against the GAO’s recommendation, arguing that the report oversimplifies the specialized requirements of hospice care. The Alliance contends that hospice is a comprehensive, holistic benefit designed to address the palliation and management of a terminal condition, which necessitates a different regulatory and financial structure than standard home health services.
According to the National Alliance for Care at Home, the focus of federal reform should remain on identifying and eliminating fraudulent activity rather than restructuring the payment system for legitimate providers. The Alliance pointed to the concentration of “low-visit” hospices in geographic areas historically associated with high levels of Medicare fraud as evidence that policy efforts should prioritize enforcement. By targeting these specific areas, the industry group suggests the government could achieve greater fiscal savings without compromising the quality or scope of care for terminal patients.
Financial Disparities and Future Policy
The GAO report underscores a long-standing challenge for the Centers for Medicare & Medicaid Services (CMS): ensuring that payment rates reflect the actual cost of delivering care while preventing abuse of the system. The $7.6 billion figure cited by the GAO represents a significant gap that could prompt future congressional hearings or new legislative proposals aimed at hospice oversight. Industry advocates are preparing to argue that any shift toward a per-visit payment system must account for the distinct skill sets, regulatory burdens, and 24/7 availability required of hospice providers.
As the debate continues, stakeholders are watching for the next official update from the Department of Health and Human Services (HHS) or potential legislative language from the House Ways and Means Committee or the Senate Finance Committee. These bodies hold the authority to initiate formal changes to the Medicare hospice benefit. In the interim, providers are encouraged to monitor future CMS proposed rules, which typically provide the first indication of how the government intends to respond to GAO oversight recommendations. Readers are encouraged to share their perspectives on these proposed structural changes in the comments below.