Hospice Costs

Hospice costs are the out-of-pocket cost of hospice care to the patient and the family. Under Medicare that cost is small and precisely bounded, which makes hospice the least expensive intensive care setting in the program, and it is the one place where Medicare pays for custodial care at all: 42 CFR 411.15(g) excludes custodial care from Medicare "except as necessary for the palliation or management of terminal illness, as provided in part 418 of this chapter."

The confusion that generates most of the unpleasant surprises is between the care and the place. Hospice is a benefit for services, delivered wherever the patient lives. It does not pay rent, mortgage, assisted living fees or a nursing facility's daily room-and-board charge, and electing it does not stop those bills. A family that reads "hospice covers everything" and is living in a facility will find that the facility invoice arrives unchanged.

The four levels decide what Medicare pays the hospice, and which one applies changes with the day. Under 42 CFR 418.302(b), a routine home care day is a day the patient is at home and not receiving continuous care. A continuous home care day is a day of predominantly nursing care given on a continuous basis at home; 418.302(e)(4) requires a minimum of 8 hours of care in the day to qualify for that rate, and the regulation confines it to "brief periods of crisis". An inpatient respite care day is a short-term stay in an approved facility to relieve the caregiver. A general inpatient care day is inpatient care "for pain control or acute or chronic symptom management which cannot be managed in other settings". Paragraph (e)(2) allows payment for only one category on any given day.

A fifth item sits inside the first. 418.302(b)(1)(i) provides a service intensity add-on for routine home care days in the last 7 days of an election ending in the patient's death: an extra payment equal to the continuous home care hourly rate multiplied by the direct patient care actually provided by a registered nurse or social worker, up to 4 hours a day. It is a payment to the hospice rather than a charge to the family, and it is why staffing usually intensifies at the end.

The patient's own liability is two items, and that is the whole list. 42 CFR 418.400(a) sets coinsurance for each palliative drug or biological prescription furnished by the hospice while the individual is not an inpatient at approximately 5 percent of the hospice's cost for it, under a copayment schedule the hospice establishes, "except that the amount of coinsurance for each prescription may not exceed $5". That $5 is a fixed figure in the regulation, not an indexed one. 418.400(b)(1) then sets respite coinsurance at 5 percent of the CMS payment for a respite care day, and (b)(2) caps the total respite coinsurance in a hospice coinsurance period at "the inpatient hospital deductible applicable for the year in which the hospice coinsurance period began". Paragraph (b)(3) defines that period: it begins on the first day an election is in effect and ends at the close of the first 14 consecutive days on none of which an election is in effect. Note the asymmetry, because it is the practical one: respite coinsurance has an annual ceiling and drug coinsurance does not, though the $5 per-prescription cap keeps it small.

What "covered" actually includes is written out in 42 CFR 418.202, and it is broader than most families expect. Nursing care under a registered nurse's supervision. Medical social services. Physicians' services. Counseling provided to the patient and to family members or others caring for them, including dietary counseling, both to train the caregiver and "for the purpose of helping the individual and those caring for him or her to adjust to the individual's approaching death". Short-term inpatient care. Medical appliances and supplies including drugs "used primarily for the relief of pain and symptom control related to the individual's terminal illness", and durable medical equipment for use in the home. Home health or hospice aide services and homemaker services, with aides permitted to do household work "to maintain a safe and sanitary environment in areas of the home used by the patient". Physical, occupational and speech-language therapy for symptom control or to maintain activities of daily living. That list is the reason hospice at home can be dramatically cheaper for a family than the same weeks without it: the aide hours, the equipment and the medications all move onto the benefit.

Now the gap. Nothing in 418.202 is room and board, and the regulation governing hospices serving nursing facility residents says so from the other direction. 42 CFR 418.112(c)(4) requires the written agreement between the hospice and the facility to include "An agreement that it is the SNF/NF or ICF/IID responsibility to continue to furnish 24 hour room and board care". So for a patient living in a nursing facility or in assisted living, the monthly charge for living there continues, and hospice sits on top of it. Whether Medicaid picks up that facility charge for a dual-eligible resident is a Medicaid eligibility question rather than a hospice question, and our Medicaid and nursing home costs pages are where that belongs.

One aggregate limit that is easy to misread as a patient limit. 42 CFR 418.302(f)(1) caps total payment to a hospice for inpatient care, general and respite combined, so that inpatient days for its Medicare patients do not exceed 20 percent of the total days those patients elected hospice. That is a constraint on the hospice's aggregate payment at the end of a cap period, not a quota applied to any individual, and it should never be described to a family as a limit on their own days.

1. The election happens, and Medicare begins paying the hospice a daily rate at whichever of the four levels applies.

2. Care arrives where the patient lives. Nursing, social work, counseling, aide and homemaker services, therapy, equipment and palliative medications come through the hospice.

3. The family's cost sharing is metered in two places only: up to $5 per palliative prescription while not an inpatient, and 5 percent of the CMS respite day payment on any respite day.

4. Respite coinsurance stops at a ceiling. Total respite coinsurance in a hospice coinsurance period cannot exceed that year's Medicare inpatient hospital deductible.

5. Housing costs keep running. Rent, mortgage, assisted living fees or a nursing facility's room-and-board charge continue exactly as before.

A hypothetical. Ines's mother lives in a nursing facility and elects hospice. The facility charges $310 a day for room and board, so a 30-day month costs 30 x $310 = $9,300, and the hospice election changes none of it. Her hospice cost sharing for that same month is six palliative prescriptions at the $5 regulatory maximum: 6 x $5 = $30. The family's monthly outlay is therefore $9,300 + $30 = $9,330, of which $9,300 is the room she was already renting.

Now suppose the family also uses a 5-day respite stay so that Ines can travel. If CMS's respite day payment in their area were $520, a placeholder for the arithmetic rather than a published rate, the coinsurance would be 5 percent of that, $520 x 0.05 = $26 a day, so $26 x 5 = $130 more. Even with the respite stay the hospice-related cost for the month is $30 + $130 = $160 against $9,300 of housing. The $310 and the $520 are illustrative; the $5 and the 5 percent are the regulation.

Pros

• The patient's cost sharing is two narrow items and nothing else, which makes it one of the least expensive things Medicare covers.
• The covered-services list is wide: nursing, social work, counseling for the family, aide and homemaker services, equipment, and palliative medications.
• Custodial care, which Medicare otherwise excludes, is paid for here: the hospice exception is written into the exclusion itself at 42 CFR 411.15(g).
• Care is delivered wherever the patient lives, so a family is not forced to move someone to obtain it.
• Respite is a defined level of care with its own coinsurance ceiling, so a caregiver can be relieved without an unbounded bill.

Cons

• It pays for care and not for housing. A nursing facility or assisted living charge continues in full, and that is the number most families are actually exposed to.
• The drug coinsurance has a per-prescription cap but no annual ceiling, unlike the respite coinsurance.
• Continuous home care requires a minimum of 8 hours in a day and is confined to brief periods of crisis, so it is not a route to routine overnight staffing.
• Coverage is scoped to the terminal illness and related conditions, so care outside that scope is paid for elsewhere.
• The benefit's structure is written in regulation and administered by individual hospices, so what a particular hospice's drug copayment schedule looks like is a question to ask before electing.