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Published On January 28, 2015

POLICY

Fixing Medicare's Hospice Problem

New approaches can combat the steep costs of caring for dementia patients.

There’s a basic problem in financing hospice care for patients with dementia. Their “end of life” may last far longer than the six-month period that Medicare will normally pay for. If their coverage is extended indefinitely, the costs would exceed Medicare limits—while excessively compensating hospice agencies. 

That’s because hospice patients’ needs and costs are highest at the beginning and near the end of life. During the more stable interim period, they need fewer visits from hospice nurses and other caregivers, but the hospice agency receives a steady reimbursement nevertheless. One fix for that problem, suggest Stephanie Patel and Robert Warren of Care Dimensions, a hospice in Danvers, Mass., would be to reduce reimbursement during that stable period and raise it when needs and costs spike at the end.  That might discourage abuse of Medicare’s hospice benefit and decrease government outlays while also serving the needs of long-term dementia patients. In 2013, an advisory committee’s report to Congress suggested such a change—but it hasn’t happened yet. 

Care Dimensions has devised its own scaled-down program, in which its team cares for patients who have been discharged from hospice with monthly, rather than weekly, visits. Not many families can afford the program, which isn’t covered by insurance, but Patel hopes to interest a health insurance company in creating a pilot program. Last year, Hospice of the Valley in Phoenix also instituted a private-pay program. They accepted some patients without reimbursement to demonstrate to the government  that this is a better, more cost-effective way to care for people with dementia.

In a related approach, a growing number of hospitals now provide palliative-only care to dementia patients. “But most people who need palliative care aren’t in hospitals,” says Diane Meier, a palliative care researcher and geriatrician at Mount Sinai Hospital in New York City. “They’re in their own homes, retirement communities, nursing homes, cancer centers and dialysis units.” Reaching those people will require new federal policies.