Simulating the impact of case-mix adjusted hospice rates.

The Medicare hospice benefit prospectively reimburses hospices based on the inpatient status of the patient, whether or not the patient is at home, and whether the patient is receiving round-the-clock nursing. Using national Hospice Study data, two case-mix adjusters based on patient functioning and living arrangement were found to be significantly related to per diem cost. These were tested by simulating their impact on hospice revenues. Increasing per diem reimbursements 35 percent for nonambulatory patients living alone only increases hospice revenues by 4 percent; hospices with sicker patients benefit the most.