Background: Medicare pays a flat per diem rate by level of hospice service without case-mix adjustment, although previous research shows that visit intensity varies considerably over the course of hospice episodes. Concerns pertain to the inherent financial incentives for routine home care, the most frequently used level, and whether payment efficiency can be improved using case-mix adjustment.
Objectives: The aim of this study was to assess variation in hospice visit intensity during hospice episodes by patient, hospice, and episode characteristics to inform policy discussions regarding hospice payment methods.
Research Design: This observational study used Medicare claims for hospice episodes in 2010. Multiple observations were constructed per episode phase (eg, days 1–14, 15–30, etc.). Episode phase and observed characteristics were regressed on average routine home care visit intensity per day; patient and hospice fixed effects controlled for unobserved characteristics.
Measures: Visit intensity was constructed using national wages to weight visits by provider type. Observed patient characteristics included age, sex, race, diagnoses, venue of care, use of other hospice levels of care, and discharge status; hospice characteristics included ownership, affiliation, size, and urban/state location.
Results: Visit intensity varied substantially by episode phase. This pattern was largely invariant to observed patient and hospice characteristics, which explained <4% of variation in visit intensity per day after adjusting for episode phase. Unobserved patient characteristics explained approximately 85% of remaining variation.
Conclusions: These results show that case-mix adjustment based on commonly observed factors would only minimally improve hospice payment methodology.