The Medicare Hospice Payment System:
A Consideration of Potential Refinements

The purpose of this article is to examine
variation in resource utilization across
and within patient stays in the context of
Medicare’s per diem payment system for
hospice. Visit-level resource utilization data
were linked to patient-level diagnosis and
demographics covering more than 68,000
Medicare patients admitted in 2002 and
2003. Our findings suggest that case mix
adjustment based on diagnosis and demographics
does not improve our ability to
explain variation in resource utilization
across stays. However, we do find that there
is substantial variation in resource utilization
within stays that may not be captured
in the current per diem payment system.