Comments on the Legislative Intent of Medicare's Hospice Care Benefit

In response to a congressional request, GAO discussed the legislative intent of the hospice reimbursement requirements contained in Medicare law, the payment cap set by law, and the discretion that the Department of Health and Human Services (HHS) has in establishing the payment rate for hospice care.

GAO noted that the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) provided for Medicare coverage of hospice care from November 1, 1983, to October 1, 1986, unless Congress reauthorizes it. Major provisions of TEFRA include: (1) limitation of hospice care to beneficiaries with a life expectancy of 6 months or less; (2) delineation of hospice core services; (3) a requirement of 24-hour care in accordance with a written plan; (4) the provision that services are to be paid on a cost-related basis; and (5) the submission of reports to Congress which evaluate the program. GAO stated that, under the law, the Secretary of HHS has authority to implement a prospective reimbursement system, although GAO believes that Congress did not expect HHS to implement it immediately. GAO noted that, by including the study requirement for a prospective reimbursement system, Congress indicated that it was considering such a system. The payment cap is intended to ensure that payments for hospice care would not exceed the amount that Medicare would spend if the patient were treated in a conventional setting. The language describing the cap is specific and gives HHS no leeway regarding the computation formula. However, HHS has limited discretion in determining the average cost per Medicare cancer case.