Do Reimbursement Rates from Medicare Undermine Optimal Care for the Dying?

In 1999 and 2000, researchers at Harvard Medical School examined how Medicare helps and/or hinders health care providers in giving quality end-of-life care and made recommendations for change.

Researchers interviewed 54 clinicians and administrators at 35 end-of-life provider organizations (hospitals, hospice agencies, home health agencies, skilled-nursing facilities [SNFs], and medical groups) in five cities (Boston; Cleveland, Greenville, S.C. Miami, and Seattle) and one rural area (the Fargo, N.D./Moorhead, Minn. area).

The project was part of the Robert Wood Johnson Foundation (RWJF) program, Targeted End-of-Life Projects Initiative.

Key Findings

  • The hospice per diem (payment per day) does not reflect current treatment practice; it is too low for high-cost patients and results in access problems for patients in some markets.

  • Some interviewees are concerned about quality of patient care due to reimbursement limitations on hospitals and hospices mandated under the Balanced Budget Act of 1997.

  • SNFs are under reimbursed for certain secondary services (pharmaceuticals, infusion [intravenous] therapy, respiratory therapy, lab tests, imaging services, and patient transportation), creating an incentive at SNFs to avoid patients who need many of these services.

  • The reimbursement rate for rural patients may be too low, considering rural travel costs (including staff travel time).


  • Pay hospices extra—above and beyond the standard per diem—for extremely high-cost hospice stays.

  • Review hospice rates, focusing on how well current hospice per diems account for changes in treatment practices since the Medicare hospice benefit was implemented in 1982.

  • Monitor the implementation of the 1997 Medicare home health payment system's impact on severely ill and dying patients.

  • Explore differences in travel costs among staff serving hospice patients, and adjust per diems accordingly.