Medicare hospice cost reports yield inaccurate data.

Abstract

A widely quoted statement among providers “we lose money on the Medicare hospice benefit (HB)” is often cited as the reason why more hospices are not participants in the Medicare program. We began this study to detennine the validity of this statement. Our study examined 1987 Medicare cost reports of 15 Colorado hospices to determinerecent costs and compare costs to payment rates. We found that data collected by the cost report isfundamentally inadequate to accurately apportion all Medicare costs. There is an adequatemethodfor only direct salaiy costs. No adequate methods are availablefor other direct costs, such as durable medical equipment-(DME),supplies, ordrugs. There is no way to accurately allocate administrative and general expenses amongthe modalitiesofcare. Methods of segregating Medicare-disallowed costs, such asfundraising, are not adequate to allow these to be properly identified. A cooperative effort is proposed that would unite the hospice community in developing cost accountingreports that can be used inaccurate cost finding and rate setting. Suggested team members are the Health Care Financing Administration (HCFA), the Colorado Hospice Organization (CHO), National Hospice Organization (NHO) and other organizations, hospiceproviders, and consultants.