Medicare Advantage and Hospice

The State Hospice Profile™, available from NHPCO, summarizes the use of hospice services by Medicare beneficiaries since 2000.  This chart of the Hospice Penetration Rate, from the National Profile page, shows that enrollees in Medicare HMO plans use hospice at a much higher rate than average.


In 2015, the Penetration Rate for Medicare HMO enrollees was 82% compared to 68% for all Medicare beneficiaries.  In the State Hospice Profile™, Penetration Rate is defined as the ratio of Medicare Hospice Patients Served to Total Medicare Deaths.  The source for these data is the Medicare claims standard analytic files that contain information on beneficiary demographics, deaths, and hospice use.

Medicare began paying for services for enrollees in 1966, and hospice services were included in the Medicare benefit package in 1983.  In 1997, private insurance plans were included in the Medicare program.   These plans are now collectively called Medicare Advantage as distinguished from Original Medicare which is also called Fee-for-Service (FFS) Medicare.   Medicare Advantage plans are also sometimes called Medicare HMO plans.  Medicare Advantage plans must cover all the services that Original Medicare covers, except hospice care.  If a Medicare Advantage enrollee elects hospice, payments for both hospice and other services are made by Original Medicare.

However, in 2014, the Medicare Payment Advisory Commission (MedPAC) recommended that Congress should include the Medicare hospice benefit in the Medicare Advantage benefits package. 

This change, if implemented, would affect a significant and growing portion of the Medicare enrollees who now choose hospice care.

Since 2004, practically all the growth in Medicare beneficiaries and Medicare deaths has been captured by the growth in Medicare Advantage plans.

Source: Medicare Claims Standard Analytic Files
Source: Medicare Claims Standard Analytic Files


Another measure of hospice use is the Death Service Ratio, defined as the ratio between Medicare Hospice Deaths and Total Medicare Deaths.  This ratio for Medicare Advantage has significantly exceeded the ratio for Original Medicare.

Source: Medicare Claims Standard Analytic Files


This gap is all the more remarkable because Medicare Advantage enrollees are, on average, younger than Original Medicare enrollees.  The use of hospice tends to increase with age even among Medicare beneficiaries.

Nationally, about one-third of all Medicare beneficiaries were enrolled in Medicare Advantage plans in 2015.  This is more than double the percentage in 2004.

Source: Medicare Claims Standard Analytic Files


However, in some states the Medicare Advantage enrollment is much higher than average.  In Minnesota, for example, over half of all beneficiaries are enrolled in Medicare Advantage.

These are the facts.  The implication is that any disruption in a hospice’s relationship with its Medicare Advantage patients will have a significant impact on that hospice’s business.