General conditions: Payment is made on a prospective per diem basis except for physician services, which are paid for on a fee-for-service basis.

Levels: Different per diem rates are set for routine home care ($94.17 in FY 1997), continuous home care ($549.65 for 24-hour care or $22.90 per hour for a minimum of 8 hours), inpatient respite care ($97.41), and general inpatient care for palliative services ($418.93).

Cap on inpatient care: For a hospice, payments are reduced if total inpatient care days exceed 20 percent of the total number of hospice care days for all Medicare patients.

Overall cap: For a hospice, total payments are limited to an amount equal to the number of Medicare patients multiplied by a statutory cap amount ($13,974 in FY 1997). (Physician services covered by Medicare Part B are not included in the cap.)