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Health working paper series. RAND working papers are intended to share researchers ’ latest findings and to solicit informal peer review. They have been approved for circulation by RAND Health but have not been formally edited or peer reviewed. Unless otherwise indicated, working papers can be quoted and cited without permission of the author, provided the source is clearly referred to as a working paper. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. is a registered trademark. 1 Recent changes in the patient population and provision of care have generated interest in re-evaluating Medicare’s per diem payment system for hospice. Given the limitations of the Medicare data with respect to patient-level resource utilization, we rely on visit data from a large national chain of hospice providers. The findings suggest that the hospice payment system reflects resource use and that available case mix adjusters would not substantially improve the system’s performance. However, we also find that the per diem system could be adjusted to more accurately capture variation in costs within stays. Future data collection and analysis efforts should focus on more detailed and comprehensive measures of patient-level utilization and on patient characteristics that relate directly to necessary care