Medicare Hospice spending has seen an exponential increase over recent years, particularly in the for-profit sector. For-profit hospice organizations have also increased—primarily in for-profit hospices, which accounted for over 63 percent of total hospice provision upsurges within the nation. Moreover, for-profit hospice centers receive more money from Medicare than their non-profit counterparts.
As far as the enormous uptick in hospice spending, much of it is largely attributed to the flat rate of per diem payments afforded to all hospice types (e.g., for-profit, nonprofit, and government). Currently, Medicare pays 95 percent of patient respite care expenses so long as their life expectancy is six months or less, which can add up to a little over $150 per day. This incentive has led to lengthier stays in hospices. Arguably more concerning, however, are the under-regulated eligibility requirements for which hospice patients qualify for healthcare.
For-Profit Hospice Organizations Under Closer Scrutiny
The Justice Department recently cracked down on for-profit hospice care facilities due to accounts brought forth by whistleblowers from some very large for-profit hospice organizations. One 2017 court case, United States v. Vitas Hospice Services, LLC ruled a payment of $75 million for violating the False Claims Act by inflating levels of care and submitting false claims for hospice care.
Other cases have included such accounts of aggressive and extensive recruiting of hospice patients, practices for which are largely, yet allegedly, inappropriate. In fact, the Journal of the American Medical Association conducted a study that demonstrated for-profit hospices experienced:
- Spikes in patients whose illnesses required fewer medical needs
- Longer lengths of patient hospice stays
- Receipt of higher Medicare payments made to for-profits
MedPAC: Watchdogging Hospices
In 2017, the Medicare Advisory Committee (MedPAC), which is a watchdog group appointed by Congress, revealed that the average stay of a hospice patient is increasing by 6.8 percent annually. As evidenced by this trend in MedPAC’s March 2021 Report to the Congress: Medicare Payment Policy, Medicare spent $12.3 billion — over half of total hospice spending — on patients with stays exceeding 180 days. MedPAC’s data further suggests that this trend is largely due to financial incentives reaped by for-profit hospices. The MedPAC study indicated that of the 4,840 medicare participating hospices, over 71 percent were for-profit, with individuals staying in the facilities nearly 63 percent longer than those in non-profit facilities.
In order to better appropriate hospice spending, MedPAC has submitted recommendations to the Centers for Medicare & Medicaid Services (CMS) such that Congress should direct the Secretary (CMS) to mandate:
- A hospice physician or advanced practice nurse visits the hospice patient to determine continued eligibility prior to the 180th day of recertification.
- Certifications and recertifications document the patient’s prognosis in a clinical context.
- When over 40 percent of total cases of hospice stays exceed 180 days, these instances must be medically reviewed.
Further, MedPAC has revealed that, while the average hospice patient stays for a non-profit hospice organization is 68 days, the average stay for a for-profit hospice patient is 110 days.
Recent Changes in Medicare Hospice Payment System
As a result of MedPAC’s various recommendations, Congress approved changes in routine home care rates, including hospice care, with separate payment rates for the initial 60 days of care, and then payments beyond 60 days. This replaced the flat per-diem payment rate currently made to hospice providers, neutralizing payments made to hospice providers by Medicare.
In January 2016, CMS focused on service intensity, add-on payments. These were to be paid in addition to the two routine home care rates. Rather than focusing on payment incentives related to length of hospice stays, these payments focused on promoting and compensating skilled visit provisions at end of life. In the 2022 proposal detailed in the Federal Register, the Department of Health and Human Services revised the Hospice Quality Reporting Program (HQRP) and plans to increase requirements for Health Information Exchange [HIE] systems as per the 2021 Executive Order and support transitions to interoperable health information technology.
What’s to Come for For-Profit Hospice Organizations?
While there has been an increase in Medicare spending in for-profit hospice providers from 2016 to the present, it is unclear whether this increase is attributable to increasing incentives for investor growth or the increase in individuals electing to receive hospice care. However, due to the holistic analysis of the 2021 MedPAC findings and the proposed rules for 2022 by the Department of Health and Human Services, it is likely that new forms of accountability and regulation will emerge for hospice providers in the future. This includes the adoption of standardized Digital Quality Measures (DQMs), such as EHRs and EMRs.
No matter, the days of for-profit hospices capitalizing on lengthier stays for patients who might not even qualify for hospice services will most likely dwindle as time goes on, especially as in-home palliative care services expand.
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