Hospice Companies Increase Profits by Taking in People Who Aren't Dying

A social movement for more compassionate end of life care is seeing its accomplishments tainted by health care companies seeking to make a profit off of sick, but not quite dying patients, according to an investigation by The Washington Post. Investigators reviewed more than 1 million patients’ records from California dated between 2002 through 2012, as well as various government reports, in reaching their conclusions.

For decades activists based at advocacy organizations and nonprofit health care institutions pushed for a fundamentally different approach to care for the dying called “hospice” that focuses on relieving pain and discomfort. Because hospice care contradicts the principle that health insurance will pay only for treatments that improve a patient’s health, until 1983 Medicare refused to cover hospice. When Medicare changed its rules, it did so in part on the theory that it might save money because palliative care is often cheaper than dramatic end of life treatment.

Although the hospice benefit has been around for thirty years, explosive growth in hospice care began around the turn of the century—just as for-profit corporations began to get into the business. Between 2000 and 2012, Medicare payments for hospice care increased fivefold, from $2.9 billion to $15.1 billion annually, even as the share of hospices run for a profit doubled from 30% to 60%, says the Post. Payments in 2013 are expected to exceed $17 billion.

It seems those for-profit hospice companies saw a lucrative opportunity in Medicare’s formula for hospice care. Once a patient has been certified by two doctors as having a life expectancy of six months or less, Medicare pays about $150 a day for routine palliative care, regardless of what care is actually delivered, meaning that healthier patients, who generally need less care and live longer, yield higher profits.

Given that financial incentive, it is not surprising that over the past decade the average stay in hospice has grown 60% longer, from 54 days in 2000 to 86 days in 2009. Between 2002 and 2012, California saw a 50% increase in the number of hospice patients who were discharged from hospice care alive, while profit per patient quintupled, from $353 to $1,975, and inflation-adjusted net profits soared more than tenfold, from $25 million to $265 million per year.

The trend toward longer hospice stays is likely costing Medicare billions of dollars a year. In 2011, nearly 60% of Medicare’s hospice spending of $13.8 billion went for patients who stayed longer than six months. Medicare makes about 85 to 90% of all payments to hospices.

How are they doing it? Whistleblower lawsuits brought by former employees alleging Medicare fraud against four of the ten largest American hospice companies contend that they intentionally admitted non-terminal patients to hospice care as a way of boosting profits. Although the companies insist the whistleblowers are motivated by greed, the fact that the  Justice Department has chosen to join several of the lawsuits greatly enhances the credibility of the allegations.

While the details of the allegations against the for-profit hospices vary, overall they paint a picture of an industry seeking to maximize profit by admitting non-terminal patients to hospice care.

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Hospice Companies Increase Profits by Taking in People Who Aren't Dying

Note: NASGA highly recommends Hospice Patients Alliance to anyone and everyone who is dealing with a hospice situation, preferably before hospice is brought in.