Hospice Industry Games Medicare to Make Billions

January 3, 2014

Hospice patients are expected to die. Indeed, to enroll a patient, two doctors certify a life expectancy of six months or less. But over the past decade, the number of "hospice survivors" in the United States has risen dramatically, in part because hospice companies earn more by recruiting patients who aren't actually dying. Healthier patients are more profitable because they require fewer visits and stay enrolled longer, says the Washington Post.

  • The proportion of patients who were discharged alive from hospice care rose about 50 percent between 2002 and 2012, according to a Post analysis of more than 1 million hospice patients' records over 11 years in California, a state that makes public detailed descriptions and that, by virtue of its size, offers a portrait of the industry.
  • The average length of a stay in hospice care also jumped substantially over that time, in California and nationally, according to the analysis.
  • Profit per patient quintupled, to $1,975, California records show.

This vast growth took place as the hospice "movement," once led by religious and community organizations, was evolving into a $17 billion industry dominated by for-profit companies. Much of that is paid for by the U.S. government -- roughly $15 billion of industry revenue came from Medicare last year.

At AseraCare, for example, one of the nation's largest for-profit chains, hospice patients kept on living.

  • About 78 percent of patients who enrolled at the Mobile, Ala., branch left the hospice's care alive, according to company figures.
  • As many as 59 percent of patients left the AseraCare branch in nearby Foley, Ala., alive.
  • And at the one in Monroeville, 48 percent were discharged from the hospice alive.

The survival rates at AseraCare are emblematic of a problem facing Medicare, which has created a financial incentive for hospice companies to find patients well before death.

  • Medicare pays a hospice about $150 a day per patient for routine care, regardless of whether the company sends a nurse or any other worker out on that day.
  • That means healthier patients, who generally need less help and live longer, yield more profits.

The trend toward longer stays on hospice care may be costing Medicare billions of dollars a year. In 2011, nearly 60 percent of Medicare's hospice expenditure of $13.8 billion went toward patients who stay on hospice care longer than six months, MedPAC, the Medicare watchdog group created by Congress, has reported.

Source: Peter Whoriskey and Dan Keating, "Hospice Industry Games Medicare to Make Billions," Washington Post, December 27, 2013.

 

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