Companies in the hospice business can expect some of the biggest returns for the least effort of any sector in American health care, says an article co-published by ProPublica and The New Yorker magazine.
Medicare pays providers a set rate per patient per day, regardless of how much help they provide. Since most hospice care takes place at home and nurses aren’t required to visit more than twice a month, it’s not difficult to keep overhead low and to outsource the bulk of the labor to unpaid family members, the article says.
Up to a point, the way Medicare has designed the hospice benefit offers rewards to providers for recruiting patients who aren’t imminently dying. Long hospice stays translate into larger margins, and stable patients require fewer expensive medications and supplies than people in the final stages of illness.
The article includes extensive stories from whistle-blowers of hospice companies setting high targets for the number of patients marketers have to sign up, giving those meeting their admissions quotas cash bonuses and perks.
Although two doctors have to certify that a patient is terminally ill, the patient can be recertified again and again.
But the federal government, recognizing that a patient may not die within the predicted six months, effectively demands repayment from hospices when the average length of stay of all patients exceeds six months.
So hospice companies have found ways to game the system, the article says. One tactic is to discharge patients with overly long stays. The industry euphemism is “graduated” from hospice, though the patient experience is often more like to being expelled, the article says: losing supplies, pain medications, wheelchairs, nursing care, and a hospital-grade bed that a person might not be able to afford otherwise.
Hospices went mainstream in 1969, when psychiatrist Elisabeth Kübler-Ross published a groundbreaking study, “On Death and Dying,” the article says. The subjects in her account were living their final days in a Chicago hospital, and some of them described how lonely and harsh it felt to be in an intensive-care unit, separated from their families. Many Americans became convinced that end-of-life care in hospitals was inhumane. Kübler-Ross and others pushed for people to have more control over how they die.
The first American hospice opened in Connecticut, in 1974. By 1981, hundreds more hospices had started, and, soon after, President Ronald Reagan recognized the potential federal savings — many people undergo unnecessary, expensive hospitalizations just before they die — and authorized Medicare to cover the cost.
Forty years later, half of Americans die in hospice care. Most of these deaths take place at home. When done right, the program enables people to experience as little pain as possible and to spend meaningful time with their loved ones. Nurses stop by to manage symptoms, aides assist with bathing, medications, and housekeeping, social workers help families over bureaucratic hurdles, clergy offer what comfort they can, and bereavement counselors provide support in the aftermath.
The author of the article says she’s spoken this year with more than 150 patients, families, hospice employees, regulators, attorneys, fraud investigators, and end-of-life researchers, and all of them praise hospice's vital mission.
But many people are concerned about how easy money and a lack of regulation have given rise to an industry rife with exploitation. Hospice has evolved from a constellation of charities, mostly reliant on volunteers, into a $22 billion business funded almost entirely by taxpayers.
For-profit hospice providers represent more than 70 percent of the sector, and between 2011 and 2019, the number of hospices owned by private-equity firms tripled.
Although the federal government occasionally requests more information from billers, it generally trusts that providers will submit accurate claims for payment.
Jean Stone, who worked for years as a program-integrity senior specialist at the Centers for Medicare and Medicaid Services, says hospice was a particularly difficult sector to police, for three reasons: “No one wants to be seen as limiting an important service”; it’s difficult to retrospectively judge a patient’s eligibility; and “no one wants to talk about the end of life.”
Although a quarter of people in hospice enter it only in their final five days, most of the Medicare spending on hospice is for patients whose stays exceed six months. In 2018, the Office of Inspector General at the Department of Health and Human Services estimated that inappropriate billing by hospice providers had cost taxpayers “hundreds of millions of dollars.”
Once a hospice is running, oversight is scant, the article says. Regulations require inspections once every three years, though complaints about quality of care are widespread. A government review of inspection reports from 2012 to 2016 found that the majority of hospices had serious deficiencies, such as failures to train staff, manage pain, and treat bedsores.
But regulators rarely punish bad actors: Between 2014 and 2017, according to the Government Accountability Office, just nineteen of the more than four thousand U.S. hospices were cut off from Medicare funding.
Because patients who enroll in hospice forgo curative care, people who aren’t actually dying may be harmed, the article says.
Sandy Morales, who until recently was a case manager at the California Senior Medicare Patrol hotline, says a cancer patient lost access to his chemotherapy treatment after being put in hospice without his knowledge. Other unwitting recruits have been denied kidney dialysis, mammograms, coverage for life-saving medications, or a place on the waiting list for a liver transplant.
Some providers capitalize on the fact that most hospice care takes place behind closed doors, and that those who might protest poor treatment often are too sick or stressed to do so, the article says.
A 2016 study in JAMA Internal Medicine of more than 600,000 patients found that twelve per cent received no visits from hospice workers in the last two days of their lives. For-profit hospices have higher rates of no-shows and substantiated complaints than their nonprofit counterparts and disproportionately discharge patients alive when they approach Medicare’s reimbursement limit, the article says.
“Providers open up a hospice and bill, bill, bill,” says Sheila Clark, president of the California Hospice and Palliative Care Association. Once that hospice is audited or reaches the Medicare-reimbursement limit, it shuts down, keeps the money, buys a pristine license that comes with a new Medicare billing number, transfers its patients over, and rakes in the dollars again.
The directors of two nonprofit hospices in the Southwest say they accepted patients who were fleeing such new providers. Some patients switched because while they were with the startup hospices they hadn’t seen a nurse in two weeks and nobody was answering the phone.
Whistle-blowers have become the government’s primary defense against hospice wrongdoing, the article says. Seven out of 10 of the largest hospices in the United States have been sued at least once by former employees under the federal False Claims Act. The law deputizes private citizens to bring lawsuits that accuse government contractors of fraud and lets them share in any money recovered. In 2021 alone, the government recovered more than $1.6 billion from these lawsuits, and the total amount awarded to whistle-blowers was $237 million.
Members of Congress have called for reforms, and the Centers for Medicare and Medicaid Services has just begun making available to the public a greater range of data on hospice providers, including the average number of visits that nurses and social workers make in the last days of a person’s life.
More significantly, the agency now has the power to impose fines on problem providers, should it choose to use it, the article says. Previously, the agency’s only consequential penalty for bad hospices was to expel them from the Medicare program, an option it seldom exercised.
Some state lawmakers also are asking deeper questions about end-of-life care. This year, after a Los Angeles Times investigation, California put a moratorium on new hospices, and state auditors raised alarms about tiny new hospices, some with fictional patients and medical staff, that were engaged in “a large-scale, targeted effort to defraud Medicare.” In Los Angeles County, there are more than 1,000 hospices, 99 percent of them for-profit. By comparison, Florida, which, unlike California, requires new providers to prove a need for their services, has 51 hospices.