[UPDATED] For-Profit or Nonprofit, Hospice Is Not a ‘Hustle’

The recent article by the New Yorker and ProPublica that branded “hospice” as a profiteering “hustle” was an outrageous misrepresentation of the provider community.

Starting with the headline, the story uses “hospice” as a monolithic term that makes little distinction among individual providers — heralding its overgeneralized and oversimplified perspective. In many instances information that was accurate at face value lacked sufficient context to fully elucidate the subject matter.

The article begins with a rehash of the AseraCare False Claims Act (FCA) and anti-kickback lawsuit which was filed in 2008 and settled in March of 2020. The court actually ruled in favor of AseraCare, with the stipulation that the U.S. Justice Department would have additional time to seek further evidence. Rather than continue to litigate the case, the company settled for $1 million.

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While I cannot personally dispute the accounts of the whistleblowers in the case, AseraCare did garner support from industry stakeholders. The National Association for Home Care & Hospice (NAHC) and the National Hospice and Palliative Care Organization (NHPCO), for instance, filed a joint amicus brief with the court. AARP also filed a brief in support of AseraCare.

The NHPCO and NAHC amicus brief argued that a “disagreement among physicians as to an individual’s terminal prognosis based on a review of the individual’s medical record gives rise to an FCA violation, ignores the well-recognized difficulty of accurately predicting the end of life and threatens to undermine Congress’s goal of ensuring access to the Medicare hospice benefit where a physician has concluded, in his or her clinical judgment, that a patient is terminally ill.”

The prognosis guessing game

Even when a hospice plays by the rules, death does not. Establishing the required six-month prognosis is a complex and ambiguous process. These estimates of the patient’s lifespan typically represent clinicians’ best guesses as to how long the patient will survive. Physicians do not have a crystal ball that tells them exactly when a person will die.

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Further complicating the issue are changes that have occurred among the patient population during the past decade. When the Medicare Hospice Benefit became a permanent program in 1982, its parameters were designed specifically for cancer patients.

Today, patients are enrolling in hospice with a wider range of diagnoses, some of which have a much less predictable trajectory than most cancers. Dementia-related illnesses are a clear example.

Dementia patients represented 20.9% of hospice enrollees in 2019, up from 9% in 2002, according to NHPCO. The average length of stay for those patients reached 126 days in 2019, compared to 92.6 days for the overall hospice population. For comparison, cancer patients that year were in hospice for an average of 45 days.

This issue may get worse before it gets better. Hospices can likely expect a more substantial influx of dementia patients in the coming years. The number of dementia patients is expected to rise by 40%, or 139 million people globally, by 2050, according to data from the World Health Organization (WHO).

This is a significant driver of patient recertification, a practice that The New Yorker piece appears to call into question.

“Long hospice stays translate into larger margins, and stable patients require fewer expensive medications and supplies than those in the final throes of illness,” the authors wrote. “Although two doctors must initially certify that a patient is terminally ill, she can be recertified as such again and again.”

At first blush, these are true statements. Longer lengths of stay do generate higher margins, the Medicare Payment Advisory Commission (MedPAC) reported in 2019. But given the shifting prevalence of diagnoses, the evidence is strong that many if not most of these recertifications are also clinically necessary.

In some instances, longer lengths of stay and live discharges can be signals of fraud. But we can’t find a provider guilty of wrongdoing on that sole basis. Again, the details matter.

A hospice can get in trouble for discharging a patient. They can get into trouble for keeping them on service for too long — all predicated on the spurious notion that doctors can be sure of how long a patient will live.

Calls to modernize the benefit

These factors have led some hospice providers and industry stakeholders to call on the U.S. Centers for Medicare & Medicaid Services (CMS) to “modernize” the benefit.

“Now we are caring for patients with neurological conditions, the Alzheimer’s and dementia components, patients with cardiac conditions, typically in the home, and we do what we can to help keep them in their homes,” Nick Westfall, CEO of VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), told Hospice News in 2019. “It’s become more complicated. We have an opportunity to start a dialogue about ways we could consider enhancing the benefit.”

Other leaders in the space have expressed similar views, and a body of research has emerged around the incidence of longer lengths of stay and live discharges among dementia patients in particular. One 2016 study found that predicting mortality among patients with dementia failed 30% of the time under current prognostic guidelines.

As far back as 2000, the U.S. Department of Health and Human Services included this degree of unpredictability among its “Important Questions for Hospice in the Next Century.” As we approach 2023, that question remains unanswered.

The six-month rule has little to do with the actual trajectory of a person’s illness or their end-of-life goals. This was a cost-control measure. If the problem is putting money before patients, perhaps re-examining this requirement would be a a good place to start. Let’s start talking about how long an individual needs hospice, rather than how long the payer is willing to cover it.

The language of health care

Health care has its own language, and at times the New Yorker and ProPublica appeared to be less than fluent.

For example, the article indicated that “half of all Americans” die in hospice care, when actually, that figure applies specifically to Medicare beneficiaries rather than the general U.S. population.

Gaps were also apparent in the sections on regulatory enforcement. The article referenced two well-known 2019 reports from the U.S. Department of Health and Human Services Office of the Inspector General (OIG) without linking to the documents or naming the agency that produced them.

“A government review of inspection reports from 2012 to 2016 found that the majority of all hospices had serious deficiencies, such as failures to train staff, manage pain, and treat bedsores,” the story read.

OIG did indicate that 87% of hospices had at least one deficiency during that timeframe, but only about 20% of those were condition-level issues that posed potential risks to patients. The term “serious” is subjective and does not distinguish the varying levels of noncompliance or their relative severity.

The article correctly stated that CMS surveys hospices every three years but omitted the potential for additional inspections in response to complaints.

No reference was made to the corrective actions that can occur post-survey, the roles of Medicare Administrative Contractors or OIG, the new survey processes that will take effect Jan. 1, 2023, or to the Special Focus Program in development at CMS.

Another passage that caught my eye seemed to quantify the reporting that went into the story:

“This year, I spoke about hospice with more than a hundred and fifty patients, families, hospice employees, regulators, attorneys, fraud investigators, and end-of-life researchers, and all of them praised its vital mission.”

Not one of those words of praise (from 150 sources) were quoted in the nearly 10,000-word piece.

The profit conundrum

Ensuring the permanent sustainability of nonprofit hospices is crucial. These providers pioneered the care model, blazed the trail that led to the Medicare Hospice Benefit, and remain vital to the communities they serve. To paraphrase a quote from Isaac Newton, nonprofit hospices have giants standing on their shoulders.

But for-profit providers also have a part to play, and their tax status does not automatically impugn their integrity. Providing quality care and turning a profit are not mutually exclusive.

Many stakeholders have voiced concerns about the growing incursion of private equity into hospice and the larger health care space.

While any significant changes in an environment that affects the lives of millions of people should be closely examined, I am uncomfortable with statements that praise or castigate an entire population or sector in generalized terms.

Reality is rarely so cut and dry, and almost every action has both positive and negative effects. The ideal for any system is to develop a set of practices and oversight that encourages the positive and holds bad actors accountable (which is admittedly easier said than done).

Some investors may have indeed made or encouraged decisions that prioritized profits over patients, but one can’t assume that such allegations are universally applicable or that the influence of PE has been entirely negative.

PE capitalization has allowed a contingent of providers to build scale and expand to new markets, including some inroads to underserved communities. This has given many patients access to care that they otherwise may not have been able to receive.

Investor dollars have also allowed hospices to obtain tools and technology that can improve efficiency and in some instances have a positive impact on quality.

“This is a complex issue, and it can’t be solved just by someone saying that equity funds shouldn’t be in health care, or that we’re going to regulate equity funds more. At the end of the day, equity funds are an economic driver,” Randal Schultz, a certified public accountant and health care lawyer with Lathrop GPM, told Hospice News earlier this year. “The clients of mine that get involved with equity funds for the most part are doing it because they’re getting some money out of it, but also because they’re getting new technologies that they need. By getting new technologies, they’re able to provide a broader base of care and better and faster care for their patients.”

Follow the money

As New Yorker/ProPublica reported, hospice became a $22 billion industry in 2020. However, the rising number of enrollees is the more likely culprit rather than the supposed “plague of exploitation” they cited.

This aggregated sum reflects the steady rise in hospice utilization during at least the past decade. In 2019, hospice utilization among Medicare decedents reached 51.7%, according to NHPCO. MedPAC in 2010 reported a utilization rate of 44%, up from 23% in 2000.

Even as the industry grows, the lion’s share of those billions pay for person- and family-centered care for millions of dying people who want to maintain their quality of life in their final days to the fullest extent possible.

That said, fraud undeniably does occur.

“Good hospice care, because of its holistic, patient- and family-centered compassionate approach to the dying, is a godsend. Bad care and true fraud in this valuable benefit are intolerable,” Katie Smith Sloan, president and CEO of the senior services advocacy group LeadingAge said in a statement. “Change is needed. Reform must promote high-quality care, including the right services in the right quantity, and eliminate opportunity for misdeeds.”

When it comes to hospice, California has been a particular hotspot. The state has passed a series of laws designed to strengthen hospice oversight, including new legislation approved earlier this week. A group of hospice industry organizations wrote to CMS last week calling for remedial action, citing similar issues in Arizona, Nevada and Texas.

But these instances, as well as the few examples brought up by the New Yorker and ProPublica, are outlier cases. No evidence suggests that these illegal or unethical practices are more common in hospice than other health care settings, or that they are widely prevalent among the nation’s more than 5,000 hospice providers. CMS stated in a 2021 document that no precise measure of health care fraud exists.

NHPCO and the NAHC made a similar argument in a joint statement condemning the article’s generalizations of the hospice community.

“The article utilizes a few instances of abuse by bad actors to assert that hospice has lost its way. While we condemn fraudulent or abusive behavior, the vast majority of hospice providers remain true to its historic mission of providing comfort and relief from suffering to individuals at the end of life and support to their loved ones,” the industry organizations wrote in the statement. “This is evidenced by CMS data indicating that 81% of families/caregivers utilizing the Medicare benefit give the hospice an overall rating of 9 or 10 (with 10 being the best) and 84% would recommend hospice to family and friends.”

Another allegation in the story involved the issue of improper Medicare payments to hospices. Here again, the report is accurate, but lacks context.

CMS defines “improper payments” as overpayments or underpayments, or reimbursement where insufficient information was provided to determine the validity of the claim. While some of these payments result from fraud and abuse, CMS has indicated that the vast majority involve situations where a state or provider missed an administrative step.

Among hospices, the volume of these payments rose to 7.77% during Fiscal Year 2021, up from 6.69% in 2020. CMS indicated that this change was not statistically significant.

Nevertheless, recent data show that a sizable segment of the U.S. health care system does have a perception problem when it comes to prioritizing patients over financial interests.

Among 2,009 respondents to a recent National Partnership for Healthcare and Hospice Innovation (NPHI) survey, 82% indicated that they believed that the health care system prioritizes profits over patients. NPHI conducted the survey in September in collaboration with Emergence Creative and the consulting firm SIR.

These data should prompt a serious look at the ways health care is provided and paid for, but such an examination must focus on the system at large rather than hospice alone. Even within the confines of this single survey, 74% of respondents expressed a positive view of hospice care, though only 31% said they trusted the health care system as a whole.

The other side of the coin

Hospice costs money. It also saves money.

The article’s hand-wringing over the $22 billion spend does not take into account the cost savings that hospice generates for the health care system and the Medicare program.

A 2015 simulation estimated that annual savings in 2011 ranged between $316 million and $2.43 billion, depending on variables like length of stay, among others. An analysis of these data appeared in the the Journal of Hospice and Palliative Medicine.

More recent research yielded similar findings.

In this population-based cohort study of community-dwelling Medicare beneficiaries, hospice enrollment was associated with lower total health care costs for the last 3 days to 3 months of life,” a February study in JAMA Health Forum concluded. “Importantly, we found no evidence of cost shifting from Medicare to families related to hospice enrollment. The magnitude of lower out-of-pocket spending to families who enrolled with hospice is meaningful to many Americans, particularly those with lower socioeconomic status.”

All told, this sounds like a pretty good return on the nation’s $22 billion investment.

The most salient point in the article was likely this: “Most older people will face a chronic disability or a disease in the last years of their life, and will need extra care to remain safely at home. That help is rarely available, and Americans often end up in a social-welfare purgatory, forced to spend down their savings to become eligible for a government-funded aide or a nursing-home bed.”

That is the unfortunate reality with which the nation is only starting to grapple. As things stand, organizations like hospice, palliative care and home health providers are among the few in a position to give seniors that help. Perhaps building up those resources will do more good than knocking them down.

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