Today’s Managing Health Care Costs Number is $15.1 billion
Source. GIP = general inpatient
Sunday's New York Times reports on research just published by the Office of the Inspector General that suggests that there is a substantial amount of waste and abuse, and possibly fraud, at hospice organizations serving Medicare beneficiaries. The OIG found through chart review that about a third of all inpatients stays were billed inappropriately - representing a cost to Medicare of over a quarter billion dollars. Medicare's total spending on hospice services is $15.1 billion a year.
MedPAC recommended last month that hospices not be given any fee update in 2016, in part because it appears that many hospice organizations have very high profits, and because of ongoing concerns about the cost of care within the hospice industry.
Hospices are a tremendous success. Most Americans would rather die at home, and almost half of Medicare beneficiaries now have hospice services in their final days or months of life. The portion who die in hospitals has declined dramatically, which is especially heartening given how much intervention we are capable of in hospitals. I urge you to read Being Mortal by Atul Gawande; he argues eloquently of the importance of supporting community organizations that help people get the care they want as their lives wind down.
However, there are really two separate hospice industries. The nonprofit hospices have modest average lengths of stay -because they don't have a lot of patients who stay for a year or more. They are much more likely to follow CMS guidelines for care plans and for physician involvement, and they are much less likely to discharge patients alive. They expend lot of resources on patient care, and have low margins.
And then there are the for-profit hospice organizations. They spend fewer resources on patient care, have especially long lengths of stay, and discharge more of their patients live (making it likely that the hospice designation was clinically wrong). For profit hospices were responsible for 87% of the inappropriate general inpatient hospital day billings cited by the OIG. Their margins are unsurprisingly much higher than the nonprofits.
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The Washington Post ran a series, "the business of dying" focusing on the for profit hospice industry in 2014-15.
Hospices are paid a "bundled" per diem rate - which varies by the patient's level of need. They are not paid fee for service. This is good evidence that simply moving away from fee for service is not by itself a "solution" for the overutilization encouraged by fee for service. Bundled payments can foster their own 'gaming' to increase provider margin.
We need more effective regulations of the for-profit hospice industry, to protect Medicare finances and also to protect the most vulnerable among us from inadequate compassionate care when we need it most.
