Today, the Kaiser Network reported that on Friday, the Medicare Payment Advisory Commission (MedPac) approved a set of recommendations that would revise the current Medicare payment system, which was implemented in 1983, for hospice care providers serving terminally ill patients. CQ HealthBeat reports that these recommendations will be included in a report to be issued in March to Congress and to take effect in 2013. (Thanks to Brad F. for calling my attention to this piece of news.)
Apparently, MedPAC has been concerned that for-profit businesses have been driving growth in Medicare spending by targeting hospice patients who need relatively long periods of care. The new payment system intends to remove incentives for long hospice stays.
So MedPac is recommending that Medicare change its payment system to include relatively higher payments per day at the beginning of the episode, and relatively lower payments per day as the length of the episode increases.
Call me cynical, but do you suppose that would give for-profit hospices and incentive to toss patients out and send them home if they linger on too long? Alternatively, the hospice might encourage them to “let go”…
The whole idea of “for-profit hospices” strikes me as a truly terrible idea—right up there with “for-profit prisons” (which have not worked out well).
Kaiser notes that: “Under the current payment system, hospice care was designed to be delivered mainly by not-for-profit groups with affiliations to religious and community groups, but a June 2008 MedPAC report found that since 2000 mostly for-profit companies and hospices have been providing such care. The report also found that hospices with longer lengths of stay are more profitable; length of stay in a for-profit hospice is about 45% longer than the length of stay in a not-for-profit facility.
I have great respect for MedPac and normally am impressed by their recommendations. The numbers from the June 2008 MedPac report suggests that there may in fact be evidence that for-profit hospices were prolonging the deaths of patients in order to rack up higher fees (and this would be just as bad for patients as encouraging them to make haste.) But my feeling is that paying hospices by the day is probably not the best idea. Perhaps we should go back to the original idea: hospice care should be not-for-profit.
While we are talking about hospice care, let me recommend a January 7 post on “The Covert Rationing Blog." Under the heading “Plausible Deniability,” Dr. Rich writes about a case originally described by the Happy Hospitalist, “the case of one Phillis Dewitt, a Peoria nurse manager who worked for Proctor Hospital until she was fired in 2005, allegedly because her husband’s hospital bills were becoming too expensive as he fought a losing battle with prostate cancer. According to Dewitt, her supervisor began to suggest, repeatedly, that it certainly appeared (didn’t it?) to be nearly hospice time for hubby, and, by the way, one must remember that the hospital itself is footing the high costs of his cancer therapy.
“Dewitt was ‘taken aback’ by the suggestion by her boss that she opt for hospice care, and replied that neither her husband nor her husband’s doctor were ready to give up trying to cure the disease. So Dewitt repeatedly refused to take the hint. Finally, the supervisor phoned Dewitt while she and her family were on vacation several hours away, insisting that she come in for a meeting on one of her vacation days. Apparently voices were raised during the ensuing discussion of this unusual request, and the next day Dewitt was fired. Dewitt sued for wrongful termination. (And her husband lived for another year, strongly suggesting that, indeed, he had not been ready for hospice care.)…” Read the entire post on Covert Rationing. It is chilling, but also, thanks to Dr. Rich’s uniquely dry writing style, it is very, very funny.
After both my parents died in Hospice care, I thought about the payment mechanisms for hospice. My mother died soon after entering a hospice, and this was expected. My dad died within a few days of entering hospice care, and that was a surprise.
After my dad died, I got to thinking that if hospices were paid only a set fee, like a hospital drg case fee, and especially if the hospice needed to make money, well giving that terminally ill patient a bit more morphine to hasten their demise and make more profit for hospice would be tempting. I was glad to learn that Hospice care is paid by the day, or at least I believe this. It would seem to be too warped an incentive to pay a hospice a single case fee or drg no matter how long the patient stay in the hospice, IMO!
Cool info, I like your blog.
Maggie:
Hospice, while well-meaning, is also open to abuse. Most referrals are from hospitals.
When patients are discharged home from an inpatient setting, many home-based services are typically non-covered by health insurers. If a patient has a limited life expectancy, however, certifying that the patient has a limited prognosis (typically 6 months) qualifies for home hospice services, which offers many more services.
I’m NOT saying that physicians will intentionally lie about life expectancy, but I will say that if a patient has a cancer and COULD die in the next 6 months, hospice is an attractive option.
It makes sense to ‘front load’ the payments to the days after discharge from the hospital. During that time, patients are especially vulnerable. Once the ‘dust settles,’ however, the intensity of care needs probably wanes. And if a patient lives month after month after month, that’s good news BUT do they need hospice or do they need something else?
Maggie, I can tell what you’re against, but what are you for in terms of making sure the right patients get the right level of treatment? My suggestion is to put the hospice NURSES in the decision loop, asking THEM to decide after some time period if hospice services are still justified. Even though they have an economic reason to continue hospice (they’re getting paid for it), pairing their recommendation with physician assent/review with auditing may be the best way to avoid third party concurrent review (1-800-mother may I) or Medicare style wack-a-mole fraud investigations.
PS: I’ve generally found the best approach to MedPAC is to assume their wrong and then try to disprove the hypothesis. It’s safer.
PPS: Since when is not-for-profit in health care any assurance that there won’t be bad behavior?
Maggie,
Thanks for recommending my post on Maintaining Plausible Deniability.
I agree that for-profit hospices create an incentive for producing long, lingering death, just as the new MedPac rules will produce an incentive for hurrying death along a bit. It is inherently difficult, of course, to create financial incentives for hospices (either way) that will generally result in a Goldilocks-like death (i.e., one whose timing is just right).
But on the other hand, the prolonged stays in hospices that are, apparently, causing a problem may not be due to the behavior within hospices themselves. Instead, they may be related to the behavior of organizations who are at risk for paying for out-of-hospice healthcare – episodes like the one faced by nurse Dewitt. If she and her husband had caved in to her employer, her husband would have ended up as one of those who inappropriately lingered within the hospice system.
Rich
So we have circumstantial evidence that for-profit hospice companies are gaming the system, and to solve this problem we punish all hospices. That would not be my way of improving the situation. To me, this is yet another example of how market economics represents the proverbial hammer, the ideologue holder of which sees everything as a nail.
Maggie,
I was reading up on MedPac today for something unrelated and discovered they do publish transripts of all meetings on their website.
The link for the meeting where they discussed this issue is here:
http://www.medpac.gov/transcripts/0108-0109MedPAC.final.pdf
The hospice section starts on page 257 of the pdf.
The main issue they were concerned with was clear outliers amont some facilities where their average length of stay was approaching 150 days.
Their argument is that hospice costs go in a U-shape, high cost in the beginning when the patient is first put into hospice, high cost at the end surrounding the death of the patient, but low and relatively stable costs during the middle of the stay. So the payment structure would include high payments for the first several days, lower payments every after, then a lump sum for the death of the patient. Are you concerned that hospices would kill off patients sooner under these? Case rate just seems like a really bad idea to me.
And I agree with two points raised by Jaan. First, I’m not sure what you’re advocating, and second, not-for-profit hasn’t done much for the hospital world, why would it help the hospice world?
I have a posting on the internet called “Cancer Patients in Nursing Homes.” In it, I mention that elderly nursing home residents receive relatively few cancer care services, according to a study published in JNCI. Few studies have examined cancer treatment and care among elderly patients residing in nursing homes. Yet, as the population ages, more people will move into nursing homes, many of whom will later be diagnosed with cancer. Cancer risk increases as people age.
Nursing home residents (including cancer patients) are already supposed to be receiving 24/7 care. The hospice service is an additional $130 a day the home receives. Because Medicare does not collect detailed data about the medical treatments a hospice patient receives, there is very little information about what services are actually being provided. And neglect is the silent killer in nursing homes. By some estimates, malnutrition, dehydration, bedsores and infection – caused by neglect – account for half of nursing home deaths and injuries.
Kaiser notes that hospice care was designed to be delivered mainly by not-for-profit groups with affiliations to religious and community groups, but the June 2008 MedPAC report found that since 2000 mostly for-profit companies and hospices have been providing such care. Manor Care operates hospice under their for-profit nursing homes as Heartland Hospice Care. On top of receiving an additional $130 a day for hospice service, above the daily payment they receive providing nursing home care, they take donations to their Heartland Hospice Fund.
Now I can understand what I’ve been observing over the last five and a half years visiting my mother at her Manor Care nursing home in Pennsylvania.
Thank you all for your comments.
NG–
I tend to agree that paying by the day probably makes the most sense, though it does give the hospice an incentive to prolong the dying process.
Jaan–
First, the notion of including the nurse in the loop is an interesting one.
I agree a second opinion would be useful; nurses usually know what is going on, and often are more “patient-centered” than doctors because they spend more time with patients.
I agree that hospitals have an incentive to ship a patient off to hospice saying that he will “probably” die in six months.
The problem is that assuming he/she is dying of something other than cancer it can be all but impossible to predict whether he will live for 4 months, 12 months, etc.
You’re right some patients would be better off some place else rather than lingering in a hospice for 2 or 2 1/2 years–which does happen, much more so at for-profit hospices that at others.
I’ve talked to a leading palliative care specialist about this who explains that not-for-profit hospices are mainly “Mom & Pop”operations run by generally well-meaning people.
For-profit hospices, like for-profit nursing homes are run by corporations that are, in his words, “Coldly efficient.” If “there is a way to play the system to make a higher profit, they will.” I also talked to a hospice specialist (MD) who was hired by the Justice Department to investigate fraud in a large for-profit hospice chain where patients were staying for 2 years or more, where record-keeping was sketchy, at best, and where the fraud was clear.
As long as they were paid by the day, for-profit hospitals were more likely to “shop” for patients who are likely to linger longer, withotu any particular concern as to whether spending a couple of years in a hospice is good for the patient (mentally or otherwise).
Clearly paying by the day has its downside–as does
paying less in the middle, which could mean that a hospice would become less attentive to that patient.
Jaan, you ask “Since when is not-for-profit in health care any assurance that there won’t be bad behavior?”
IT is not. There is fraud and corruption in not-for-profit healthcare as well.
But the profit motive in for-profit healthcare always creates a conflict of interest: Should the company do what is best for its shareholders (more revenue, more profit) or what is best for the patient (often that is NOT more care, or more expensive care.)
I’m old enough to remember when virtually all HMOs were non-profit in the early 1990s. Then Reagan changed the tax law, making it easier for for-profit HMOs to compete against non-profit HMOS.
By the mid-1990s, for-profits had driven most of the non-profits out of the business and had taken over Managed Care.
The for-profits managed care based on price, not quality. Not what Paul Ellwood had in mind. Lots of chicanery.
I was at Barron’s at that time, and around 1989–1990, while there were still non-profits in the business, I found someone who was running a small company rating the quality of care HMO were delivering nationwide(using Hedis measures as well as measures l ike patient satisfaction.) He was selling the info to employers and let me spend a week or so with his files.
Quality was significantly better, on average, at the non-profits.
When you compare non-profit hospitals to for-profits, you find the non-profits are less expensive, and provide more charity care. Outcomes are slightly better. That said, a good number of non-profits do not do enough community service or charity care to justify their tax exemption.
When you look at which hospitals in the U.S. have palliative care, very few for-profit hospitals offer it. This means that a much higher percentage of their patients die in extreme pain. To me this is a very important measure of quality.
Finally most of the large for-profit chains have been involved in Major Scandals that involved kidnapping patients, performing unncessary heart surgery on patients, cooking hte books and lying to Medicare, prviate insurers and shareholders.
Wall Street touted “for-profit hospitals” as a mega-growth “get rich quick” business in the 1980s,and it attracted the sleaziest people. . . I remember going down to interview Rick Scott just as he was taking over HCA,
and coming back and telling my editor I wouldn’t buy a used care from the man. . . Scruchy,
the folks running Tenet . . .
What am I for? The type of “patient-centered” (Not consumer-driven) healthcare that folks like DArtmouth’s Jack Wennberg or IHI’s Don Berwick espouse–collaborative medicine, doctors working in teams, “shared deicisin-making” so that patients can make an informed choice; palliative care teams involved in end-of-life care–and any situation where the patient is in great pain–
and finally, squeezing the hazardous waste out of our system. The ineffective, unproven and over-priced drugs, tests and procedures are not only a waste of dollars, they are dangerous to our health.
Lower spending and higher quality go hand in hand. (See the most recent Dartmouth ATlas on the Mayo Clinic in Minnesota. Better outcomes at a lower cost.
Dr. Rich–
I agree that it is very, very dificult to align financial incentives to favor a “Goldilocks” death–and that hosptals anxious to transfer dying patients may send them to hospice “too soon.”
Chris–
Yes.I’m sure non-profits make mistakes too, but for-profits do have a single motive–to improve profits–and anywhere they see a chance to do that, they will.
Mike C.
First, thanks for the link to MedPac. I can see their reasoning– that caring for patients in the middle of their stay is less expensive.
But . . . do I think some hospices might hasten the death of patients if they are making less on them? Given what has happened in for-prfoit hospitals all over the country, I have to say yes.
I’m not talkng about deliberately killing people — just not trying so hard to keep them alive–being a little sloppy here and there–letting a patient die of penumonia that might have been treatable if given a full-court press–especially if the patient is suffering from dementia or doesn’t seem to care whether he or she lives or dies. .
On for-profit vs. not-for-profit see my response to Jaan higher up on the thread. I wrote at length about for-profit hosptials and non-profits hospitals in my book, Money-Driven Medicine.
Not- for-profits have many problems–and their own scandals– but For-profits are simply Over the Top.
.
Yeah, for-profits are almost certainly worse, as I did learn in Money-Driven Medicine 🙂
I don’t think the incentives to cut corners will be bad. I think the way MedPac is looking at it is that currently the margin on the 10th day in to the hospice stay to the 10th day from the end is like 25%, where as the margins on those first and last 10 days might be 5%. By changing reimbursement methodology, they’re moving to a scenario where each day of the stay is going to have a 10% margin, so neither short stays nor long stays are incentivized. The margin on each kind of day is the same, so there’s no reason for the hospice to prefer a “maintenance day” or a “implementation day” or an “end of life day”.
That’s how I see it anyway. I’m just not sure there would be harmful effects on patients from this reimbursement arrangement.
Mike C–
You make a good point about the margin being the same on each day. (MedPac is generally very intelligent and logical.)
Just hope the for-profit hospices see it the same way. . .
But my main complaint is not about MedPac’s new rule (it’s impossible to figure out how to create incentives for waht someone on this thread calls the “Goldilocks” thread.)
I just find it chilling that for-profits are taking over hospices the same way they have taken over nursing homes.
There is no question but what many (the majority?)of corporations now involved in the nursing home business are bad actors. And what my sources told me about for-profit hospices is not
comforting.
Glad you read the book!
“I’m not talking about deliberately killing people — just not trying so hard to keep them alive–being a little sloppy here and there–letting a patient die of pneumonia that might have been treatable if given a full-court press–especially if the patient is suffering from dementia or doesn’t seem to care whether he or she lives or dies.”.
Maggie,
I wonder how the ( largely non-profit) healthcare systems in Western Europe, Canada, Japan, Australia, etc. deal with this, especially in the case of patients with dementia and those who don’t seem to care whether they live or die. Wasn’t there a time when pneumonia was referred to as “the old man’s friend?”
Maggie. Thanks for pointing out the chilling aspects that for-profits are taking over hospices the same way they have taken over nursing homes. I was thinking about the other avenues of income for these companies.
The nursing home can double the capacity of medicare patients just out of hospitals, where it pays the most money, and add rehabilitation to the list of services. My mother’s nursing home had done that at the end of 2006. Even renaming one of its nurse’s stations to T.C.U. (Tender Care Unit).
In February 2007, there was a norovirus outbreak at the home. Over 125 residents (over 50 percent of the population) had fought off the infection. Guess where the norovirus epidemic started? T.C.U.
Another way to increase revenue is when a Medicare/Medicaid resident goes to the hospital for (let’s say) a urinary tract infection for four days, and is readmitted to the nursing home, they are placed on Medicare-only for up to 80 days, at a much higher rate of reimbursement.
The only Plan of Care that is recognized is a decreased functional mobility secondary to a recent urinary tract infecton and hospital stay. The goal is for the resident to ambulate, transfer and perform bed mobility. The only intervention is for skilled physical therapy five times a week.
However, there are no other interventions to prevent urinary tract infections. So, near the end of 80 days or when the resident has reached their plateau of physical stamina, the resident is taken off of Medicare-only and place back on Medicare/Medicaid.
If another urinary tract infection occurs, and the resident uses up the allotted time period to meet physical therapy plateu standards, the resident cannot stay on Medicare-only even though the urinary tract indications are not resolved.
Any ancillary services provided due to the hospitalization would also be more renumerative to the company if those services are owned by, or are shell companies belonging to the company (even when they do not pertain to the medical indication).
Whether those ancillary services are independent of the company or not, they are an additional cost burden on residents and/or government programs.
I agree with most of your assessments of for-profit versus not-for profit organizations.
One area I have not seen covered much is how insurers earn the not-for-profit tax exempt status.
According to the IRS, this tax exemption is very well articulated in a 1992 paper, which is still relevant today.
For the paper, go to:
http://www.irs.gov/pub/irs-tege/eotopicl92.pdf.
A few excerpts:
On page 1 – “Congress determined that although the Blues and plans similar to them had evolved to the point where many of the characteristics that distinguished them from the commercial insurance carriers were no longer apparent. Therefore, there was no longer any justification for the continuing exemption if their primary purpose was providing medical insurance indistinguishable from that provided by commercial carriers.”
On Page 5 – “In recognition of the fact that the Blues were operated on a non-profit basis providing health care coverage that was virtually nonexistent in the commercial field, the IRS determined that the plans were exempt from federal taxation.”
Page 12 – “Over the years, however, as a result of competitive pressures, the Blues changed their mode of operation, and in the process have erased the characteristics that at one time distinguished them from commercial insurance carriers.”
Page 18 – “In addition, in G.C.M. 39828,the Service determined that based on the following factors, the HMO’s primary activity was providing commercial-type insurance. The factors used to make this determination were (1) Whether and to what extent the entity is operating similar to for-profit insurers and (2) whether and to what extent the entity is marketing a product similar to for-profit insurers.”
As you can see, non-profit tax exempt non commercial insurers have as part of their mission, to be unique insurers compared to what is commercially available.
Don Levit
Gregory & Don–
Thanks for your comments.
Gregory– it seems to me need a thorough, unannounced nationwide investigation of nursing homes and hospices.
This could be a public works project for the government that could create jobs. The government might hire “health inspectors” who were out-of-work reporters/jouranlists with some investigative expereince (of which there are many and will will be
more) plus people who have some experience working in nursing homes or hospices or as home health aides. They could be trained, in teams, by experts in the nursing home and hospice areas, to teach them what to look for and how to document it. (cameras, etc.)
The FBI should be involved in raids of the places with the worst reputations.
Families should be encouraged to write to the unit investigating hospices and nursing homes with whatever informatin and documentation they have.
Don–
Yes, many of the Blues did begin to operate like
for-profits.
The whole problem began shortly after Ronald Reagan became president. He
took away an important tax break that non-profit HMOs enjoyed, and this made it possible for for-profits to compete successfully with not-for-profits.
And because for-profits were willilng to cut deals (for instance, agreeing not to cover Drug X, made by Drug Company X, if its rival, Drugmaker Y, would give it a discount on Drug Y– even though Drug X was in fact a more effective drug.)
In general, for-profit
HMOs competed on price, not quality. Their main concern was not what products and services would be best for the patients they insured, but what products and services would be best for their shareholders. (By law, for-profit corporations are supposed to put their shareholders’ interest first, which creates a built-in conflict of interest for for-profit healthcare.)
You’re right; non-profits are supposed to have a “mission.”