Medicare spending on patients in assisted-living facilities has skyrocketed in recent years as “financial incentives” embedded in the federal healthcare program have driven hospices to target the most lucrative beneficiaries and raised questions about whether those patients are “receiving the services they need during the last months of their lives.”
Because patients in assisted-living facilities relied on hospice care for much longer and at much higher Medicare rates than those in their own homes or in nursing homes, hospices may have sought beneficiaries in the settings that “offer … the greatest financial gain,” the Department of Health and Human Services inspector general said in a report.
Such targeting may have caused hospices to focus mainly on patients with illnesses that were easier to manage and those slated to live longer in order to collect bigger payments from Medicare.
Among evidence of the growing phenomenon was the fact that for-profit hospices collected more from Medicare than their nonprofit counterparts providing the same services in assisted-living facilities. Hospices typically dedicated less than five hours a week to each patient at assisted-living homes but earned $1,100 a week per patient.
Medicare spending on hospice services in assisted-living homes jumped 119 percent between 2007 and 2012, while spending on hospice care in other settings grew just 38 percent over the same time period. Such care soaked up $2.1 billion in 2012 alone.
Hospice care is meant to minimize the discomfort of terminally ill patients in their final weeks. To be eligible for Medicare coverage, hospice patients must have a life expectancy of six months or less.
Patients in assisted-living facilities remained under hospice care more than twice as long as those receiving the same services at home. More than a third of patients in assisted-living facilities spent at least 180 days in hospice care.
In assisted-living facilities, Medicare paid an average of $16,195 per hospice patient — more than twice the $8,077 it paid for beneficiaries in nursing homes or the $7,526 it paid for those in private residences.
The IG blamed the higher costs of hospice care in assisted-living homes on the longer stays that accompanied it, noting that “Medicare payments are a function of time spent in hospice care.”
That’s because providers are typically paid for each day a patient remains in hospice care, regardless of whether services are provided on a given day.
Most hospice patients in assisted-living homes listed “ill-defined” diagnoses, mental illnesses or Alzheimer’s disease as the terminal condition that justified hospice care. Some of the ill-defined conditions requiring hospice care included “adult failure to thrive” and “unspecified debility.”
Patients in assisted-living facilities were six times more likely to have vague diagnoses than a diagnosis of cancer. Cancer patients in hospice settings usually required simpler care and require shorter stays than those with mental illnesses.
The IG highlighted the rise of for-profit hospice providers working in assisted-living homes, pointing to the larger payments and longer stays for-profit patients racked up as evidence of hospice targeting.
Medicare paid $18,261 per patient to for-profit hospices but only $13,941 per beneficiary to nonprofits providing care in assisted-living homes.
What’s more, patients under the care of a for-profit hospice typically received care for four weeks longer than those under the care of a nonprofit one at those facilities.
Such conditions have created an environment in which hospices benefit by going after patients with “certain diagnoses” and “those likely to have longer stays” in assisted-living homes.
The watchdog suggested HHS consider the problematic incentives as it continues its mandated hospice reform effort under the Affordable Care Act.
Past reports have shed light on the challenges hospice providers pose to Medicare, which have cropped up in a variety of settings. In 2009, the IG found 82 percent of hospice claims for patients in nursing homes didn’t meet basic Medicare coverage requirements.
A 2011 report showed hospices with a higher percentage of patients who resided in nursing facilities collected more payments per patient, many of whom were staying the nursing homes for longer spans of time.
Go here to read the full report.
