Medicare payment structure may promote hospice patient enrollment bias

Patients with diagnoses that require lower skilled needs and who had longer lengths of stay were more common among for-profit hospice agencies compared with nonprofit agencies, results from a nationally representative study reveal.

“Our findings have potentially important implications both for clinicians taking care of patients at the end of life and for policy makers in the area of Medicare hospice payment,” Melissa W. Wachterman, MD, MPH, and colleagues from the Harvard Medical School in Boston wrote in the Journal of the American Medical Association

They decided to compare patient characteristics among the two types of organizations after noting that the number of for-profit hospices more than doubled, from 725 in 2000 to 1,660 in 2007, while the number of nonprofit agencies stayed the same.

Furthermore, from 2001 to 2004, for-profit hospices reported profits between 12% and 16%, whereas nonprofits posted losses (-2.9% to -4.4%). Currently Medicare reimburses hospices at a fixed per diem rate ($142.91 per day in 2010), regardless of individual patient care needs.

A cross-sectional study using data from 145 for-profit hospices (1,087 discharges) and 524 nonprofit hospices (3,618 discharges) included in the 2007 National Home and Hospice Care Survey was performed to compare patient diagnosis, length of stay and the number of visits that various hospice personnel paid patients each day.

The researchers found that for-profit hospices had a lower percentage of patients with cancer (34.1% vs. 48.4%), and higher proportions of patients with dementia (17.2% vs. 8.4%) and other noncancer diagnoses (48.7% vs. 43.2%; P<.001) compared with nonprofits.  

Consequently, patients with dementia (0.37 visits) and other noncancer diagnosis (0.41) required fewer visits each day from nurses compared with patients who had cancer (0.50, adjusted P=.002).

For-profit hospice patients were also more likely to have stays lasting longer than 365 days (6.9% vs. 2.8%) and less likely to have patients with stays fewer than seven days (28.1% vs. 34.3%; P=.005) compared with nonprofits.

“While it is unknown whether hospice patients with stays exceeding one year were enrolled inappropriately early in the course of their illnesses, these admissions can be particularly lucrative for hospices in a per diem reimbursement system, because, as we found, they receive fewer visits per day from skilled hospice personnel,” the researchers wrote.

They noted that these findings might help inform current payment reform debates — the Medicare Payment Advisory Committee recently recommended that hospice reimbursement rates be adjusted to consider the higher intensity of care often required at the beginning and end of hospice.

“Given that approximately 1 million Medicare beneficiaries use hospice each year and that the for-profit hospice industry continues to expand rapidly, future research is needed to understand more fully the association of profit status with quality of care and patient and caregiver experiences at the end of life,” the researchers wrote.

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