“Outliving their profit potential”: hospice patients

Image by Ryan Stone, Flickr

“Hundreds of hospice providers across the country are facing the catastrophic financial consequence of what would otherwise seem a positive development: their patients are living longer than expected,” according to Kevin Sack in the New York Times.

The problem is the Medicare Hospice Cap, a law passed in 1982 to limit aggregate Medicare reimbursement to each hospice and assure that the average cost of caring for hospice patients was less than the cost of caring for them in acute care settings. The cap is determined by multiplying the number of patients by a per-patient allowance--$21,410 in 2007. When a hospice exceeds its cap, it must repay Medicare for services.

In the 25 years since the Hospice Cap was established, things have changed. Limitations on an individual’s length of stay have been removed, as long as a physician continues to recertify the patient as terminally ill. And those with non-cancer diagnoses became eligible. The two factors mean that the average hospice stay is considerably longer than in 1982: 86 days for people with Alzheimer’s disease versus 44 for those with lung cancer.

However, except for the yearly multiplier, no other changes have been made to the Hospice Cap.

In 1999, few hospices hit their cap. But estimates from the Medicare Payment Advisory Commission for 2005 project that 220 hospices in 25 states will be billed for repayment of $166 million. Most of these are independent hospices, and in some southern states, half of hospices will hit their cap.

In Wisconsin, 10-15 hospices hit their caps last year, according to notes from the May 2007 National Hospice-POE Advisory Meeting, Chicago CMS Regional Office.

Even with the increases in lengths of stay, hospice care saves Medicare money, according to Duke University professor Donald Taylor. And so the National Alliance for Hospice Access is calling for an immediate 3-year moratorium on calculating overpayments for 2005-2007, during which time Congress must develop a “fiscally sound, responsible, long-term solution.”

And if they don’t? To remain in business, some hospices have already begun to admit only cancer patients. Others, hoping to buy time, are “aggressively recruiting new patients in order to pay off last year’s cap charges.”

The next step may be to discharge patients who are medically eligible but just “live too long.” The Center for Medicare and Medicaid Services points out management issues behind that dramatic statement, especially doctors certifying patients too early.

Of course, you can’t tell the hospice story by numbers. Joan Rademacher’s end-of-life journey in the Wisconsin State Journal (May 2007) shows what hospice is all about.

Have you had an experience with the Medicare Hospice Cap? Care to comment on patients as “profit potential”—or anything else? Use the comment area or e-mail me at cmclaughlin(symbol for “at” here)milwagingconsortium.org.