Medicare Cracking Down on Hospice Industry: Kaiser

Medicare is beginning to crack down on one industry with a strong emphasis on home care: hospice.

The level of scrutiny on the industry is increasing, according to J. Donald Schumacher, president and CEO of the National Hospice and Palliative Care Organization, in a Kaiser Health News article. The Office of the Inspector General’s 2013 plan states an intention to examine the relationships between nursing homes and hospice agencies after finding that 82% of hospice claims for beneficiaries in skilled nursing facilities didn’t meet Medicare coverage requirements.

Hospice is meant to treat patients who have fewer than six months to live, but thanks to relatively high margins in Medicare reimbursement, many hospice companies had more generous admissions policies, according to Kaiser Health News. That’s starting to change in the wake of an ongoing federal audit.


Medicare reimbursement is the primary source of funding for the $14 billion hospice industry and paid for the benefits of 84% of the 1.65 million served in the U.S. in 2011.

What’s happening in many cases is that hospice programs tend not to discharge patients who live longer than six months past the time of enrollment, says KHN.

The problem is that Medicare expects patients to leave the program if they recover and can only be re-certified in a federally-funded hospice program if they’re still likely to die within six months.


It can end up being a catch-22, Kathleen Pacurar, president and CEO of San Diego Hospice in California, tells KHN. Many times, hospice programs end up prolonging patients’ lives, leaving them with extended prognoses.

Because profits in the hospice industry are usually reaped when patients require routine care or lower levels of attention, many agencies have an incentive to keep serving patients for as long as possible.

“The longer a patient stays, generally speaking, the better the hospice is able to deal with those costs and probably has a greater opportunity for a higher financial margin on that patient,” Theresa M. Forster, vice president for hospice policy and programs at the National Association for Home Care & Hospice, a national trade association for home care agencies, hospices and home care aide organizations, told KHN.

Growth in the hospice industry has been fueled by enrollment bonuses to employees and kickbacks to referral sources, including nursing homes, according to a Bloomberg News article cited by KHN, with investigators alleging that some hospices were accepting ineligible patients as a result.

Written by Alyssa Gerace

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