Researchers Imply For-Profit Hospices Choose Patients with Lower Care Needs

Compared with nonprofit hospice agencies, for-profit hospices have a higher percentage of patients with diagnoses associated with lower skilled care needs and longer lengths of stay, according to a study in the February 2 issue of JAMA.

During the past 10 years, the for-profit hospice sector has increased substantially, with a doubling of these types of hospices from 2000 to 2007, while the number of nonprofit hospices has remained essentially the same, researchers said. Overall, for-profit hospices have significantly higher profit margins than nonprofit hospices.

“This rapid increase in the for-profit hospice sector and the differential profit margins have raised questions about potential financial incentives in hospice reimbursement,” researchers wrote. “Medicare payment policy is a key determinant of hospice reimbursement. Medicare beneficiaries compose 84% of patients in hospice, and about 40% of Medicare decedents use hospice annually. Medicare reimburses hospices a per diem rate for routine care, which can be provided at home or in a nursing home.”

They added that this capitated rate is fixed regardless of the care needs of individual patients or the services that they receive and may create a financial incentive for hospices to select patients requiring less resource-intensive services or longer hospice stays, which are thought to be more profitable.

Melissa W. Wachterman, M.D., M.P.H., of Beth Israel Deaconess Medical Center, Harvard Medical School, Boston, and colleagues compared patient diagnosis and location of care between for-profit and nonprofit hospices and examined whether lengths of stay and the number of visits per day by hospice personnel varied by patient diagnosis and by hospice profit status. For this analysis, the researchers used data from the 2007 National Home and Hospice Care Survey, with a nationally representative sample of 4,705 patients discharged from hospice.

Comparing data from for-profit hospices (1,087 patient discharges from 145 hospice agencies) and nonprofit hospices (3,618 patient discharges from 524 hospice agencies) revealed that diagnosis and location of care both varied by profit status. Compared with nonprofit hospices, for-profit hospices had a lower proportion of patients with cancer. The data also indicated that approximately two-thirds of patients in for-profit hospices had dementia and other noncancer diagnoses, whereas only about half of patients in nonprofit hospices had these diagnoses.

“… there are important policy implications if hospice agencies differentially enroll more patients with dementia and other noncancer diagnoses, who require fewer visits from skilled personnel such as nurses and social workers,” researchers wrote. “Patient selection of this nature leaves nonprofit hospice agencies disproportionately caring for the most costly patients—those with cancer and those tending to begin hospice very late in their course of illness; as a result, those hospices serving the neediest patients may face difficult financial obstacles to providing appropriate care in this fixed per-diem payment system.”

Some industry groups have already expressed disagreement with the researchers’ implications. “The National Hospice and Palliative Care Organization, which represents 3,800 nonprofit and for-profit hospice providers, said suggesting that the for-profit industry selects certain patients is ‘a bit of an over-generalization,’” The Associated Press reported. “Hospice practices including quality of care depend on an organization’s staff and leadership, not tax status, said Don Schumacher, the hospice group’s CEO”.

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