For-Profit Hospice Companies May Gain on Fewer Cancer Patients

For-profit hospices for dying patients are less likely to enroll cancer patients than nonprofit competitors and more inclined to treat people needing longer-term, lower-cost services, a study found.

Medicare’s reimbursement system may spur companies to select patients who need “fewer skilled services” or longer hospice stays because the federal insurance program for the elderly and disabled pays a fixed daily rate, regardless of the services patients need, according to a report published today in the Journal of the American Medical Association.

The number of U.S. for-profit hospices more than doubled to 1,660 in the seven years ended in 2007, while the total of nonprofits remained at about 1,200, according to the report. Cincinnati-based Chemed Corp.’s Vitas unit and Gentiva Health Services Inc. in Atlanta are the two largest U.S. for-profit hospice providers, according to Gentiva.

“Our findings have potentially important implications both for clinicians taking care of patients at the end of life and for policymakers in the area of Medicare hospice payment,” the researchers said. The study was led by Melissa Wachterman, an internist at Beth Israel Deaconess Medical Center in Boston.

Hospice programs provide medical care, pain management and emotional support to the terminally ill. About 42 percent of the 2.45 million people who died in the U.S. in 2009 received such services, according to the National Hospice and Palliative Care Organization. About two-thirds of hospice patients were treated at home, and 83 percent were at least age 65.

About 34 percent of for-profit hospice clients had cancer in 2007, less than the 48 percent at nonprofit hospices, according to the study of more than 4,700 patients that didn’t mention companies surveyed.

Hospices serve about 1 million Medicare recipients annually, and were reimbursed at a fixed daily rate of $142.91 last year, according to the report. Medicare spent $12 billion on hospice services in 2009, according to a Jan. 14 study from the Medicare Payment Advisory Commission, which makes nonbinding suggestions to Congress about payment policy.

The commission’s report recommended changing Medicare’s hospice policy to reduce daily reimbursements the longer a patient receives end-of-life care, and to make higher payments at the beginning and end of a patient’s treatment.

To contact the reporter on this story: Molly Peterson in Washington at mpeterson9@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net

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