"Emotion, not Information" - the Lucrative Deceptive Marketing of Hospice, and its Potentially Fatal Consequences

One of the real recent advances in health care, in my humble opinion, was the organization of compassionate, palliative care for people at the end of life.  During my training and early career I saw too many patients with terminal illness getting aggressive, sometimes very painful treatments which at best only offered hope of briefly prolonging their lives.  Some patients chose such treatments with full knowledge of the implications, at times with the hope that they might survive until some significant event, for example, the birth of a grandchild.  Many patients, however, seemed to be suffering with no purpose.

The hospice and palliative care movement, however, offered true comfort to those with little hope of prolonged survival.  Good hospice care eased the final days of patients with advanced disease for whom no definitive treatments could be found.

Hospice seemed like a great alternative for such patients, but its reasonable use depended on physicians' abilities to identify patients who really were at the end of life, and for whom aggressive treatment would be futile.  The Achilles Heel of the hospice movement remained health care professionals' inability to reliably identify such patients.  The big problem is that putting a patient who actually potentially could survive for a long time in hospice will doom that patient were he or she to develop an acute illness for which treatment is available, like a bacterial pneumonia that might respond to antibiotics, because in hospice antibiotics are not given for acute infections.

So the development of hospice had a downside which could be fatal for some patients.  I think most physicians hoped, however, that we could minimize the number of such patients by trying hard to make accurate predictions, and that in the future, better technology would lead to better predictions.

The Rise of Corporate Hospices

Back in the 1980s, however, I did not anticipate that hospices might become parts of for-profit corporations, and that such corporations might be able to make more money by admitting more patients, even patients who really were not at the end of life.   Starting in 2011, however, we started to find cases in which that appeared to be what was going on (look here, then here, here, and here).

In 2013, more cases appeared, listed in chronologic order -

Hospice of Arizona LC and American Hospice Management LLC - Per a news release from the Department of Justice, these entities settled litigation that alleged, among other things, that they "submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care...."

 Hospice Care of Kansas, and parent company Voyager HospiceCare - Per a Topeka (Kansas) Capital-Journal article, these entities settled to resolve allegations that they "submitted inappropriate claims between January 2004 and December 2008 for patients without a terminal prognosis of six months or less."

Hernando-Pasco Hospice - Per the Tampa Bay Times, " Hernando-Pasco Hospice has agreed to pay $1 million to settle allegations that it billed the Medicare and Medicaid programs for patients who did not need end-of-life care, the U.S. Attorney's Office for the Middle District of Florida announced Monday.  The not-for-profit Hernando-Pasco Hospice, which goes by HPH Hospice, is accused of admitting ineligible patients in order to meet targets imposed by its management team, federal authorities said in a statement."

These were all small settlements, that is, less than $15 million, reported in relatively small media outlets.

This week the issue was in the media spotlight courtesy the Washington Post, in an article which provided yet more data and vivid examples suggesting that for-profit hospices were putting money ahead of vulnerable patients' well-being.   


The Post added to the background we provided above,

Medicare began paying for hospice care in 1983, following a resurgence of interest in end-of-life care, sparked in part by the publication of 'On Death and Dying' by Elisabeth Kubler-Ross.

'We can give families more help with home care and visiting nurses, giving the families and the patients the spiritual, emotional, and financial help in order to facilitate the final care at home,' Kubler-Ross testified to the Senate Special Committee on Aging in 1972.

After this well-intentioned beginning, there was a rapid increase in the use of hospice, and hence its costs,

The benefit was quickly embraced by Americans and continues to grow, with Medicare paying for hospice care for more than 1.2 million people annually. In 2000, Medicare spent $2.9 billion on the hospice benefit. By 2012, that figure has risen fivefold, to $15.1 billion.

But as more Americans have taken up hospice care, a profound change has been underway: Big businesses have moved in.

In parallel, the nature of hospices changed, going from being predominantly local non-profit organizations to predominantly corporate,

When Medicare paid its first hospice benefit, the vast majority of hospice-care providers were nonprofit groups. Over the past decade, however, the for-profits have come to dominate the industry.

In 2000, 70 percent of hospices were run by nonprofit organizations or government agencies. Today, nearly 60 percent are for-profit companies, and they may account for an even larger share of patients.

They really were for-profit,

The profit margins as measured by MedPAC, the Medicare watchdog, climbed to 8.7 percent in 2011.

The per-patient operating profit has risen from $353 in 2002 to $1,975 in 2012, according to the analysis of California data.

Big money lured aggressive players, in particular, private equity,

 The returns have attracted some prominent financial firms, whose analysts have run the numbers and decided to invest. Among the private investment companies that have put down bets on hospices in recent years are Kohlberg Kravis Roberts & Co., KRG Capital Partners and Summit Partners.

As we have discussed elsewhere, the private equity model involves not long term management, but trying to make big money in the short term, either by directly extracting it from the companies taken over, of by rapidly selling them, if necessary, piece by piece. 


Financial Incentives to Enroll the Wrong Patients

Keep in mind that the revenue fueling the uber capitalists involved in for-profit hospices came predominantly from the US government, and depended on the rules set by the government to pay for hospice,

The vast majority of those profits flow from the U.S. government and Medicare, which makes an estimated 85 to 90 percent of all payments to hospices.

The payments provide more profit from patients with the longest stay in hospice,

The reason that longer stays are more profitable is that hospice companies typically spend more on patients at the beginning of their care and then again at the end of their lives.

When a patient is first enrolled, the hospice often must diagnose the patient’s illness, set up home equipment and get them stabilized. Then, during the last week of life, a hospice typically must pay for more frequent home visits by the nurse, aides and others.

As a result, patients who live a longer time — and for whom there is a long, stable period in the middle — generate more profits.

There is evidence that for-profit hospice management has reacted to these incentives to enroll patients who would live a long time, despite the fact noted above that hospice was intended for patients who were at the end of life, and were obviously thus expected not to live for a long time,

Indeed, it has been an open secret in the industry that, because of the method of payment, the way to run a hospice profitably is to enroll patients who stay for a long time.

The annual report in 2004 for one large hospice provider, VistaCare, noted that its fortunes depended on its ability to manage costs and 'maintain a patient base with a sufficiently long length of stay.'

The company also warned that 'cost pressures resulting from shorter patient lengths of stay . . . could negatively impact our profitability.'

'It is common knowledge in the industry that a longer length of stay is going to be more lucrative,' said Rachel Mason, who worked in marketing at Delta Hospice in California, where one of the company’s branches had one of the highest discharge rates of living patients in the state last year — 63 percent. 'If they come in very sick and die right away, it’s difficult to run a business that way.'

So, in the aggregate, stays have gone up, costs have increased, partially because there are more hospice ''urvivors," that is, patients who actually were admitted to hospice not at the end of life, survived much more than the six months which was supposed to have been their expected lifespan, and thus ended up graduating from hospice, a service meant originally for the terminally ill,

over the past decade, the number of 'hospice survivors' in the United States has risen dramatically, in part because hospice companies earn more by recruiting patients who aren’t actually dying, a Washington Post investigation has found. Healthier patients are more profitable because they require fewer visits and stay enrolled longer.

The proportion of patients who were discharged alive from hospice care rose about 50 percent between 2002 and 2012, according to a Post analysis of more than 1 million hospice patients’ records over 11 years in California, a state that makes public detailed descriptions and that, by virtue of its size, offers a portrait of the industry.

The average length of a stay in hospice care also jumped substantially over that time, in California and nationally, according to the analysis. Profit per patient quintupled, to $1,975, California records show.

Yet, while Medicare administrators have been warned about these perverse incentives, they have done nothing to fix them,

For five years, Medicare’s watchdog group has been recommending that the payments to hospice companies be revised to eliminate the financial incentive for improper care, but Medicare has not yet done so. To ensure that patients are appropriately selected for hospice care, Medicare relies on strict medical documentation requirements, a spokesman said. 

Perhaps Medicare administrators are listening harder to for-profit hospice executives than to their own advisory committee,

 The hospice industry is opposed to fundamental changes to the payment system. Jonathan Keyserling, senior vice president of health policy at the National Hospice and Palliative Care Organization, an industry group, said that the current payment system is sound and that tampering with it could have unintended consequences. 

Furthermore,

because of the large sums of money at stake, MedPAC in June added a sense of urgency to its recommendation.

'Given the magnitude of hospice spending devoted to long-stay patients, who are more profitable under the current payment system than other patients, it is important that an initial step toward payment reform be taken as soon as possible,' MedPAC wrote.

Yet Medicare administrators still seemed to feel no sense of urgency, and are not eager to address the specifics of the MedPac recommendations,

A spokesman for Medicare said the agency is considering hospice payment reform but that no such changes will happen in fiscal 2014.

'While the Medicare hospice benefit provides a choice for beneficiaries to seek the care that best meets their care needs and desires, Medicare has and will continue to take actions to safeguard this benefit from inappropriate use,' said Jonathan Blum, principal deputy administrator of the Centers for Medicare and Medicaid Services, said in a statement.

So to recap so far, the hospice movement devolved from one involving non-profit organizations providing care to the terminally ill to ever larger corporations providing care to the less ill, paid largely by the US government under rules from a simpler era.  However, since hospice provides only palliative care, this transition meant that some patients who were not terminally ill may have died from illness that would have been treated in an environment other than hospice.

Vivid Anecdotes of the Deceptive Marketing of Hospice

The Washington Post article summarized allegations from multiple legal actions that provided a disturbing tapestry of deceptive marketing deployed to recruit patients unsuitable to hospice care,

While the lawsuits against the for-profit hospices vary in the details, as a whole they depict an industry in which companies compete for new patients and provide services to patients who are not eligible for them.

Hospice 'outreach specialists' and 'community education representatives' seek out patients in a variety of ways: They solicit doctors and hospitals who might regularly deal with the terminally ill; they make connections at nursing homes, assisted-living developments and Meals on Wheels groups. They show up at the 'health fairs' held at senior centers with, for example, machines that test blood pressure. For families struggling to take care of a loved one, they offer the promise of extra help.

At AseraCare, officials gave advice to their recruiters on how to close a deal with families who are 'not ready yet' for hospice, according to a company presentation for Alabama employees. It instructed recruiters to 'focus families' by stressing the urgency of a decision, and saying things like, 'We only have 10 minutes left.'

'Effective communication is the transfer of emotion, not information,' the presentation said.

At Odyssey Healthcare, one of the nation’s largest hospice companies, representatives earned bonuses if they met their goals for new patients, according to that complaint. The case led to a $25 million settlement with the company.

At Vitas, a division of Chemed, a company that also owns the Roto-Rooter plumbing service, the corporate culture encouraged staff members to admit as many patients as possible, regardless of whether they were eligible for hospice care, according to the lawsuit. The lawsuit said the company paid bonuses based on the number of patients enrolled. One former manager said that the company philosophy was 'sign everybody up' and that medical staffers felt pressured to admit patients regardless of whether they were appropriate.

And at Angels of Hope hospice in LaGrange, Ga., audio recordings cited in the complaint described how some salespeople found patients: by cruising neighborhoods, looking for elderly people with disabilities.

The article coned down on specific litigation about AnseraCare,

One of the primary lawsuits against AseraCare was initiated by Dawn Richardson, a clinical manager at the company, and Marsha Brown, the former executive director at the company’s Monroeville, Mobile and Foley, Ala., outlets.

There was steady pressure for AseraCare managers to find more patients, the lawsuit said.

An executive who did not meet a quota was penalized, according to the lawsuit, and the company offered a massage chair for the person who brought in the most hospice patients.

'In order to make our admission goal for the month, we are down to the wire, and need today to be a huge admit day for every region,' a regional vice president wrote in an e-mail, according to the lawsuit. 'Mobilize your teams, get them into the game this morning . . . when we call on them, they always respond with referrals and a push to convert those referrals into admits ASAP.'

'We had a director who would be like, ‘Get a patient, get a patient, get a patient,’ ' Michael Bonham, a Lutheran minister who worked as a chaplain at the company in Alabama, said in an interview. He is not a party to any of the lawsuits.

These demands for patients were sometimes met with people who were sickly but not dying, according to the federal lawsuit, which outlines five examples.

One patient was supposed to have had end-stage heart disease and thus would have had trouble breathing and walking, according to the lawsuit.

He left the nursing home for his granddaughter’s graduation and for Christmas, had a good time and ate a lot, according to notes from hospice workers cited in the lawsuit.

Another, diagnosed with end-stage 'debility,' was not losing weight as is typically the case, according to the legal filing, and instead went out for a trip to Wendy’s and another to go birdwatching.

Hospice firms' public relations departments provided the usual high minded statements that did not address specific allegations about the marketing of hospice, for example,

'AseraCare provides an important and valuable service to patients and their families facing difficult end-of-life decisions,' the company said in a statement. 'Our policies and programs comply with the Congressional intent of the hospice benefit to reduce the stress and anxiety of the end of life of a loved one,' the company said.

'Doctors for each patient in question determined that the patient needed hospice care, and expressed their clinical judgment by signing the required physician certifications. Other independent and well-qualified physicians reviewed the charts of these ­patients, and overwhelmingly agreed with the original conclusions that these patients were entitled to receive the hospice benefit.'

The company declined to identify the doctors who certified the patients in Alabama.

That seems about as relevant as the mission and values statements of Golden Living, AseraCare's parent corporation,

Our Mission

To share our passion for improving quality of life through innovative healthcare — one person, one family and one community at a time.

Our Values

Make integrity and accountability your pledge.
Share our passion for excellence.
Be uncompromising in delivering quality care.

Summary

Yet somehow our society must make it right and possible for old people not to fear the young or be deserted by them, for the test of a civilization is in the way that it cares for its helpless members. 

Pearl S Buck, My Several Worlds, 1954, p 377 (see Wikiquote)

I also was once taught that the true test of a doctor is his or her care of the sickest and most vulnerable patients.  By this token,  how the hospice movement in the US evolved into corporate health care delivery which generates tremendous revenues from the most vulnerable patients, and in some cases may condemn ill but not terminal patients to death from treatable disease marks how badly US health care has failed.

The story combines many of the themes we have sounded before -

Perverse Incentives - a reimbursement scheme that made sense when hospices were local community non-profit organizations now provides incentives for commercial hospices to enroll patients who are not terminally ill, putting them at risk of inadequate care should they develop a new serious but treatable problem.

Money Before Mission - For-profit hospices which market themselves as equivalent to their community non-profit forerunners, are run, as is suggested above, to maximize revenue no matter the effect on mission. Presumably this is justified by the fallacy of maximizing shareholder value, which really means maximizing apparent short-term revenue in order to maximize executive compensation, no matter what the collateral damage.

Impunity - Although hospice enrollment of unsuitable patients not only may defraud the government, but may put such patients at risk of their lives, the only regulatory or law enforcement actions against big corporate hospices so far involve corporate fines that are small in comparison with revenues, but not penalties imposed on any individuals who authorized, directed or implemented such patient enrollment, even when patients wrongly enrolled have died from lack of treatment of potentially treatable problems.

Corporatism - Government agencies which could seriously challenge corporate hospices' actions have been curiously inert, perhaps because agency leaders feel more sympathetic to their fellow managers within corporate hospices than to the citizens whose interests they are supposed to protect.

Because of their potentially severe adverse effects on our most vulnerable patients, reform of hospices should be at the forefront of true health care reform.  At the least, we need vastly tougher regulation of corporate hospices, removal of perverse incentives for them from the government payment system, and vigorous law enforcement when their leaders induce them to misbehave.  Leaders of corporate hospices need to be held accountable for their actions, and must be pushed towards putting their patients' health ahead of all other considerations, including the leaders' personal enrichment.

Furthermore, the story of corporate hospices shows that while turning direct health care over to poorly regulated for-profit corporations may have been increased efficiency, been "disruptive" and lead to innovations, the efficiency, disruption and innovation have mainly lined the pockets of corporate insiders, and not improved patients' or the public's health.  We ought to give strong consideration to banning corporate hospices, and banning all forms of the corporate practice of medicine and corporate health care "delivery."

Given how many insiders make so much money from the current version of laissez faire capitalism in health care, however, I would expect strong resistance should such apparently "radical," but actually conservative proposals actually get any mainstream attention.