For-Profit Hospice Pitfalls Exposed

A 2018 study conducted by U.S. Department of Health and Humans Services states, “the current (Medicare) payment system creates incentives for hospices to minimize their services and seek beneficiaries who have uncomplicated needs.”

More than two-thirds of U.S. providers that deliver end-of-life care for terminally ill patients are for-profit hospice companies. Hospice care was once only administered by volunteer members of charities or religious organizations. The Medicare Hospice Benefit was later enacted by Congress in 1986, supporting patient access to end-of-life care, while furnishing bottom lines for providers. According to the National Hospice and Palliative Care Organization, Medicare benefits paid to hospice providers in 2019 totaled more than $20 billion. The majority of those assets benefitted private-equity owned and publicly traded companies.

For-profit hospice models have grown substantially throughout the last decade, caring for more than half of all Medicare hospice patients in 2019. And investors are buying up non-profit competitors at an alarming rate. However, many of these companies operate without appropriate healthcare knowledge or staffing. And short-term expectation for a return on investment is creating an end-of-life care framework riddled with incompetency, fraud, and abuse.

The L.A. Times reports: “More than 1.6 million Medicare beneficiaries now receive care from about 5,000 hospices, the vast majority of them for-profit operators.

In 2020, The Los Angeles Times investigated California’s disproportionate growth in for-profit hospice providers in L.A. County. Auditors uncovered tens of millions in fraudulent billing to Medicare, illicit patient recruitment practices, and reports of patient abuse. Lawmakers quickly responded to the news, creating a task force and shoring up hospice licensing requirements. A state audit released in March 2022 echoed the media’s initial findings and outlined measures for additional oversight.

But increased stopgaps may further bog down an industry already struggling to keep up with new demands from Medicare. Legal experts warn that mounting pressure may lead to more companies disbanding or selling to for-profit hospice entities.

“The sophistication and the maturity of the industry is causing a lot of agencies to kind of self assess,” Mark Kulik, managing director with the M&A advisory firm The Braff Group, told Hospice News. “They are asking if they have the size, the resources and the sophistication to handle this continuing evolution and changes both in regulatory oversight and reimbursement pressures.”

Added regulatory reimbursement requirements
from Medicare may force more providers to sell
their business to for-profit hospice enterprises.

The U.S. Department of Health and Human Services recognizes the gravity of fraudulent practices by for-profit hospices. A 2018 study conducted by their Office of Inspector General identified several vulnerabilities in the Medicare program, including poor patient care management and billing schemes.

If you have concerns regarding hospice  practices in your area, submit a complaint to U.S. Department of Health and Human Services Office of Inspector General.