Washington, DC – A new report titled “Preying on the Dying: Private Equity Gets Rich in Hospice Care?” by CEPR’s Eileen Appelbaum and Cornell University’s Rosemary Batt is released today.
In the past decade, hospice care has become a new target for private equity firms. Nonprofit agencies provided nearly all hospice care until 1982, when legislation was passed that required Medicare to provide a hospice benefit; its purpose was to enable terminally ill Medicare beneficiaries to receive the care they needed and live out their final months and days with dignity. Hospice was a low margin business, and there was little to no expectation that the industry would prove attractive to for-profit providers. But the lure of government-funded hospice care did, in fact, start to attract small for-profit hospice providers. This was followed soon after by publicly-traded corporations and then, crucially, by private equity firms that saw an opportunity to extract profits from caring for the dying.
Lax regulation of hospice agencies, with no standard for adequate care and a payment system that is easily gamed, has made it possible for-profit and PE-owned companies to commit widespread fraud, abuse & neglect of sick and dying patients.
Key findings include:
- The hospice benefit pays a fixed amount to the hospice agency for each day an eligible Medicare beneficiary within six months of death is enrolled in its hospice program, whether or not the patient receives services on that day. This sets the stage for unscrupulous providers to game the system and increase their profits.
- Neglect of patients at the very end of life increases profitability while denying patients badly-needed care; it occurs more often in for-profit settings.
- Some for-profit care providers have committed Medicare fraud by recruiting people who are not terminally ill, and enrolling them and collecting the per diem payment while providing little or no services to them.
- Recruiters are paid on the basis of the number of people they enroll, and have targeted poor people with little access to medical care with the promise the recruited patients housekeeping help, a free hospital bed, 24-hour nursing care, and other hospice benefits.
Policy suggestions include:
- Medicare payments need to be calibrated to the seriousness of the illness of enrolled patients and the skills of the nurses and others providing hospice care.
- Standards of care, including number of visits and access to services such as physical therapy, need to be established and disseminated to patients and caregivers.
- Regulators need to carry out inspections (called surveys in this industry) on a regular basis, and to impose steeper penalties for failure to adhere to standards, including the loss of their hospice license.
“Patients at the end of life are entitled to have their pain and other symptoms alleviated and to live out their last days with dignity – that is the promise of the Medicare hospice benefit. Opportunities to game the system and failure to provide adequate care to hospice patients should be eliminated; illegal behavior should be dealt with harshly. No one should be able to profit by preying on the dying,” write Appelbaum and Batt.
The full report is available here.
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This post was previously published on cepr.net and under a Creative Commons license CC BY-ND 4.
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