Hospices in Florida: From Cause to Commerce

Cynthia Barnett | 8/1/2011

Growth as a result of Medicare reimbursements has created the best of times and the worst of times for hospices, says Susan Ponder-Stansel, CEO and president of non-profit Community Hospice of Northeast Florida. [Photo: Jon M. Fletcher]

Both sides think the system favors the other. Typically, non-profit hospices operate at a 3% to 4% loss, supplementing the reimbursements they receive from Medicare with fundraising that lets them serve more patients, including some not covered by either Medicare or insurance.

Non-profit executives say their broader community mission puts them at a financial disadvantage. For example, Community Hospice of Northeast Florida operates a $2.2-million PedsCare program for children with life-threatening diseases, offering palliative care not covered by either Medicaid or insurance. Other Florida non-profits cover rural counties where no for-profit wants to compete or operate stand-alone hospice facilities.

For-profit hospice executives say that they also offer services far beyond those required for reimbursement. They claim non-profits have an advantage in being able to turn to their communities for millions in charitable donations. Still, Medicare reimbursement is generous enough that for-profit hospices sustain operating profits of between 12% and 16%.

An important question in the debate is whether the Medicare reimbursement system creates incentives for the for-profits to try to cherry-pick the most lucrative patients.

Medicare reimburses at a per-day rate — $143 in 2010 — for routine hospice care regardless of the patient's disease or place of care, which might be a patient's home, a nursing home or a stand-alone hospice facility.

Long stays, therefore, are far more profitable than short stays. That means it can be profitable to care for an Alzheimer's patient who lives for months needing relatively little medical intervention. But Medicare may not come close to covering the overhead for a renal-failure patient who dies in just a few days and requires intense medical help or a cancer patient in need of drugs or radiation to help reduce pain.

For the past few years, an independent congressional agency called the Medicare Payment Advisory Commission (MedPAC) has raised concerns that the system creates financial incentives for for-profit companies to market to the families of patients with longer, less-expensive illnesses such as dementia. The commission is worried that non-profits are left to manage shorter-term, costlier cases involving diseases such as cancer.

A team of researchers at Harvard Medical School published a study in February in the Journal of the American Medical Association, finding "notable differences" in the types of patients enrolled in for-profit vs. non-profit hospices. The for-profits had longer average stays than non-profits. The for-profits also had higher proportions of patients with dementia and lower proportions with cancer.

Medicare Reform? Both non-profit and for-profit hospice executives are watching the D.C. donnybrook over Medicare's future. In addition to considering tweaks in specific Medicare reimbursements for hospice services, Congress in 2013 is expected to reform the hospice benefit to ensure it does not create a financial disincentive for hospices to provide a full range of care for patients with conditions that require the most technological intervention. "If I could wish for anything, it would be for concurrent care reimbursement — allowing a patient with terminal illness to continue to access chemo and radiation," says Barbara Ivanko, COO at Hospice of Palm Beach County. Another important change under way is a new requirement to report outcomes, from pain management to how well hospices assist families. The federal government this year is expected to release outcome measures and base reimbursement in part on how well hospices perform.

Congress is expected to reform the hospice benefit in 2013. MedPAC is recommending a U-shaped payment curve that recognizes the first and last several days of hospice care as the most expensive, paying a little more on each end — and a little less in the middle.

Leadership at the National Hospice and Palliative Care Organization in Alexandria, Va., which represents both for-profits and non-profits, does not support that model, however. "We understand the need to examine hospice reimbursement, and we are not opposed to that," says organization spokesman Jon Radulovic. "However, NHPCO feels that changes must be based on comprehensive data collection and analysis — which we don't feel has been done at this point."

In Florida, anecdotal evidence is inconclusive. Researchers here have noted the growth in for-profit hospices, but they say the state's current measures and standards don't provide a clear comparison of how a hospice's business plan affects the quality of care.

Florida regulators who work with hospices say while operations can vary greatly from one hospice to the next, the differences don't derive from the business model. Some for-profits may be more efficient simply because they're part of national chains with streamlined operations, for example. Non-profits may be more deeply embedded in their communities.

More important are quality, access and character of care — not whether the provider is a for-profit or non-profit, says Jeff Gregg, chief of the bureau of health facility regulation for Florida's Agency for Health Care Administration. Indeed, he says, the path toward death for terminally ill patients can be so complex and unique that a simple solution is not likely.

"It's good to try and get a sense of the approach," he says, "and to figure out which hospice is the best fit."

Community Hospice of Northeast Florida displays military flags outside the rooms of dying veterans, a gesture to Jacksonville's large military-retiree population that non-profit providers say is typical of the ties they try to cultivate with their communities. [Photo: Jon M. Fletcher]

Tags: Healthcare