Read my interview with MarketWatch

I spoke recently with Jessica Hall of MarketWatch about my recommendations for reforming end of life care. You can read the interview here. If you'd like to learn more on this subject, my book is available from Amazon.

Why Private Equity is Interested in Hospice

Profit-Obsessed Private Equity is Now Dominating the US Hospice System by Lily Meyersohn offers insights to address hospice care challenges.

Private equity firms (PEFs) are targeting US hospice care and this isn't good for patients or healthcare. Flawed reimbursement and Medicare’s use of coding to pay for services are the problem. Complicated coding:

• Does a poor job compensating for non-procedural care that is neither complex nor procedure driven

• Distracts caregivers from focusing on patients' needs

• Invites fraud and cross subsidization into hospice care, hurting hospice patients

Coding is so complex, it spawned a new industry called revenue cycle management that cost providers $140 billion in 2020 for billing services they couldn’t manage themselves. The article notes: “Private equity is [...] good at exploiting the public payment system for hospice care.” PEFs optimize and manipulate Medicare payments by focusing on the gray areas.

The fact that some services requiring complex care have a higher profit margin while others have none is known as cross subsidization. The article notes that coding creates cross subsidization with hospice patients: “People with dementia [...] may have few acute medical needs and live for more than six months, giving providers more time to collect their daily reimbursement and allowing providers to goose their profit margins. By contrast, cancer patients or patients with heart conditions [...] typically have shorter life expectancies and require more skilled nursing care. Refused by privately owned providers, they frequently wind up in nonprofit hospices.”

PEFs can manipulate payments and carefully select profitable patients to earn a 15-20% margin while nonprofit hospices struggle to break even.

The author recommends more regulation and transparency which to date have demonstrated little success. I offer a completely different solution: Change the hospice reimbursement model to cost reimbursement. Eliminate coding and instead base payments on the actual cost of care for a patient making all patients equal from a payment perspective. A modest margin beyond the reimbursement of costs could be added to those costs.

This is simple and less costly to administer. Caregivers can focus on patients instead of coding. It eliminates cross subsidization since all patients are paid for equally. It minimizes fraud because there is nothing complex to manipulate in the billing process. It would drive PEFs from the hospice sector because they could no longer achieve their profit margin requirements.

Hospice care is too critical to end-of-life care to be at risk because of a complex payment system. Medicare needs to change how it pays for hospice services.

For details on improving end-of-life care and reforming healthcare see my new book The Journey’s End.

Insurance rules diminish the gift of hospice care

Thank you, Investor’s Business Daily for this article of tribute to Dr. Cicely Saunders, which focuses on her many leadership traits. My interest is in the article's insightful observations about dying and the benefits of hospice.

Recently, hospice has received unfair press related to the design of hospice insurance not with the hospice care model of palliative care.

Saunders's vision for hospice was about caring for patients and accepting that at the end of life, curing the uncurable may not be what is best for the patient. She worked to keep things simple, pragmatic and evidence-based. Unfortunately, hospice insurance has abandoned these core principles. Let me review three flaws in hospice insurance design that discourage the use of hospice and make its care delivery unnecessarily complex:

1. The insurance requirement that two doctors certify a patient will die in six months. No physician wants to tell a patient they will die in six months, so they don't offer this care and wait until a patient is a few weeks from dying to raise the option. Saunders' criteria was much simpler and evidence-based - if the patient has a terminal diagnosis they qualify for hospice. This approach keeps the time factor of death off the table, making it easier for everyone to discuss hospice.

2. The insurance requirement that patients give up their regular Medicare insurance benefits in order to qualify for hospice benefits. Based on evidence from a Medicare Innovation project, patients with both regular Medicare and the hospice benefit at the same time are more willing to embrace hospice, better cared for, more satisfied and the cost of their care is one-third less. Once they experience the hospice benefit, they move from the curative treatment model that isn’t helping them.

3. The insurance rule that hospice is paid via ICD-10 coding, a process that is ridiculously time-consuming and invites fraud. The more complex we make the payment process, the more room there is to manipulate the coding to maximize payments. Venture capital is chasing after hospice because they can make a 15-20% margin by manipulating coding.

These insurance requirements are unnecessary, complicated, time-consuming and distracting, taking caregivers away from caring for patients facing numerous and important end-of-life issues.

Saunders was a great leader because she knew that if you follow the evidence and keep things simple, good things happen. Her vision and approach to end of life care gave everyone a better model of care for dying patients. Unfortunately, unnecessarily complex insurance rules are diminishing the legacy of Dr. Cicely Saunders and her gift of hospice. My book The Journeys End offers a new path forward to improve EOL care that honors the Saunders legacy.