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Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities

Jenell Clarke-Whyte, a team leader for the Office of Evaluation and Inspections, is interviewed by Nancy Harrison, Deputy Regional Inspector General for Office of Evaluation and Inspections in New York.

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[Nancy Harrison] I'm Nancy Harrison, Deputy Regional Inspector General in New York for the Office of Evaluation and Inspections. Today I am speaking with Jenell Clarke-Whyte, a team leader in our office, about the report called Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities. Jenell, can you tell us what you found in this report?

[Jenell Clarke-Whyte] Sure. We found that Medicare paid a lot more money for hospice care provided in assisted living facilities, compared to hospice care provided in other settings like private homes or nursing facilities.

[Nancy Harrison] What is the difference between an assisted living facility and, say, a nursing home?

[Jenell Clarke-Whyte] Assisted living facilities are like apartments or small suites or other residences for seniors who can live relatively independently but do need some help with the chores of daily living. Assisted living facilities typically provide services like housekeeping, meals, and community activities but not medical or nursing care. On the other hand, nursing homes provide a full range of services from housing to administering medications and around-the-clock nursing care.

[Nancy Harrison] Why does Medicare pay more for hospice care in assisted living facilities than in other settings?

[Jenell Clarke-Whyte] People in assisted living facilities receive hospice care for longer periods of time than those who live at home or in nursing facilities. Medicare pays hospice providers a daily rate for each patient in their care, so the long length of time residents in assisted living facilities stay in hospice care explains the higher Medicare payments. We are also concerned that some hospice providers are targeting certain beneficiaries with medically uncomplicated conditions because they may offer hospices the greatest financial gain.

[Nancy Harrison] So, hospices can make a lot more money, for less care, if they focus on patients in assisted living facilities?

[Jenell] Yes, that seems to be supported by our findings. In fact, we found that for one week, Medicare paid hospice providers about $1,100 dollars per patient for fewer than five hours of visits for each patient in an assisted living facility.

[Nancy Harrison] Who qualifies for Medicare's hospice benefit?

[Jenell Clarke-Whyte] The hospice benefit is for terminally ill Medicare patients whose physicians believe that they will likely die within six months. The goal, therefore, is not to cure a patient but to relieve any pain and suffering in their final days.

[Nancy Harrison] Why did you start looking into hospice care in assisted living facilities?

[Jenell Clarke-Whyte] Medicare payments for hospice care in these facilities have been growing at an alarming rate compared to hospice care in other settings.

[Nancy Harrison] Can you give us an example?

[Jenell Clarke-Whyte] Sure, in 2012, Medicare paid $2.1 billion dollars for hospice care in assisted living facilities - that's more than double what Medicare paid 5 years earlier. Hospice care in other settings has not increased at that same rate.

[Nancy Harrison] That is a big increase! So what does this all mean?

[Jenell Clarke-Whyte] The Centers for Medicare and Medicaid Services, or CMS, needs to fix the way that Medicare pays for hospice services. Hospices should not have a financial incentive to focus solely on certain types of beneficiaries. Hospices need to be more accountable. A hospice's top priority should be providing quality care to those who need its services.

[Nancy Harrison] What are you recommending to CMS?

[Jenell Clarke-Whyte] CMS must change the hospice payment system. One way to do that is to tie payment rates to a patient's specific needs and what services are provided.

[Nancy Harrison] What else do you recommend?

[Jenell Clarke-Whyte] CMS has adopted some quality measures for hospices that address pain management and other treatments. We recommend that CMS develop additional measures like the average number of services the hospice provides, the types of services, how often physician visits are provided, and how often a hospice provides services on the weekend.

[Nancy Harrison] Anything else?

[Jenell Clarke-Whyte] Yes, we also recommend that CMS make hospice data publically available like it does for other types of providers such as nursing homes. This can help beneficiaries and their families compare hospice providers that can best meet their needs.

[Nancy Harrison] Jenell Clarke-Whyte, with the Office of Evaluation and Inspections, thank you so much for sharing this important work.

[Jenell Clarke-Whyte] Thank you, Nancy.