Hospice Cap Crisis – Why are more and more hospices hitting the Cap?

Hospice is the only Medicare benefit in which Congress has promised eligible beneficiaries unlimited care, but Medicare arbitrarily and retrospectively refuses to pay providers for those services.   The result is the Hospice Cap Crisis, which is harming terminally ill Medicare beneficiaries, independent hospices and Medicare’s end-of-life care quality and costs.

The Cap Crisis stems from a conflict among Medicare statutes and regulations that emerged in 1998, and which is being made worse by Medicare’s flawed hospice Local Coverage Determinations.

In 1982 when hospice first became a Medicare benefit, Congress limited individual patients to 210 days of hospice care, and providers were also subject to a Cap, effectively on the average length of stay of their patients. From 1982 until 1998 neither cap came into play because, in practice, hospices admitted only cancer patients, whose hospice stays are unfortunately predictably short.  The 75% of Medicare beneficiaries who die from non-cancer illnesses had little practical access to hospice, because their prognoses are less predictable, there were no eligibility standards and physicians were reluctant to certify these patients as having a six month prognosis.

In 1998 Medicare and Congress and Medicare significantly expanded the hospice benefit.

• Medicare created objective eligibility criteria for non-cancer patients that provided them “equal access” to hospice. This effectively quadrupled the potential universe of hospice users, and hospice began to grow rapidly.
• Congress removed all limitations on individual hospice length of stay. Congress knew that patients die in their own good time, that beneficiary satisfaction with hospice was extraordinarily high, that hospice saved Medicare money and that too few terminally ill seniors were receiving a timely hospice choice.

But, neither Congress nor Medicare reformed the Cap on hospice providers. Hospices that follow Medicare’s LCDs scrupuously and that continue to care for eligible patients who live longer than the expected six months are now receiving retrospective government demands to repay hundreds of millions of dollars. Independent hospices don’t have this money; they spent it years ago caring for dying seniors who had a statutory right to receive that hospice care.

Making this fundamental conflict worse, Medicare never empirically tested their hospice Local Coverage Determinations which by law “determine” patient eligibility. Medicare’s LCDs are now widely believed to be flawed and to result in very long patient stays in hospice. Hospices that honor Medicare’s explicit eligibility criteria are being driven into Cap Crisis.

These retrospective Cap demands have grown from under $5 million affecting fewer than 25 hospices in 1999 to the Cap Crisis we see today.  For 2006, over 400 hospices in 30 states face demands from CMS to refund about $300 million.  This is about 15% of all hospices nationally, 25% of all hospices that are not affiliated with hospitals, and 30% of all Sunbelt state hospices, and the number is growing 50% each year.

The hospice Cap Crisis harms patients, because it is forcing hospices to withhold access to quality, cost-effective end-of-life care from eligible non-cancer patients who may “live too long,” but who have a statutory right to receive that care.

The hospice Cap harms quality hospices who are caring for exactly the patients and families that Medicare has directed them to admit, yet face financial ruin solely because their eligible patients are living longer than the 1982 Cap permits.

The hospice Cap is harming Medicare’s quality and costs by reducing patient access to quality, cost-effective end-of-life care.

The good news is that there are fiscally responsible legislative reform proposals that would improve patient access to care, reform the Cap, and save Medicare over $1 billion annually. (www.hospiceaccess.org)

Congress should act.