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Money & Ethics

Is This Hospice Pitch Legit?

Because Medicare pays firms a flat rate of at least $150 per day per patient, a company bent on producing rising profits for investors has an incentive to enroll healthier patients.

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Q. My 90-year-old mother -- who is frail and short of breath but not suffering from any particular illness -- lives with my family. At the elder-care center where she socializes a few afternoons a week, a representative from a hospice company met my mom and later told me that she is eligible for its Medicare-funded services, including nursing visits to our home, oxygen equipment, pain meds, etc. I thought hospice is supposed to be palliative care for terminally ill people, but the hospice rep said it has been broadened, and they can arrange everything. Some of the services could be helpful to our budget, but should I be skeptical?

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A. Yes, you should. It sounds as if this hospice is engaging in aggressive enrollment practices that run counter to Medicare rules and have been the subject of lawsuits and federal probes. Such practices are not the norm, but they have sullied the reputation of classic hospice care, a valuable and honorable system -- especially as practiced by nonprofit organizations, which are a dwindling presence in the industry.

To qualify properly for hospice care, a patient must be certified by two physicians as not likely to live more than six months due to a specific disease, often cancer. Just being generally debilitated or "failing to thrive" is not enough.

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To stay in hospice more than six months, the patient must be recertified as terminal for each additional two-month period, which can be unlimited in number. The recertification can be done by the hospice's own medical director. Because Medicare pays the firm a flat rate of at least $150 per day per patient, regardless of whether a home visit is made each day, a company bent on producing rising profits for investors has an incentive to enroll healthier patients and keep them in the program until a reimbursement cap (calculated for all of its patients combined) is reached. At that time, healthier patients are often discharged.

For more information on this complex subject, see a story by my colleague Eleanor Laise that appeared in Kiplinger’s Retirement Report.

Have a money-and-ethics question you'd like answered in this column? Write to editor in chief Knight Kiplinger at ethics@kiplinger.com.