The decision about when and whether to transition a terminally ill patient to hospice care can bring up many powerful feelings. If someone is suffering and isn't going to recover, hospice can be the most compassionate choice. But with medical science often wrong on life spans after a terminal diagnosis, the decision can be very nettlesome.

The only clear conclusion about hospice care is that the aging of the U.S. population has made it a growth industry, but one that is immersed in controversy as Medicare focuses on cost-saving measures.

A key trigger for the expansion of hospice services will be the new Medicare provision on hospital readmissions. Starting next year, Medicare will begin to impose penalties on hospitals that discharge and readmit patients within 30 days. This provision of the Affordable Health Care Act (ACA) was designed to eventually reduce the cost of care given to patients who would not substantially benefit from the highest-cost acute care offered by hospitals.

Beginning Oct. 1, 2013, the ACA will penalize hospitals that readmit patients within 30 days for specific conditions, including heart failure, heart attack and pneumonia. These fees could climb to 3 percent of a hospital's yearly income by 2015 under the current law.

Some policymakers and industry officials believe that terminally ill patients would be better served in hospice and palliative care settings. As a result, Medicare is paying more each year for hospice care. Between 2005 and 2009, hospice payments increased 53 percent, according to the Office of Inspector General (OIG) for the Department of Health and Human Services. Payments for hospice care in nursing facilities rose even faster with a nearly 70 percent increase over the same years.

The private hospice industry has grown to meet the demand. In 2009, more than half of Medicare hospices (56 percent) were for-profit, up from 13 percent in 1992, the OIG reports. Although the majority of hospice care is given at home, there are more than 5,000 hospice programs nationwide.

Despite the growth rate in use of hospice services, the Medicare benefit is not well known, nor is it widely used. In 2000 (the most recent figures available), only 23 percent of Medicare patients who died were enrolled in a hospice program. To be eligible for Medicare hospice care, a patient must be entitled to Medicare Hospital Insurance (Part A) and be certified as having "a terminal illness with a life expectancy of 6 months or less." Once hospice care is approved, it's then considered "palliative"—improving quality of life until death—as opposed to curing an illness.

Private hospice groups have stepped up their marketing for what Bloomberg Business Week estimates is a $14 billion market for services. Companies have been offering incentives to doctors and other health care professionals for referrals, even soliciting patients in nursing homes.

The stepped-up industry marketing has been the subject of numerous probes of the OIG, Medicare's watchdog. Are private cousampanies too eager to sign up infirm patients? A recent OIG article cited the following:

"A recent report found that hundreds of hospices had more than two-thirds of their beneficiaries residing in nursing facilities in 2009. These `high-percentage hospices' typically served beneficiaries who required less complex care than other beneficiaries but required hospice care for longer periods. By serving beneficiaries for longer periods, these hospices billed Medicare more per beneficiary, on average, which can mean larger profits. The numbers reflect this; compared to the overall pool of hospices, high-percentage hospices are more likely to be for-profit."

In the past, the OIG discovered several situations where patients were needlessly moved into hospices or who were overbilled:

• SouthernCare Inc., an Alabama-based company, and its shareholders allegedly submitted false claims to the government for hospice patients who were not eligible for such care. In 2009, SouthernCare Inc. agreed to pay a total of $24.7 million to settle allegations and enter into a corporate integrity agreement (CIA) with OIG.
• Roberto Ruiz, M.D., and his company, Southwest Internal Medicine Group P.C., entered into an integrity agreement with the OIG in 2009 to resolve charges of submitting false claims to Medicare for hospice services. The agreement requires written policies, employee education and annual audits. He also paid $525,000 to resolve his civil liability.
• In 2008, Solaris Hospice Inc., formerly Home Hospice of North Texas, and its two owners agreed to pay $500,000 plus interest to resolve allegations that Solaris submitted improper claims for hospice-related items and services. The improper claims included, for example, alleged misrepresentation to Medicare of the medical conditions of patients to ensure that they would be or continue to be hospice patients. Also, Solaris Healthcare, the parent company of Solaris, agreed to enter a 5-year CIA with OIG.

While the OIG continues to investigate how hospice services are marketed, an industry group has launched an awareness campaign. Earlier this month, the trade group National Hospice and Palliative Care Organization contracted with a public relations firm "to develop and launch a `Reaffirming Hospice Campaign.' This national campaign will reinforce the vital importance and quality of hospice to policy makers, healthcare professionals, and baby boomers."

 "In 2010, an estimated 1.58 million patients, along with their family caregivers, received hospice services,” stated J. Donald Schumacher, NHPCO president and CEO. “But, despite this growth, there is still an ongoing lack of awareness about the full benefits of hospice and a need to utilize facts to develop increased understanding of the issues.” In 2011, the organization published its "ethical marketing practices."

In addition to the problems the OIG discovered, Medicare will need to address the numerous conflicts that arise when hospice care is suggested and implemented.

Who decides when hospice care is appropriate? Is it a joint decision fully shared by the family, doctors and other health professionals? What's the role of lawyers and clergy in the process? How can Medicare weigh the decision-making so that the cost (and profit) considerations don't overshadow quality-of-life concerns? After all, end-of-life care is more than a business or medical decision. It is becoming one of the most pressing socio-ethical questions of our time.