The Strange Case of Crypto Exchange QuadrigaCX: Death and a Missing $200 million

 A major Canadian cryptocurrency exchange is in the spotlight following the sudden death of its founder, Gerald Cotten, which has left customers unable to access $190 million in funds.

The 30-year-old founder of QuadrigaCX died in India on Dec. 9, 2018 due to complications from Crohn’s disease, according to a sworn affidavit by his wife, Jennifer Robertson. At the time of his death, Cotten was the only person with the password to access the customers' funds.

“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us,” QuadrigaCX said, in a statement posted on its website. “Unfortunately, these efforts have not been successful.”

Referring to Court filings, the Chronicle Herald notes that “cold wallets” harness technologies such as USB drives and electronic devices that are not connected to the Internet.

I noted in my Facebook post on the subject that:

This would NOT have happened had the owner set up a LegalVault® account with my firm. I warned that this would happen in an article I published last November. I also described how my clients who use LegalVault avoid this risk. See my article here: http://bit.ly/2GrallA. 'A man who does not plan long ahead will find trouble at his door.' ― Confucius, Chinese philosopher."

You can read more in the Fox News article that first alerted us about the fiasco. Apparently the owner was concerned more for the welfare of his pet chihuahuas, than for his family or investors.  

More:  

LegalVault® Offers Solution to Estate Planning Challenges of Bitcoin and Cryptocurrencies;

Most Procrastinating on Planning; Those That Plan Don't Protect Their Plans;

Considerations in Crafting Health Care Proxies or Durable Powers of Attorney for Health Care;

Where Are Our Family Photos?!? Planning for a Digital Legacy;

The Trouble With Advance Directives;

More than 50% of Dual-eligibles Steered to Low-rated Nursing Homes

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Accepting the risks of the current health care system, for seniors, their families, and caregivers, often includes accepting the risks of referral to a nursing home after Medicare hospital benefits expire. Most assume that the transition is, like other aspects of health care, handled carefully and competently, and with the patient's best interest being paramount.  Unfortunately, that assumption is dangerously incorrect.

A recent study found that seniors who are eligible for both Medicare and Medicaid are more likely to wind up in low-quality skilled nursing facilities rather than available higher quality alternatives.  The authors summarize by concluding "(duals) are concentrated in lower quality [with ratings from 1 or 2 of five stars] nursing homes, relative to those not on Medicaid." Implicit is that Medicaid residents find themselves in the lowest quality facilities.

The study is significant because "dual eligible" seniors have, or should have, access to the widest variety of institutions, since they can be referred to both institutions accepting Medicaid and Medicare, and are not excluded from either those that don't accept Medicaid, or Medicaid-only facilities (the latter characterization is often misnomer since most institutions will accept both, but some institutions become Medicaid-primarily, or Medicaid-only). Medicaid residents often find themselves relegated to  the lowest quality facilities. The results of the study are the subject of an article published in McKnight's Long-term Care News. 

The study identified patient education and proximity to quality skilled nursing facilities as key reasons for the disparity.   This blog has repeatedly warned that the proximity of a care choice to the resident's home, or family, or hospital is a poor bases upon which to select a care provider.  

The study is published in the Journal of Applied Gerontology. According to the study's authors, the solutions are is not limited to investment in formal education and relocating high-quality facilities into areas where dual-eligible beneficiaries live. Rather, experts suggest that health care leaders should work to better disseminate information on high-quality care options to duals, and to improve lagging nursing homes in low-income areas:

“More interactions among nursing home leaders from both high-quality and low-quality facilities can help identify ways to improve low-quality facilities in poorer neighborhoods,” lead author Hari Sharma, Ph.D., an assistant professor in the University of Iowa’s Department of Health Management and Policy, told McKnight’s on Thursday.

Sharma and colleagues reached their conclusions based on nursing home quality data from 2009 — the first year after Five-Star ratings were made public, before facilities had a chance to substantially improve scores (by 2011, a large proportion of SNFs were rated as four or five stars, authors wrote). They found that duals were 9.7 percentage points more likely than non-duals to be admitted to a SNF rated as one or two stars (50.7% compared to 40.9% for non-duals).  

Authors note that healthcare leaders must find ways to address those additional factors that contribute to disparity. For instance, hospitals might work to steer duals to high quality nursing homes, Sharma said. Another important takeaway for SNF leaders from the study is the need to form partnerships with legislators to help eradicate inequalities:

“Our research highlights the need to invest more resources to improve existing low-quality nursing homes in areas that do not have many alternatives. Since investment of additional resources requires the commitment from both policymakers and nursing home leaders, it is imperative that both sides actively work together to improve existing low-quality nursing homes.”

For those planning to "Age in Place," this study provides more evidence for justification, and illustrates the importance of educating caregivers and fiduciaries regarding the workings of the health care and legals systems.   

Hospice Use by Nursing Homes on the Rise, but still Underutilized

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For those who implement an "Aging in Place" plan, hospice plays an integral part in the planning.  First, hospice care is "person-centered care" of the type and kind those who seek to stay home want and need.  Hospice focuses on "palliative care", a specialized type of care focused on relief from the symptoms and stress of a serious illness, with the goal being to enhance or improve the quality of life for both the patient and the family. Second, hospice is a benefit paid for by Medicare, meaning that there is no need for 'spend down," or planned or unplanned indigence to obtain the care.  

Now, according to an article in McKnight's Long-term Care News, more nursing homes are providing hospice care.  The article reported the results of a new LeadingAge report. The Report also finds that hospice care, nonetheless, remains largely underutilized. 

The report notes that the hospices’ prevalence has skyrocketed in recent years, with the number of providers nearly doubling since 2000, at about 4,200 in 2016:

Over the same period of time, the hospice patient population has changed drastically: hospice is now serving more individuals residing in nursing homes and assisted living in addition to its traditional home-based population. In 2016, half of all Medicare hospice beneficiaries died at home and a third died in a nursing home. The terminal conditions experienced by hospice enrollees are also changing. Whereas hospices initially served primarily patients with cancer, they now serve individuals with many different diagnoses, including neurological conditions such as dementia, as well as progressive cardiac and pulmonary diseases [citations omitted]. 

In 2016, about half of all Medicare hospice beneficiaries died at home, while one-third died in a nursing home. Terminal conditions treated by the benefits have changed too. While the service was almost exclusively limited to cancer in the past, patients with dementia and heart disease are increasingly using it, too.

Though hospice use has grown exponentially in recent years, utilization remains low, according to the report. More than one-fourth (28%) of Medicare beneficiaries who used the benefit enrolled for fewer than seven days immediately before death, a length of stay thought to be of less benefit to patients and their families than a longer stay. According to the report, these short stays relate to:

• Physicians being reluctant to discuss hospice or delay such discussions until the patient is close to death;
•  Some patients and families having trouble accepting a terminal prognosis;
• The requirement that patients forego intensive conventional care in order to enroll in hospice; and,
• Financial incentives in fee-for-service Medicare that encourage increased volume of clinical services.

Congress and CMS have introduced a number of initiatives to promote earlier hospice enrollments and better-quality end-of-life care.

With Doughnut Hole Gone, Medicare's Uncapped Drug Costs Still Bite

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Although federal legislation closed the doughnut hole for brand-name drugs in 2019, because Medicare has no spending limit for prescription medications in Part D, its drug benefit, some Medicare beneficiaries could owe thousands of dollars in out-of-pocket drug costs every year for a single drug.

The closure is good news, and means that  a beneficiary will only be responsible for 25% of the cost of brand-name drugs. Although the doughnut hole for brand-name drugs has closed, the beneficiary may still see a difference in cost between the initial coverage period and the doughnut hole. For example, if a drug’s total cost is $100 and the beneficiary pays the plan’s $20 copay during the initial coverage period, the beneficiary will be responsible for paying $25 (25% of $100) during the coverage gap. The doughnut hole will close for generic drugs in 2020, at which point a beneficiary will be only responsible for 25% of the cost of generic drugs.

Kaiser Health News published an excellent article, Doughnut Hole Is Gone, But Medicare’s Uncapped Drug Costs Still Bite Into Budgets, about the demise of the doughnut hole and the out-of- pocket costs beneficiaries must still face. The article focuses on the need for an annual cap on out of pocket drug spending by telling the stories of some of those who have significant out-of-pocket costs even with the elimination of the doughnut hole:

 "Legislative changes have gradually closed the doughnut hole so that, this year, beneficiaries no longer face a coverage gap. In a standard Medicare drug plan, beneficiaries pay 25 percent of the price of their brand-name drugs until they reach $5,100 in out-of-pocket costs. Once patients reach that threshold, the catastrophic portion of their coverage kicks in and their obligation drops to 5 percent. But it never disappears."

Recent proposals by the Trump administration and Sen. Ron Wyden (D-Ore.) would address the long-standing problem by imposing a spending cap. The article notes, however, that "it’s unclear whether any of these proposals will gain a foothold."

Although none of the Medicare programs have caps on spending, the article illustrates that those enrolled in original Medicare can purchase Medigap policies, which do not extend to Part D  prescription drug plans.  There's a great chart in the article that compares the existing Part D program with proposed legislation that illustrates the effect of the recent proposal to cap the annual amount. 

Why Hospice is Integral to Most Aging in Place Plans - Palliative Care Paid for By Medicare

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For those who implement an "Aging in Place" plan, hospice care plays an integral part in the planning.  First, hospice care is "person-centered care" of the type and kind those who seek to stay home want and need. Hospice is "palliative care", a specialized type of care focused on relief from the symptoms and stress of a serious illness, with the goal being to enhance or improve the quality of life for both the patient and the family.  Second, hospice is a benefit paid for by Medicare, meaning that there is no need for "spend down," or planned or unplanned indigence to obtain the care, in most cases.  Simply, Medicaid is unnecessary for most hospice benefits. 

Hospice Care Improves the Quality of Care and Life

Hospice Volunteer
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Numerous studies demonstrate that many seriously ill patients and their families receive inadequate care, characterized by untreated pain and physical symptoms, spiritual and emotional distress, high family caregiving burdens, and unnecessary or unwanted treatments inconsistent with their previously stated wishes and goals for care.  Hospice care greatly improves the quality of care for patients and their families near the end of life. Palliative care services provided through hospice delivered by a team of professionals, including physicians, nurses, social workers, chaplains, home health aides, and volunteers, to dying patients (patients with a life expectancy of six months or less), who are willing to forgo curative treatments, have been demonstrated to greatly reduce symptoms  of distress, improve outcomes for caregivers, provide a high level of patient and family satisfaction, and reduces the use of hospital-based services, including emergency department visits and intensive care unit stays, together with the likelihood of death in the hospital.

Medicare Pays for Hospice Care 

The Medicare program pays a daily rate to hospice providers, who assume all financial risk for costs and services associated with caring for the patient’s terminal illness and related conditions. The hospice program is paid for each day the individual is enrolled, whether or not the program visits the client that day. This enables the program to cover other costs, such as palliative care, and management of the terminal condition plus “related services” such as care planning, on-call services, drugs, medical equipment, supplies and transportation. Payments are made based on four levels of care, distinguished by intensity and setting of services: 

• Routine Home Care, the most common (98% of all hospice days in 2016). With this type of care, the individual has elected to receive hospice care in his or her residence.
• Continuous Home Care (CHC). This care is provided for eight to 24 hours a day to manage pain and other acute medical symptoms. It is predominantly nursing care and maintains the person during a pain or symptom crisis. 
• Inpatient Respite Care. This care provides temporary relief to caregivers by offering temporary care in a hospital, nursing home or hospice facility, where 24-hour nursing personnel are present. 
• General Inpatient Care (GIC). This type of care is provided in a hospital, hospice or nursing home when pain or acute symptoms cannot be controlled at home.

The Quality of Hospice Care is Regulated

The quality of hospice care is highly regulated.  The Patient Protection and Affordable Care Act mandated a Hospice Quality Reporting Program (HQRP) that required that all hospices submit data on quality measures. Medicare Hospice providers that do not submit data face a loss of 2% of the payment increase they would get for the year under Medicare. The law further required that CMS publicly report on quality measures related to the care provided by hospice programs across the country.

In 2017, CMS released the Hospice Compare website to help consumers compare hospice providers based on their reported quality data. The quality measures that are reported by hospices are based on consumer feedback from hospice patients and their family members on aspects of care, such as communication with family members, training family members to help with care, their rating of the hospice and their willingness to recommend the hospice provider. Additionally, the hospice provider completes the “Hospice Item Set,” which includes information on how the hospice considers and addresses patient preferences, assessments and pain management.

Hospice Care Integrates in Supported Decision-making Plans

Hospice Care fits well in an estate and health care plan that implements "Supported Decision-making" precisely because it serves the objectives of most people who are concerned with and consider more than just themselves.  Simply, hospice, like your planning, considers and concerns itself with your loved ones.  For example, bereavement support, which is delivered to family members in preparation for and after an individual’s death (for 13 months), considers and is concerned with your loved ones. Medicare does not reimburse for bereavement support. This support is, nonetheless, required by hospice regulations and is a unique and crucial function of the Medicare hospice benefit.  Another way of understanding this benefit, is that it is a community-based benefit, for which the government does not pay, but which is available to a patient and a patient's family simply because it is humane! 

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Because bereavement support is not reimbursed, hospices attempting to cut costs may, admittedly, see it as an easy place to limit services. For example, a hospice may choose to send a letter with a phone number for bereavement care or ask social workers to assume bereavement responsibilities rather than employ a bereavement counselor to meet with and support families. Some hospice providers may even simply refer the families of their patients to other hospice programs for bereavement support, which circumvents their responsibilities and increases the burden on hospices that do offer complete bereavement services.

Fortunately, nonprofit, community-integrated hospices have been shown to be more likely than their for-profit counterparts to provide certain bereavement services, such as support groups and workshops, and to offer services to the community.  Many nonprofit, community-based hospice programs provide services, such as group therapy, one-on-one grief counseling and specialized programs like grief camps for children. These hospices often serve as first responders for trauma in their communities, regardless of whether the recipients of the grief support or trauma counseling services have family members who utilized the hospice program. For example, a school that experiences the sudden death of a student may rely on its local hospice to meet with grieving staff, students, and affected family.  

Hospice Care Utilizes Volunteers More Likely to Be Concerned with You than with any Other Competing Concern

Why do you trust your spouse, your child, or your most closest friend or loved one, and why do you select him or her as your fiduciary?  Chances are that your answer includes a belief that he or she will consider your interests and needs above their own, and certainly above other less important but competing concerns such as cost, or convenience. The people that you have the most trust and confidence in are those who, because of their love and affection, will consider your needs first.  

Hospice providers utilize volunteers for this same reasons.  Because volunteers are people who volunteer their time, and have no financial or other incentive other than their altruistic desire to "help," they are more likely to consider your needs and wishes as being paramount.  These volunteers are usually people who have themselves benefited from hospice care, and having receive the benefit of the selflessness of others, commit themselves to providing that same benefit.  Most hospice volunteers will, if asked, share their journey and experiences.  

Hospice is the only Medicare benefit that requires community volunteers to deliver a significant portion of patient care hours. Medicare sets a 5% threshold for volunteer involvement.  Some providers struggle to meet this threshold, and the requirement is, unfortunately, not well enforced despite being a condition of participation. Of course, oversight is properly more concerned with quality of care provided than ancillary services.  Nonprofit hospices are, fortunately, leaders in using volunteers. Moreover, non-profit and for-profit providers that well utilize volunteers often expand the typical volunteer role by creating specialty volunteer-driven programs tailored to the needs of patients and families. These programs include: 

• Veteran-to-veteran programs that match patients who have served in the military with volunteers who have also served;
• Pet therapy teams, in which registered animals and handlers visit hospice patients to provide companionship; and,
• Vigil programs, which provide around-the-clock care for patients in the final hours of life.

One study noted that, compared to nonprofit hospices, for-profit and government-owned hospices used proportionally fewer volunteer full-time equivalencies as a proportion of total staff. The use of volunteers by providers ensures that hospice programs have ongoing integration with their local communities. 

The Choice Between Non- and For-Profit

Whatever the statistics, there are good and bad nonprofit and for-profit hospice care providers.  Among the "Supported Decision-making" objectives, then, should be the evaluation and selection of competing care providers.  Only by understanding hospice care, hospice providers, and the competing costs and benefits of different providers can you, and those who make decisions on your behalf, effectively consider and evaluate hospice care, and its providers.  Utilization of government data, such as is available through Hospice Compare, formal and informal interviews, inspections, and visits, as well as advice and counsel of professionals, such as with physicians, health care professionals, socials workers, and elderlaw attorneys, can ensure a more appropriate selection of provider.