Medicaid and End-of-Life Care - Urban Institute

Medicaid and End-of-Life Care

Medicaid provides health- and long-term care coverage to children,

young adults, and older people with low incomes and few assets, or

those impoverished by the high costs of health care Especially through

its funding for long-term care services—such as nursing home, home

care, and hospice—Medicaid is a major source of financing for end-of-

life care, the period of time when patients are terminally ill.

Jane Tilly and Joshua Wiener

Last acts®

Financing Committee

Medicaid and End-of-Life CareJane Tilly and Joshua Wiener

The Urban Institute2100 M Street, NWWashington, DC 20037(202) [email protected]

We gratefully acknowledge funding for this project from Last Acts®, a Robert Wood Johnson Foundation initiative. Andy Schneider andTheresa Varner, co-chairs of the Last Acts Financing Committee, provided extremely helpful guidance throughout this research. We arealso grateful to the many experts who took time from their busy schedules to talk with us and to Joanne Lynn, M.D., at the RandCenter To Improve Care of the Dying and Thomas Shenk and Thomas Saltz from the Health Care Financing Administration for theirreviews of earlier drafts of this paper.

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Introduction

Medicaid provides health- and long-term carecoverage to children, young adults, and olderpeople with low incomes and few assets, orthose impoverished by the high costs of healthcare. Especially through its funding for long-term care services—such as nursing home,home care, and hospice—Medicaid is a majorsource of financing for end-of-life care, theperiod of time when patients are terminally ill.

Research Methods

To supplement the limited research and dataavailable on end-of-life care for Medicaidbeneficiaries, we designed a qualitative studyof Medicaid’s role in caring for dying patients.We interviewed 23 national experts aboutMedicaid and end-of-life care, and focused ouranalysis on covered populations, benefits,reimbursement, and quality assurance. We alsointerviewed four experts from health-caresystems that provide innovative palliative andhospice services to Medicaid beneficiaries. Theinnovative health-care systems were identifiedby asking experts for nominations of systemsthat make palliative services available toMedicaid beneficiaries who are likely to diewithin one year.

Findings

Eligibility—Medicaid uses Medicare’s hospicerequirement: a physician must certify that thepatient has a life expectancy of six months orless if the terminal illness runs its normalcourse. The prognosis requirement createsbarriers to access to care because

1) patients, their families, and physicians havedifficulty discussing and accepting a predictionof death within six months, and 2) it can bedifficult to make predictions of date of deathwith a great deal of accuracy, particularly forcertain populations.

Benefits—As in Medicare, Medicaidbeneficiaries who elect hospice must forgo“curative treatment” for their terminal illnessand the line between treatment and palliation isnot always clear-cut. Medicaid beneficiariessometimes have difficulty accessing appropriatepain-relief measures because of prescriptionpractices and Medicaid benefit limitations on theMedicaid drug benefit that some states impose.Even though they are not required by federal lawto do so, some states are still requiring patientsto give up home and community services whenthey opt for hospice care.

Quality Assurance—Medicare and Medicaidhave quality standards governing hospices andnursing homes that can create problems forbeneficiaries at the end-of-life. Hospices andnursing homes must have plans of care fornursing-home residents, which can be at oddswith one another if the two providers do notcoordinate their efforts. Quality assurancemeasures for nursing homes do not focus onpain management or palliative care, althoughthe Health Care Financing Administration hasbegun to address these issues.

Payment—According to most non-governmental experts, the current Medicaidhospice rate for routine home care is too lowto enable hospices to provide the most

Me d i c a i d a nd E nd - o f - L i f e C a r e

Executive Summary—Medicaid and End-of-Life Care

Medicare and

Medicaid have

quality

standards

governing

hospices and

nursing homes

that can create

problems for

beneficiaries at

the end-of-life.

advanced types of pain relief, such asexpensive chemotherapy and radiationtreatments. Payment rates, although they haveincreased over time, are based on very old costexperience from the early 1980s that may nolonger reflect current expenses.

The way in which Medicaid pays nursinghomes for hospice patients causes a great dealof confusion. State Medicaid programs must payat least 95 percent of the nursing-home ratefor room and board directly to the hospice,which in turn pays the nursing home.Reportedly, nursing homes rarely accept lessthan 100 percent of the Medicaid room andboard payment, causing a financial loss for thehospice. In addition, the nursing home’spayment can be disrupted or payment to thehospice can be delayed when Medicaid switchesfrom paying the nursing home for people whoare already residents to paying the hospice.

Case Study Findings

Three of the four innovative healthsystems—the Community Medical Alliance, OnLok, and EverCare—are managed-care planswhich receive capitated payments for serving apredominantly Medicaid population. Theseproviders integrate health, long-term and end-of-life care using an interdisciplinary teamapproach to management of an enrollee’sservices. Thus, unlike the fee-for-service systemor other managed care plans, enrollees in thesehealth plans have an integrated system of carethat does not require them and their familiesto navigate a complex health system on theirown. The fourth provider nominated for itsinnovation was the Florida Hospice of theSuncoast. It is an example of a hospice that istaking the initiative to provide palliativeservices to Medicaid beneficiaries of all ageswho do not want or are not ready for hospice.

Conclusions

A five-part strategy on the part of federaland state officials, providers, and foundationscould help improve quality of care for dyingMedicaid beneficiaries. 1. Develop better data about Medicaid

beneficiaries and their experiences whiledying. The data needed include informationon causes of Medicaid beneficiaries’ death,location of death, and utilization and costof services during the last year of life, andhow these compare to non-Medicaiddecedents.

2. Encourage or require the health systemswith which Medicaid contracts to pay moreattention to end-of-life care. Managed-careorganizations such as the CommunityMedical Alliance, On Lok, and EverCare haveused the flexibility of capitation paymentsto provide needed services without referenceto whether they fit specific fee-for-servicecategories. Dependence on managed careraises issues of freedom-of-choice ofproviders and capitation provides incentivesfor underservice, but this approach alsogives providers the ability to use their fundsin creative ways.

3. Explore ways to fund palliative care andmake a range of pain-relief measuresavailable through the fee-for-service systemand try to improve delivery of end-of-lifecare in nursing homes. Experts persistentlyidentified lack of explicit Medicaid coverageof palliative care to be a major fundingproblem. However, it is not clear how bestto provide palliative care while addressingthe need to restrain expenditure increases.

4. Improve pain management and end-of-lifecare in nursing homes and home care byexamining Medicaid’s current policies andmodifying them to require participatingproviders to do such things as measure and

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control pain. This is an attractive target ofopportunity for improvement because ofMedicaid’s overwhelming role in financinglong-term care services.

5. The current structure of the Medicaid-hospice benefit should be re-examined. Thesix-month prognosis requirement, reportedlyinadequate payment rates, and the need forquality-assurance systems to addresspalliation and pain management in newways were all identified as problem areas.Currently, no consensus exists about howbest to address these issues.

The challenge for the future will be toharness Medicaid’s purchasing power to improvethe services that dying beneficiaries receive. Upto now, Medicaid has been the sleeping giantof end-of-life financing.

The nonpartisan Urban Institute publishesstudies, reports, and books on timely topicsworthy of public consideration. The viewsexpressed are those of the authors and shouldnot be attributed to the Urban Institute, itstrustees, or its funders


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Introduction

Medicaid provides health and long-term carecoverage to children, adults with disabilities,and older people with low incomes and fewassets. Especially through its funding for long-term care services—such as nursing home,home care, and hospice—Medicaid is a majorsource of financing for end-of-life care, theperiod of time when patients are terminally ill.In addition to these services, Medicaid coversprescription drugs, physician, hospital, andnursing services, among others.

Although Medicaid plays a large role infinancing a wide range of services, the programdoes not cover palliative care—a constellation ofservices including medical, psychological, social,and spiritual support for dying persons—as aseparate benefit. Palliative care is available underthe hospice benefit but only for beneficiarieswho have a prognosis of death within six monthsand who agree to give up “curative treatment”for their terminal condition. Hospice beneficiariesreceive such services as pain management,psychosocial services, and bereavementcounseling from an interdisciplinary team.

This paper analyzes the role of Medicaid inend-of-life care, focusing on coveredpopulations, benefits, reimbursement, andquality assurance. Because it has been thecenterpiece of Medicaid policy on end-of-lifecare, much attention is devoted to theMedicaid hospice benefit. Four innovativedelivery systems that provide palliative services

to dying Medicaid beneficiaries are alsodescribed to highlight possible ways to improveend-of-life care for people with low incomes.

Background

Medicaid is a means-tested entitlementprogram—jointly funded and administered bythe federal and state governments—thatprovides a range of health and long-term careservices. States have wide latitude indetermining eligibility, benefits, and paymentmechanisms for providers within broad federalguidelines. In fiscal year 1998, approximately40.4 million people, including children, theaged, blind, and disabled, were enrolled inMedicaid (Urban Institute, 2000).

States must provide a core set of servicesthat includes physician, hospital, nursing home,and home health services. States can limit theamount, duration, and scope of services, whichmay be problematic for dying beneficiaries. Forexample, Alabama covers only 16 hospitalinpatient days and 14 doctor visits a year(Wiener et al., 1998). Texas limits the numberof prescriptions that beneficiaries can fill tothree a month, except for persons under age 21or nursing home residents (NationalPharmaceutical Council, 1998). In addition tothe mandatory services, Medicaid programs canprovide many optional services to beneficiaries,including hospice, outpatient prescriptiondrugs, personal care, home and community-based services under waivers, and Programs ofAll Inclusive Care for the Elderly (PACE).1


Medicaid and End-of-Life Care

1 PACE programs provide comprehensive health-and long-term care services to frail nursing home-eligible enrollees underrisk-based, capitated payment.

Although

Medicaid plays

a large role in

financing a

wide range of

services, the

program does

not cover

palliative care

Medicaid’s role in end-of-life care varies,depending upon the population underconsideration. Most children and adults withdisabilities who meet Medicaid’s financialeligibility criteria rely almost exclusively onMedicaid for financing end-of-life care.However, elderly and younger disabled Medicarebeneficiaries who are also eligible for Medicaid(i.e., dually eligible) rely on Medicare forcoverage of physician, hospital, and mosthospice services during the end-of-life. For thedually eligible population, many of whom residein nursing homes, Medicaid supplementsMedicare by paying Medicare’s cost-sharingrequirements and funding such services asoutpatient prescription drugs and long-termcare.

Most of the extant research on financing end-of-life care focuses on Medicare utilization andexpenditures for the older population (Spillmanand Lubitz, 2000; Gage et al., 2000). Very littledata are available on utilization andexpenditures during end-of-life for Medicaidbeneficiaries, in part because of the difficultyin obtaining information from multiple payersfor the younger population (Scitovsky, 1994).One study compared the use and costs ofservices at the end-of-life for aged Medicarebeneficiaries and the dually eligible populationin Monroe County, New York (Temkin-Greener etal., 1992). The 1988 data indicate that hospitaland other Medicare expenditures for the ageddually eligible population were far higher thanfor persons who were only eligible for Medicare.Another study, which analyzed Medicare claimsand eligibility data, estimated that 21 percentof Medicare beneficiaries who died from 1994through 1998 were also eligible for Medicaid(Hogan et al, 2000). This same study analyzed1992-1996 cost and use files from the MedicareCurrent Beneficiary Survey and estimated that,on average, during the last six months of life

Medicaid paid for 32 percent of dually eligiblebeneficiaries’ health and long-term care costs.

Medicaid is a major source of financing forlong-term care, especially nursing home care, atthe end-of-life. Approximately 35 percent ofolder people who die use nursing home careduring the last year of life and an unknownadditional percentage use home andcommunity-based services, such as personalcare (Spillman and Lubitz, 2000). An analysis ofthe 1985 National Nursing Home Survey foundthat almost two-thirds of elderly nursing homeadmissions ultimately died either in a nursinghome or hospital (Spence and Wiener, 1990).

More than two-thirds of nursing homeresidents are dependent on Medicaid to financetheir care (American Health Care Association,1999). For 2000, the U.S. Congressional BudgetOffice estimated that Medicaid funds 42percent of nursing home care for the olderpopulation and 19 percent of this population’shome care spending (U.S. Congressional BudgetOffice, 1999). In 1998, Medicaid spent $44.4billion on institutional long-term care and$17.5 billion on home and community-basedservices, which represent 28 percent of totalMedicaid expenditures for long-term care(Urban Institute, 2000).

Medicaid beneficiaries with disabilities haveaccess to long-term care in the home,community, or institutions, although coverageof noninstitutional care varies a great deal fromstate to state. For example, Oregon devotesabout half of its Medicaid long-term carespending to services in the home andcommunity, while Indiana spends 90 percent ofthese funds on nursing home care (UrbanInstitute, 2000). In addition, each state setsits own unique financial and functionaleligibility criteria for long-term care. Although

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More than

two-thirds of

nursing home

residents are

dependent on

Medicaid to

finance their

care

9

most states’ functional criteria consider anapplicant’s difficulty with activities of dailyliving (ADLs), such as eating, bathing, anddressing, the definitions of ADLs and how theyare weighted in determining eligibility variesmarkedly among the states. (O’Keeffe, 1996).

While the bulk of Medicaid funding for end-of-life care is for nursing home care, fewnursing home residents receive hospiceservices. About 70 percent of nursing facilitieshave no residents using Medicare’s hospicebenefit and only four percent of facilities haveat least five percent of their residents receivinghospice care (Petrisek, 1999).

Despite the large role of nursing homes inend-of-life care, the Medicaid benefit designedto serve dying beneficiaries is the optionalhospice benefit, which closely tracks Medicare’sbenefit and provides a range of medical andpalliative services to persons who have aprognosis of six months or less to live.According to the National Hospice andPalliative Care Organization (NHCPO), everystate but Connecticut, Maine, Nebraska, NewHampshire, Oklahoma, and South Dakotacovered hospice under Medicaid in 2000(Connors, 2000). Maine subsequently decidedto provide coverage starting in 2001 (BangorDaily News, 2001).

When compared to the Medicare hospicebenefit, Medicaid’s hospice role is very small interms of expenditures and number of personsserved. Figure 1 shows that Medicaid accountedfor only about seven percent of total hospicerevenues and eight percent of hospice patientsin 1995, while Medicare accounted for 74percent of revenues and 65 percent of patientsin the same year (National Hospice andPalliative Care Organization, 2001). In fiscalyear 1998, about one percent of Medicareexpenditures or $2.2 billion went toward

hospice care for 360,000 patients, whileMedicaid devoted much less than one percentof its federal and state spending or $325million to hospice services for 52,000 patients(Health Care Financing Administration, 1998;General Accounting Office, 2000; and UrbanInstitute, 2000).

Federal and state Medicaid spending onhospice, although small, has grown rapidly.Medicaid hospice expenditures amounted to$129 million in fiscal year 1993 and rose to$325 million by fiscal year 1998, almosttripling over that time period (See Table 1 andFigure 2). However, expenditures haveplateaued in recent years and Medicaid hospiceexpenditures actually declined slightly betweenfiscal years 1997 and 1998. Medicare hospiceexpenditures also grew during this period.Medicare hospice payments almost doubledfrom fiscal year 1993 to fiscal year 1998, risingfrom $1.15 billion to $2.2 billion (NationalAssociation for Home Care, 1999; Health CareFinancing Administration, 1998).

Medicaid federal and state spending forhospice care varies markedly among the states.For those states with a hospice benefit, totalexpenditures in fiscal year 1998 ranged fromonly $572 in Tennessee to $48 million inFlorida and in Texas. Fiscal year 1998 spendingfor each beneficiary receiving hospice averaged$6,284 for the U.S. and ranged from $3,094 inLouisiana to $18,022 in Michigan (Table 2).Hospice spending per person in the U.S.averaged $1.20 and ranged from 9 cents inOregon to $3.25 in Florida.

In 1998, the total number of Medicaidhospice patients was 51,722, and ranged fromonly four in Arizona to 7,583 in Florida (Table2). Demographic data on users of Medicaidhospice services are not available.


Research Methods

To supplement the limited research and dataon end-of-life care for Medicaid beneficiaries,we designed a qualitative study of theMedicaid’s role in caring for dying patients. Weinterviewed four sets of experts: eight nationalexperts who were identified through theirresearch on end-of-life issues; eight staff fromthe Health Care Financing Administration(HCFA); seven representatives of nationalorganizations with a stake in end-of-life care,such as the National Association of StateMedicaid Directors; and four experts fromhealth care systems providing innovativepalliative services to Medicaid beneficiaries.

Innovative health care systems in end-of-lifecare were identified by asking experts fornominations. No state was cited as havingmodel Medicaid end-of-life policies. To beincluded in this study, delivery systems had togo beyond the provision of hospice care tomake palliative services available to otherMedicaid beneficiaries who are likely to diewithin one year. Each representative of thehealth system was asked to describe how thesystem identifies persons for receipt of end-of-life care, what the services are and how theyare delivered, reimbursement rates, and qualityassurance systems.

Policy Issues in Hospice Care for MedicaidBeneficiaries

In the Medicaid program, most of the policyfocus on end-of-life care revolves around thehospice benefit, so the discussion with expertsprimarily dealt with this benefit. Thelimitations of the hospice benefit fall intoseveral categories—eligibility, benefits, qualityassurance, and payment.

Eligibility

For eligibility purposes, the Medicaid programuses Medicare’s hospice requirement: aphysician must certify that the patient has alife expectancy of six months or less if theterminal illness runs its normal course (StateMedicaid Manual, Part 4, section 4305). As withMedicare, this medical eligibility requirementfor hospice appears to be problematic, asevidenced by the small number of dyingpatients who receive the service and theirlength of stay in hospice—which is thought tobe too short to provide the palliative servicesthat dying patients need.

The prognosis requirement creates apsychological and practical barrier. Patients,their families, and physicians have difficultydiscussing and accepting a prediction of deathwithin six months, making them unlikely to usethe benefit. This is particularly true for children,whose families and medical providers do notwant to give up attempts at finding a cure andwill try virtually anything to keep the child alive(Stephenson, 2000). Persons with AIDS generallyare young, which increases their reluctance toaccept a terminal prognosis (Cox, 1998).

Beyond the unwillingness to accept death,the practical problem is that it can be difficultfor physicians to make predictions about deathwith a great deal of accuracy, particularly forcertain populations. One expert estimated thatthe date of death is predictable within sixmonths for only 20 percent of patients. Otherexperts noted that prognoses of children’sdeath are particularly difficult. Children can goin and out of terminal illness phases and thecurative process is likely to be very long,making it unclear whether they will ultimatelyrecover from their illnesses (Stephenson,2000). Likewise, the course of illness among

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AIDS patients and the terminal phase of theirillnesses can be quite difficult to predict (Cox,1998), as it can be for patients with dementia.

To address some of the uncertainty related toprognosis, the NHCPO convened a group ofexperts to develop guidelines that providerscould use to determine a patient’s prognosis.HCFA made the guidelines available to Medicarefiscal intermediaries, who have tended tointerpret them as rules (Lynn, 2001). However,the guidelines had not been distributed tostate Medicaid programs as of December 2000.

Recent federal legislation—Section 322 ofThe Benefits Improvement and Protection Act(BIPA) of 2000—addresses the uncertaintysurrounding prognosis by clarifying that thebasis for the physician’s certification is his orher own clinical judgment regarding the normalcourse of an individual’s terminal illness. This isintended to alleviate concerns that a physicianwould be held liable if it was later determinedthat his or her clinical judgment may have beeninaccurate. The same section in BIPA requiresthe Secretary of Health and Human Services toconduct a study regarding the appropriatenessof the certification rule, taking into accountthis recent change in the law.

Although the non-governmental expertsgenerally agreed that the six month prognosisrequirement is at least a psychological barrierto receipt of hospice care, they were unsureabout what criteria should replace it. Twoobservers thought that when patients are verysick with “a clinical diagnosis of an eventuallyfatal illness” they should be eligible forpalliative care. However, it would be difficult tooperationalize this concept and it would notaddress the difficulty of getting people toaccept receiving care related to theirimpending deaths.

Benefits

Medicaid hospice programs must offer at leastthe same services as Medicare—nursing care;medical social services; physician services;short-term inpatient services (for pain controlor acute or chronic symptom management andfor providing respite for family members);homemaker services; counseling services; homehealth aide; medical appliances and supplies(including drugs and biologicals); physical andoccupational therapy; speech-languagepathology services; and bereavementcounseling (State Medicaid Manual Part 4,section 4305). Medicare and Medicaid also willpay for treatments by other health careproviders for conditions not related to theterminal illness. For example, a nursing homeresident in hospice because of cancer could gettreatment for a fractured hip.

Although Medicaid and Medicare hospicebenefits are almost identical, state Medicaidprograms have certain other obligations andoptions when the programs cover hospiceservices. Medicaid programs cannot imposecopayments on hospice patients, and theprograms must pay Medicare hospice copaymentsfor dually eligible beneficiaries. In addition,Medicaid can cover other Medicaid services thatare related to the treatment of terminal illnessas long as these services “would not be coveredunder the Medicare hospice program” (HealthCare Financing Administration, 2000). Forexample, if a state covers the optional personalcare service, its Medicaid program can coverpersonal care for hospice patients who have noprimary caregiver available.

As in Medicare, Medicaid hospice care isclassified into four different categories,depending on how much care is needed (StateMedicaid Manual, Part 4, section 4305.7). First,


Although

Medicaid and

Medicare

hospice

benefits are

almost

identical, state

Medicaid

programs have

certain other

obligations and

options when

the programs

cover hospice

services.

“routine home care” encompasses services thatpatients need on a day-to-day basis. Second,“continuous home care” is available during crisesand is defined as providing at least eight hoursa day of mostly nursing care to manage acutemedical symptoms. Third, “short-term, inpatientcare” is inpatient care necessary for pain controlor symptom management when proceduresnecessary for pain control or symptommanagement cannot feasibly be provided inother settings. Short-term inpatient care mustbe provided in an institution that meets hospiceconditions of participation in Medicare andMedicaid. Fourth, “in-patient respite care” isavailable to relieve unpaid caregivers on anoccasional basis for not more than fiveconsecutive days. In general, all hospice servicesmust be related to management, not cure, of aterminal illness or to maintain a person’s abilityto perform daily activities.

There are certain problems with currentMedicaid hospice benefits for dying beneficiariesthat are similar to problems with Medicare’sbenefit. People who elect hospice must forgo“curative treatment” for their terminal illnessand sometimes the line between treatment andpalliation is not clear-cut. For example,chemotherapy and radiation are normallycurative treatments, but they can also providepain relief when used to mitigate the effects ofcancer in the end stage of illness. Separatepayment for palliative services would help makethese services available to people who mightnot want to give up “curative treatment” asthey must when choosing hospice, but suchpayment could raise Medicaid program costs andthe benefit could be difficult to control.

In addition, there are several issues relatedto prescription practices and drug coveragethat could affect Medicaid beneficiaries,although they are not specifically Medicaid

policies. Opioids, the major class of analgesicsused in management of moderate to severepain (e.g., morphine), fall under each state’scontrolled substances acts and are subject tocertain restrictions that can make obtainingprescriptions difficult. In addition, since statemedical boards often investigate prescriptionsthat exceed recommended dosage levels,patients needing high levels of painmedications may have difficulty gettingprescriptions written. Moreover, pharmaciesoften have limited supplies of controlledsubstances or do not stock them at all, whichcan make obtaining pain-relief medicationscumbersome at best.

Some Medicaid programs’ coverage of pain-relief measures can also limit patient access toneeded care. The cost of some pain-controlmeasures, such as chemotherapy or intravenousmedications, are high and not all programscover such options. Access to a wide range ofopioids and pain-relief measures is importantbecause many patients need strong measureswhile they are dying and the side effects canvary among patients. However, experts fromsome states said that Medicaid provisions didnot present any problems, emphasizing the factthat Medicaid policies vary greatly across states.

The third major benefit issue is that, as ofDecember 2000, some states are still requiringpatients to give up certain services when theyopt for hospice care, as federal Medicaid lawrequired until 1990. The Omnibus BudgetReconciliation Act of 1990 (OBRA 90)eliminated the requirement that Medicaidhospice patients give up other Medicaidservices (State Medicaid Manual, Part 4, section4305). However, some states, such as New York,still require people receiving hospice to give uptheir Medicaid personal care services, creatinganother barrier to the use of the service.

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Some Medicaid

programs’

coverage of

pain-relief

measures can

also limit

patient access

to needed care.

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Quality Assurance

Medicare and Medicaid have quality standardsgoverning hospices and, in recent years, issues ofpain management and provision of palliative carein nursing homes have drawn the attention offederal policymakers. For example, two studiesdocument improved quality of life and painmanagement for nursing home residents receivinghospice care compared to residents receiving onlyroutine nursing home care (Zerzan et.al., 2000).However, education of providers about theseissues, and the labor shortage among health careworkers, especially in long-term care, has notreceived as much governmental attention.

To participate in Medicaid, hospices must meetMedicare’s conditions of participation, whichrequire that an interdisciplinary team supervise ordeliver a defined set of services based on a writtenplan of care (Code of Federal Regulations, part 418,subparts C-F). In addition, hospices must have aninternal quality assurance program and anemployee directing volunteer activities. There areother requirements related to record keeping anddelivery of services such as inpatient hospice care.

Nursing homes have a separate set ofconditions of participation that they must meetto serve Medicare and Medicaid beneficiaries.These conditions and the associated survey andcertification procedures require a plan of carefor each nursing home resident and focus onrehabilitation and restoring nursing homeresidents’ functioning (Zerzan et al, 2000). Twopotential problems result from these rules andprocedures. First, a nursing home resident whoelects hospice will have two potentiallycompeting plans of care, one from the hospiceand the other from the nursing home. Thehospice’s plan of care likely would emphasizepalliation while the nursing home’s plan likelywould emphasize rehabilitation and restoration.

Unless the nursing home and hospicecoordinate their plans of care, the residentcould be receiving care that is inappropriate.

The second problem is that Medicare andMedicaid’s quality assurance system for nursinghomes does not focus on palliation andappropriate care for dying residents. Forexample, the nursing home resident assessmentinstrument does not include “protocols forpalliative care” and some of the symptoms ofterminal illness such as weight loss areconsidered indicators of potential qualityproblems (Zerzan et al, 2000). Thus, thecurrent system may not be doing all it could topromote appropriate care for dying residents orrecognize the terminal phases of illness amongnursing home residents.

The non-governmental experts’ views weremixed regarding the role of Medicaid andMedicare in quality assurance. Most observersinterviewed said that government should take astronger role in assuring quality of care at theend-of-life, but a minority of experts arguedthat the government should not try to take onthe issue. Advocates of greater governmentinvolvement said that experts in painmanagement and palliative care should examineMedicaid and Medicare survey and certificationprovisions for hospices, nursing homes, andhospitals, determine whether changes shouldbe made, and develop an improved set ofcommon provisions for Medicare and Medicaidrelated to end-of-life care. As a way ofexpanding access to these services, one expertsuggested that hospitals be required to havecontracts with hospices or to provide palliativeservices. Those opposing a strong governmentalrole in quality assurance contended thatprivate-sector initiatives, such as educatingproviders, are the most effective route towardquality improvement.


HCFA has some efforts underway that couldlead to improvements in end-of-life care,including a dialogue with the hospice industryabout outcomes measures. First, the OutcomesForum — an industry-funded consortium ofchief executive officers of 15 or more majorhospices, whose mission is to develop outcomemeasures for hospice care — includes a HCFAstaff person.

Second, HCFA has contractors working toimprove measurement of pain in the nursingfacility minimum data set (MDS), which is theresident assessment instrument that facilitiesmust use for Medicare and Medicaid patients.HCFA is also considering development of newquality indicators for nursing homes that wouldrelate to proper pain assessment andtreatment. Guidance is being developed forsurveyors to help them recognize the end-of-life among nursing home residents and to helpensure that nursing homes deliver appropriatecare to dying residents.

Third, HCFA recently awarded grants toenable five states to develop Programs of AllInclusive Care for Children (PACC), which willcoordinate and integrate all health, social, andsupportive services for children with life-threatening conditions and their families, withthe goal of improving quality of care for dyingchildren. In September 2000, five states—Florida, Kentucky, New York, Utah, andVirginia—received one-year grants ofapproximately $250,000 each to develop theseprograms.

Presently, federal and state Medicaidprograms are doing relatively little to educateproviders or beneficiaries about end-of-life careor about the availability of hospice. Ofparticular concern is that Medicaid andMedicare requirements related to training of

health staff, such as certified nurse assistantsin nursing homes, do not address painmanagement and palliative care. However, oneexpert cautioned that educating nursing homestaff will not have much effect unless thesurvey and certification processes focus onmeasuring palliative services and painmanagement, and payers (including Medicaid)recognize palliation as a separate, reimbursablenursing home service.

A final quality issue is the shortage ofworkers, due to low unemployment, low wagesand benefits, and difficult working conditions.On the one hand, non-governmental experts saythat hospices appear not to be experiencinglabor shortages to the degree nursing homeand home care providers are. On the otherhand, nursing homes and home care agencieshave high turnover rates, which experts saycould affect long-term care workers’ preparationfor caring for people at the end-of-life.

Payment

Unlike almost all other Medicaid services(including nursing homes and home care) wherestates have almost complete flexibility in howthey set payment rates, states must payhospices at least federally set, minimum rates.States, however, can increase the paymentrates (State Medicaid Manual, Part 4, section4306). State Medicaid programs are supposedto pay hospices one of four prospective ratesdepending on the level of care provided—routine home care at $101.97 a day, continuoushome care at $594.64 a day, inpatient respitecare at $110.89 a day, or general inpatient careat $453.04 a day. These rates are adjusted forregional wage differences. Starting in April2001, the Medicare and Medicaid hospice rateswill be increased by five percent as mandatedby BIPA of 2000.

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There are two additional ways in which statescan control Medicaid hospice payments. First,states can place a cap on aggregate Medicaidpayments to each hospice if they choose (StateMedicaid Manual, Part 4, section 4308). Theaggregate cap is calculated by multiplying thenumber of Medicaid beneficiaries served by anindividual hospice by a “cap amount” —$15,916.98 effective November 1, 1999-October 31, 2000. Hospices with Medicaidexpenditures exceeding the cap amount mustrefund any payments received in excess of thecap. Second, an individual hospice’s aggregatenumber of inpatient hospice days during afiscal year may not exceed 20 percent of thetotal days of care the hospice provides to allMedicaid beneficiaries (State Medicaid Manual,Part 4, section 4306.5). However, states maychoose to exclude Medicaid beneficiaries withAIDS when calculating the aggregate limit onan individual hospice’s total inpatient days. Thehospice must refund any excess Medicaidreimbursement.

There are at least three major payment issues.First, according to most non-governmentalexperts, the current hospice rate for routinehome care is too low to enable hospices toprovide the most advanced types of pain relief,such as chemotherapy and radiation treatments.Another reason the payment level is consideredlow is that hospices tend to serve patients inthe last few weeks before death when care canbe particularly expensive and the payment ratesdo not adequately adjust for casemix. Theseexperts did not assert that the other threecategories of hospice rates are too low.

Second, payment rates are based on very oldcost experience that no longer reflects currentexpenses. Data from hospice demonstrationprojects conducted during the early 1980s wereused to calculate the initial Medicare hospice

rates, upon which both current Medicare andMedicaid rates are based. Since implementation ofthe Medicare and Medicaid hospice benefits,payment levels have been updated periodically bythe hospital market basket (i.e., a measure of thehospital inflation) minus a small percentage thatCongress determines each year. At the request ofthe industry, hospices began submitting costreports to HCFA in April 1999 in the hope thatthese data might be used to determine theadequacy of hospice payment rates.

Third, the way in which Medicaid paysnursing homes for hospice patients causes agreat deal of confusion. In thesecircumstances, the hospice is the primarycaregiver for the resident and the nursing homesupplies room and board, which is defined inthe State Medicaid Manual (section 4308.2) toinclude help with activities of daily living,medication management, supervision, cleaninga person’s room, and prescribed therapies.State Medicaid programs must pay at least 95percent of the nursing home rate for room andboard directly to the hospice, which in turnpays the nursing home.

Several problems result from this paymentsystem. Reportedly, nursing homes rarely acceptless than 100 percent of the Medicaid room andboard payment. As a result, hospices generallypay full room and board costs, which means thatthey suffer a financial loss. In addition, thenursing home’s payment can be disrupted orpayment to the hospice can be delayed when theMedicaid program switches from paying thenursing home for people who are alreadyresidents to paying the hospice. Finally, it is notclear who should collect the spend downpayments (i.e., the contributions toward the costof care) that medically needy and other nursinghome residents pay when they are on Medicaid.Having states pay nursing homes directly for the

Several

problems result

from this

payment

system.

Reportedly,

nursing homes

rarely accept

less than 100

percent of the

Medicaid room

and board

payment.

16


room and board of hospice patients wouldalleviate confusion and aid the finances ofhospices, but to the detriment of nursing homes.

Case Studies

Experts in end-of-life care were asked tonominate states or health care systems that areinnovative in delivering end-of-life care toMedicaid beneficiaries. Experts did not nominateany states, but suggested four health caresystems. Three of these health systems—theCommunity Medical Alliance (CMA), On Lok, andEverCare—are managed care plans which receivecapitated payments for serving a predominantlyMedicaid population. These providers integratehealth, long-term and end-of-life care using aninterdisciplinary team approach to managementof an enrollee’s services. Thus, unlike the fee-for-service system or other managed care plans,CMA, On Lok, and EverCare use an integratedsystem of care that does not require enrolleesand their families to navigate a complex healthsystem on their own. The fourth providernominated for its innovation was the FloridaHospice of the Suncoast. It is an example of ahospice that is taking the initiative to providepalliative services to Medicaid beneficiaries ofall ages who do not want or are not ready forhospice. Each of the following case studiesdescribes how the providers deliver services,assure quality, and are paid for care. Chart 1compares key aspects of these providers’systems. Web sites related to these systems areincluded in the references.

Community Medical Alliance

The Community Medical Alliance (CMA), asubsidiary of Neighborhood Health Plans (NHP),is a Boston-based health care system thatcontracts with the Massachusetts Medicaidprogram to provide comprehensive benefits toMedicaid beneficiaries with advanced AIDS and

individuals with severe disabilities, such asmuscular dystrophy, in return for capitatedpayment. In 2000, CMA started a program fortechnology-dependent children. CMA providesservices through primary care practices inBoston.

In 1992, CMA started with a pilot project of100 Medicaid enrollees with severe disabilitiesand about 50 patients with advanced AIDS. By2000, CMA had about 500 enrollees in Boston,of whom 125 were dually eligible for Medicareand Medicaid; about 240 patients had AIDS,260 had severe disabilities, and 30 werechildren. The program expanded throughoutMassachusetts to Springfield in 1998, Worcesterin 2000, and New Bedford in 2001.

In CMA, teams of physicians and nursepractitioners manage services for beneficiaries.Physicians and nurse practitioners havevirtually complete authority to admit patientsto the hospital, refer them to specialists, orallocate resources within the network to meetenrollee needs without risking financialpenalties or having to obtain priorauthorization (Master, 1998). The parentplan—NHP—has internal management andinformation technology systems to carry outthe primary care team’s orders.

Primary care physicians are usually salariedand most practice in NHP’s network ofcommunity health centers, while nursepractitioners are employees of CMA. Nursepractitioners are the primary contact point forenrollees, who average two to three visits ortelephone calls a month from the practitioners.Enrollees with emergency needs also haveaccess to nurse practitioners 24 hours a day,seven days a week. Caseloads are 25 for nursepractitioners serving AIDS patients, and 45 forthose serving enrollees with severe disabilities.

In 1992, CMA

started with a

pilot project of

100 Medicaid

enrollees with

severe

disabilities and

about 50

patients with

advanced

AIDS.

17


CMA enrollees receive all Medicaid benefits,including a broad range of services needed atthe end-of-life. The primary care team developsan individualized care plan in consultation withthe enrollee. The team does not have formaldiscussions with new enrollees about theirpreferences regarding end-of-life care. Rather,these discussions occur over time as the teamdevelops relationships with enrollees and careplans follow patients’ wishes regarding thedying process. Some patients want emergencyhospitalization and 24-hour ventilators, whileothers do not want to be hospitalized. Staffhas found that patient wishes can also evolveover time, particularly among AIDS patientswhose conditions may improve as a result ofdrug treatments.

CMA does not have a separate palliative careservice because this form of care is integratedinto ongoing services. Enrollees have access topersonal care, pain management, social workand counseling, private duty nursing,psychiatric nursing, and needed drugs.Although spiritual counseling is not routine,the health plan will arrange for it at theenrollee’s request.

CMA assures the quality of its services byrecruiting nurse practitioners who haveexperience serving with the heath plan’spopulations. The programs serving those withAIDS and severe disabilities each have aphysician medical director, who oversees allaspects of the clinical program, and a nursepractitioner director who oversees the work ofthe nurse practitioners. Nurse practitioners alsotrain aides on how to serve enrollees, in skillslike proper transfer techniques. Health andlong-term care labor force shortages have notaffected CMA to any great degree, at least inregard to nurse practitioners.

CMA also assures quality by comparing itsutilization and cost data to benchmarks, suchas hospital admissions, and frequency ofcontacts with enrollees, incidence of decubitusulcers, and immune system functioning in theAIDS population. Patients also have grievanceprocedures they can use.

CMA says it receives an “adequate”negotiated, capitated payment from theMassachusetts Medicaid program. When theproject first began in 1992, the rate reflectedfee-for-service experience with the AIDS andsevere disabilities populations. Now, CMAnegotiates its rates annually with the state,based on costs incurred during the previousfiscal year. In fiscal year 2001, CMA receives$2,564 per member per month for enrolleeswith AIDS and severe disabilities. The rate fortechnology-dependent children is $8,000 permember per month, and $3,200 for high riskchildren and adolescents with major behavioralhealth problems.

On Lok

On Lok is a non-profit managed care planthat provides medical and long-term care tofrail older persons who reside in the communitybut who are eligible for nursing home coverage.The program began in 1971 in San Francisco,California, by providing adult day health care.The range of services expanded over time andthe plan obtained waivers from Medicare andMedicaid in 1983 to provide a comprehensiverange of health and long-term care services tofrail nursing home eligible enrollees under risk-based, capitated reimbursement. Services thatenrollees receive include: assessment, careplanning, primary care, comfort care,counseling, therapies, meals, activity programs,personal care, and transportation. On Lokcontracts with other providers such as hospitals

18


and pharmacies for the medical services theydo not provide directly. On Lok’s waiversbecame permanent in 1986. In 2000, the planserved 860 enrollees—whom approximately 90percent were Medicaid eligible—at five sites inSan Francisco.

In an effort to test the On Lok model, 25similar organizations in 13 states, calledPrograms of All Inclusive Care for the Elderly(PACE), have been established with an averagedaily census of 6,045 enrollees (National PACEAssociation, 2000). An additional 70 PACEprograms are in various stages of developmentin 30 states. Beyond the 13 states where PACEis currently operating, another eight stateshave included PACE as an optional serviceunder their Medicaid programs, but as yet haveno provider agreements in place (Health CareFinancing Administration, 2001).

On Lok’s enrollees must be at least 55 yearsold and certified by California’s Medicaid programas needing care in a nursing facility. On Lokpatients are medically frail with such conditionsas congestive heart failure or renal failure, or arephysically dependent. Seventy percent of deathsat On Lok are due to chronic illness and abouthalf of these deaths are due to dementia.

Each enrollee’s care is planned and managedby an interdisciplinary team composed ofphysicians, nurses, social workers, therapists,dietitians, and transportation and home careworkers. The team assesses each enrollee’sneeds upon enrollment and at least every threemonths thereafter.

Assessments include rankings on a pain scale.Pain assessment for persons with dementiarequires judging whether clients are losingweight, exhibiting distress, and other sorts ofbehavioral symptoms. In addition, dementia

patients are shown a chart of faces withdiffering expressions of discomfort or pain andare asked to pick the one that resembles howthey feel. The focus on pain assessment beganin 1997 when On Lok started its initiative toimprove end-of-life care (On Lok, 2000). Theinitiative consisted of one year internaltraining for plan staff that focused onimproving end-of-life care, particularly servicesrelated to pain and symptom management andpsychological support.

Within six months of entering On Lok, theprimary care staff (a physician or nursepractitioner) on the team must initiate adiscussion of the client’s desires regarding end-of-life care, including preferences aboutresuscitation, feeding tubes, and aggressivemedical procedures; more than 90 percent ofenrollees have advanced directives. Spiritualneeds are addressed by asking enrollees whatthey think about death and the dying process sothat the team can provide appropriate counselingand services. Should patients’ conditions orpreferences change over time, the team willmodify service delivery and advanced directives.

On average, On Lok enrollees receive carefrom the plan during their last four years oflife. For those who are at the end-of-life due toconditions such as heart disease, length ofenrollment at On Lok ranges from six months totwo years. Those who are dying because ofdementia or functional impairment receiveservices for four or more years, on average. Atany given time, seven percent of enrollees aredying. When this occurs, On Lok does not referpatients to hospice, but rather provides comfortcare, including pain management, until death.Dying patients receive comfort care for 163days on average—almost three times thenumber of days provided before On Lok’s 1997end-of-life initiative.

19


Giving social workers lead responsibility forhelping to meet patient and family psychosocialneeds is also part of On Lok’s comfort care.Staff tries to prepare families so they will notbe surprised by an enrollee’s death. Families arekept abreast of the patient’s condition andprovided counseling when necessary.

Social workers and other staff must also dealwith problems that certain enrollees face infinding or keeping a place to live while dying.When people are dying in residential settings—such as assisted living facilities, single roomoccupancy dwellings, or board and carehomes—these facilities sometimes forceresidents to leave because they cannot or donot want to deal with a dying resident. Due tohigh housing costs in the San Francisco area, itis very hard to find replacement housing.Equally problematic has been the general laborshortage among long-term care workers. On Lokhas difficulty recruiting nurses and in-homeworkers. The nursing homes that contract withOn Lok are facing similar problems.

To assure quality in end-of-life care for itsenrollees, On Lok conducts an annual analysis ofdeaths that focuses on patient age and locationof death, cause of death, determination ofwhether a comfort care plan was in place,duration of comfort care, and use of services inthe last month of life. The performance of theinterdisciplinary teams are compared, and anyteam with problems receives education abouthow to improve service delivery.

On Lok receives capitated payments fromMedicare and Medicaid that cover the costs ofall medical and long-term care services that anenrollee needs. The capitation rate fromMedicare is 2.39 times the adjusted average percapita cost (AAPCC) for Medicare beneficiariesin On Lok’s service area. In 2000, the Medicare

payment was $1,350 per month per enrolleeand the capitation rate that On Lok negotiatedwith the state Medi-Cal program was $2,650per month. The state rate is calculated basedon 90 percent of what the state pays for anursing home resident in the San Francisco Bayarea. Prior to 2000, the rate was 85 percent ofthe nursing home rate, but was increased to 90percent of that rate in recognition of theincreasing cost of labor in the Bay Area.

EverCare

EverCare, a subsidiary of United HealthCareCorporation, is a Medicare managed care planthat provides preventive and primary care toresidents of nursing homes and assisted livingfacilities through nurse practitioner andphysician teams (United HealthCare, 2000).Started in Minnesota in 1987, the plan serves atotal of 20,000 enrollees with additional sitesin Arizona, Colorado, Georgia, Florida,Maryland, Massachusetts, New York, and Ohio.

The Minnesota site serves Medicarebeneficiaries who are eligible for parts A and B,70 percent of whom are also eligible forMedicaid. EverCare’s goal is to provide goodquality geriatric care to residents in theirfacilities. Interdisciplinary teams composed ofphysicians and nurse practitioners provideprimary care services, including orders forlaboratory tests, intravenous therapy, and othermedical procedures. Like most other Medicaremanaged care plans, enrollees in EverCare donot have to pay the 20 percent coinsurancethat Medicare requires for physician and otherPart B services.

The nurse practitioner plays a key role inproviding services and is the focal point ofcommunication for facility staff, residents, andfamily members. The nurse practitioners visit

On Lok

receives

capitated

payments from

Medicare and

Medicaid that

cover the costs

of all medical

and long-term

care services

that an

enrollee needs.

20


residents in the facilities at least monthly, withsome residents receiving more frequent contactwhen their conditions warrant it. Typically,nurse practitioner visits occur two to threetimes a week when patients are dying.Physicians visit residents jointly with the nursepractitioner every 120 days and more frequentlyif the condition of the patient changes.

Shortly after enrollees join EverCare, nursepractitioners discuss quality of life and end-of-life issues with residents and family membersto determine an appropriate plan of care.EverCare provides palliative services that areintegrated into the primary care-deliverysystem and the nurse practitioners are requiredto have skills in pain management, hydration,comfort care, and other end-of-life services.EverCare refers residents to hospice when themember would benefit from such services asbereavement counseling. Under hospice,EverCare continues to provide all primary careservices to enrollees.

Quality assurance for EverCare dependsheavily on the recruitment and training ofnurse practitioners. Before final hiringdecisions are made, practitioners spend half aday in a facility to make sure they arecomfortable with the culture of the nursinghome and serving frail, older residents.EverCare mostly hires experienced nurses whoare new nurse practitioners. Each new hirereceives an intensive, six-month orientationprogram. Thus, the nurse practitioners receivetraining about the plan’s approach to deliveringprimary care in nursing homes. Continuingeducation occurs monthly through in-serviceprograms. Nurse practitioners do not have fullcaseloads, which average less than 100residents, until six to nine months after beinghired. Nurse practitioners are on teams led by aclinical services manager who is a nurse

practitioner trained in the EverCare model. Themanager has daily contact with new nursepractitioners.

EverCare also has a clinical quality committeethat meets monthly to discuss quality issuesand progress with the plan’s initiatives toimprove quality for enrollees, such as trying toincrease vaccination rates among enrollees,promoting use of advance directives, andtracking sentinel events such as unexpecteddeaths associated with changes in medication.Each site reports on its progress in addressingthese initiatives to EverCare’s local andcorporate quality councils. EverCare interactswith nursing home staff by developingprograms that teach quality indicators and howto prevent adverse events. The plan also workswith nursing home staff to coordinate effortsto deal with quality problems such asdehydration.

EverCare receives capitated payments fromMedicare and is at risk for all Medicare services,except for hospice. From Medicare, EverCarereceives AAPCC minus 5 percent, which is theroutine payment to health maintenanceorganizations. For dually eligible residents,Minnesota’s EverCare site is at risk for allMedicaid benefits that Medicare does not cover,with the exception of nursing home daily care.Minnesota’s Medicaid captitated payment ratefor EverCare is age and sex adjusted.

Hospice of the Florida Suncoast

The 20-year-old Hospice of the FloridaSuncoast is a non-profit provider founded byvolunteers that serves more than 1,200patients a day in Pinellas County, Florida(National Coalition on Health Care andInstitute for Healthcare Improvement, 2000).The hospice offers a comprehensive program of

EverCare

receives

capitated

payments from

Medicare and

is at risk for

all Medicare

services,

except for

hospice.

21


medical and palliative care, which includescounseling, spiritual support and other servicessuch as home health. The hospice has 850 staffand more than 2,800 volunteers who helpprovide services.

The hospice serves three categories ofMedicaid beneficiaries—dying children andadults, AIDS patients, and Medicare andMedicaid dually eligible nursing home residents.The hospice has a child and family supportprogram that served more than 2,000 familiesin 1999, with about 10 children a day coveredby Medicaid. The program helps families caringfor dying children and those who have recentlyexperienced a death. Thirty patients a day or75 percent of the hospice’s AIDS patients whoare receiving home health services from thehospice are Medicaid eligible. Two hundredpatients a day or 50 percent of the nursinghome residents the hospice serves are duallyeligible for Medicare and Medicaid. Forty-ninepatients a day or 70 percent of patientsreceiving home health services from thehospice are on Medicaid. About 8 percent ofthe hospice’s revenue comes from Medicaid.

Half of the referrals to hospice come fromphysicians and the rest from hospital orcommunity case managers and self-referrals.The proportion of patients who self-refer hasincreased over the last several years, perhapsbecause consumers are becoming moreproactive about managing their own healthcare services.

The hospice does not view the six-monthprognosis requirement of the Medicare andMedicaid hospice benefit as a significant barrierto serving patients because it has been able tomeet the requirement with carefuldocumentation of the patient’s condition.Hospice staff can produce this documentation

because they are trained to paint acomprehensive picture of the patient andfamily, describing psychological, social, andspiritual issues, which will likely contribute toa shortened prognosis, in addition todocumenting the clinical indicators ofprogression of illness. The average length ofstay at this hospice is 98 days compared toabout 48 days nationally, so the hospice istreating people earlier in the process of dyingthan most other providers (NHCPO, 2000).

For those who have prognoses of longer thansix months or who do not want to waivecurative services, the hospice offers an array ofpalliative services, including counseling andpain management. Even though Medicaid doesnot cover palliative care, per se, hospicephysicians and nurses receive Medicaidreimbursement for medical management ofpalliative care. With appropriatedocumentation, Florida Medicaid also coversmost drugs that patients need for pain relief.However, in order to pay for supplies andservices that Florida Medicaid does not cover,an organizational affiliate of the hospice —AIDS Services of Pinellas County — conductscommunity fundraisers.

Nursing home residents receive hospice carefrom four teams that are devoted exclusively tothis population. These teams try to developgood working relationships with nursing homestaff to help mitigate the coordinationproblems that can occur between the nursinghome and hospice.

The hospice’s mission includes a number ofeducational endeavors which involve educatingstaff and the community about end-of-lifeissues (The Hospice of the Florida Suncoast,2000). New physicians, nurse practitioners,staff, and volunteers receive an intensive

22


training program when they join the hospice.Medical, nursing, and social work studentsrotate through the hospice as part of theirtraining. The Hospice Institute of the FloridaSuncoast offers education and training sessionsfor staff and volunteers and develops modelcare programs that it disseminates to otherhospices. For example, in 2000, the Hospice ofthe Florida Suncoast partnered with otherhospices and health care providers to provideadvance-directive packets to hospitals, clinics,malls, community associations, and schools fordistribution to the general public. A follow-upactivity was a series of town hall meetings heldin Pinellas County on end-of-life issues andcaregiving.

The Hospice of the Florida Suncoast operatesa quality management program, which has fourstaff persons. The program audits servicedelivery, tracks patient and family complaints,and conducts consumer satisfaction surveys.Each of the hospice’s four regional offices inPinellas County has a quality assurance programtailored to the local results on these measures.

Staff turnover at the hospice is reported tobe approximately 5 percent a year, althoughrecruiting aides and counselors is starting tobecome somewhat difficult because of the laborshortage. Hospice staff attributes their successin recruiting and retaining employees to thenon-profit nature of the organization, the factthat staff is doing meaningful work, and thatthe hospice takes care of its staff throughtraining and creation of a supportive workenvironment.

The hospice contends that Medicaid paymentsare not sufficient to cover the rates that thehospice pays its staff and providers. Forexample, Medicaid reimbursement for nursingvisits in the home health, AIDS home and

community-based services waiver program isabout $27 an hour. Reimbursement for homehealth aide visits is $10 an hour, reportedlyless than one-third of what it costs the hospiceto provide these services. Likewise, Medicaidphysician reimbursement is far below what theorganization pays and the hospice alsoreimburses nursing homes 100 percent of roomand board costs, while Medicaid only pays them95 percent of the costs. The HospiceFoundation of the Florida Suncoast helps funddeficits and charitable care by seekingmemorial donations, encouraging plannedgiving, and arranging fundraising events.

Conclusion

Federal and state Medicaid policy on end-of-life care revolves around the program’s hospicebenefit, which closely resembles the Medicarebenefit. Medicare’s benefit was designedprimarily to accommodate an older persondying of cancer at home with family caregiversavailable. While some of the Medicaidpopulation fits this description, many whoneed end-of-life care do not, such as those whohave chronic illnesses with major long-termcare needs. In addition, dying children havespecial needs and family circumstances thatadults do not.

Federal and state Medicaid programs are onlybeginning to attend to the role the programplays as one of the largest governmentalprograms financing care for people during theirlast year of life—a role that reaches far beyondthe hospice benefit. The overwhelming partthat Medicaid plays in financing nursing homeand other forms of long-term care isparticularly important. On the positive side, theHealth Care Financing Administration (HCFA)has several efforts underway to address painmanagement in nursing homes. However, other

23


than a few small efforts, Medicaid is notfocusing in a major way on using its marketpower to encourage or force changes thatwould increase Medicaid beneficiaries’ access toquality palliative services at the end-of-life.Thus, we have virtually no state Medicaidprograms to point to as models in delivery ofend-of-life care.

A five-part strategy on the part of federaland state officials, providers, and foundationscould help improve quality of care for dyingMedicaid beneficiaries. First, a re-examinationof federal and state policy is difficult withoutbetter data about Medicaid beneficiaries andtheir experiences while dying. Compared to amodestly rich research literature on end-of-lifecare for Medicare, virtually no data or researchhas been conducted on end-of-life care forMedicaid beneficiaries (Scitovsky, 1994). Oneextant study on this topic is over a decade oldand only dealt with the dually eligiblepopulation age 65 and older in one county inNew York state (Temkin-Greener, et al, 1992).The other study focuses on Medicarebeneficiaries who are dually eligible (Hogan, etal, 2000). The data needed include informationon causes of Medicaid beneficiaries’ death,location of death, and utilization and cost ofservices during the last year of life, and howthese compare to non-Medicaid decedents.These data would help policymakers focus onwhere and when deaths occur and whetherbeneficiaries receive sufficient access tohospice and palliative services.

Second, Medicaid could consciously encourageor require the health systems with which itcontracts to pay more attention to end-of-lifecare. A few health systems, especially somemanaged care plans, are using Medicaid funds ininnovative ways to care for dying Medicaidbeneficiaries. The Community Medical Alliance,On Lok, and EverCare are examples of newapproaches to financing and delivering Medicaidend-of-life care. These organizations have usedthe flexibility of capitation payments to provideneeded services without reference to whetherthey fit specific fee-for-service categories.2

These plans integrate palliative and hospicecare into their health care-delivery systemsthrough the use of interdisciplinary teams.Obviously, dependence on managed care raisesissues of freedom-of-choice of providers andcapitation provides incentives for underservice,but this approach also gives plans the ability touse their funds in creative ways.3

Third, federal and state Medicaid officialscould explore ways to fund palliative care andmake a range of pain relief measures availablethrough the fee-for-service system. Despite theefforts of the providers profiled in the casestudies, provision of palliative services, such aspain management and psycho-social services,to dying patients outside of the hospice benefitappears to be limited. In a striking exception,the Florida Hospice of the Suncoast has usedthe current Medicaid coverage of physician, andnurse practitioner services as well as drugbenefits to provide some palliative services toMedicaid beneficiaries outside of the Medicaid

2The new Medicaid managed care organization regulations issued at the end of the Clinton administration clarify that theseorganizations may cover “services that are in addition to those covered under the state plan” (42 CFR 438.6(e) aspublished in the Federal Register, January 19, 2001, p. 6406). The Bush Administration has put these regulations on hold.

3However, capitation and managed care can also reduce integration. For example, state Medicaid provisions related tooutpatient drug coverage could affect the flexibility that managed care organizations and hospices have to providepalliative care to dying beneficiaries. States that “carve out” pharmaceutical benefits and pay a capitated rate topharmaceutical benefit management companies could create coordination problems between a managed care plantrying to provide pain-relief medications and the management company.

The Community

Medical

Alliance, On

Lok, and

EverCare are

examples of

new

approaches to

financing and

delivering

Medicaid end-

of-life care.

24


benefit. Experts persistently identified lack ofexplicit Medicaid coverage of palliative care tobe a major funding problem. However, it is notclear how best to provide palliative care whileaddressing the need to restrain expenditureincreases.

Fourth, beyond reimbursement for palliativecare, efforts to better monitor painmanagement and end-of-life care in nursinghomes and home care represents an attractiveopportunity for improvement. Medicaid coulduse its overwhelming role in financing long-term care services to promote better care fordying beneficiaries by examining its currentpolicies and modifying them to requireparticipating providers to do such things asmeasure and control pain.

Fifth, the current structure of the Medicaidhospice benefit should be re-examined. The six-month prognosis requirement, inadequatepayment rates, and the need for qualityassurance systems to address palliation andpain management in new ways were allidentified as problem areas. Currently, noconsensus exists about how best to addressthese issues. However, the cost data that HCFAis now collecting from hospices and itsdiscussions about outcomes measures withproviders should help shed some light on howfuture progress can be made in these areas.Linking eligibility for hospice to diagnosis of apotentially fatal illness would help expandpalliative care services, but containingexpenditure increases could be difficult.

The challenge for the future will be toharness the Medicaid’s purchasing power toimprove the services that dying beneficiariesreceive. Up to now, Medicaid has been thesleeping giant of end-of-life financing.

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Cox C (1998) “Hospice Care for Persons withAIDS: Findings from a National Study,” TheHospice Journal, vol.13, no.3, pp. 21-34.

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The challenge

for the future

will be to

harness the

Medicaid’s

purchasing

power to

improve the

services that

dying

beneficiaries

receive.

25


Health Care Financing Administration,information downloaded January and February2001 from www.hcfa.gov.

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National PACE Association (2000) PACE Profile2000, Alexandria Virginia. Downloaded from www.natlpaceassn.org.

National Pharmaceutical Council (1998)Pharmaceutical Benefits Under State MedicalAssistance Programs, Reston, Virginia.

O’Keeffe J, (1996) Determining the Need forLong-Term Care Services: An Analysis of Healthand Functional Eligibility Criteria in MedicaidHome and Community-Based Waiver Programs,AARP Public Policy Institute, Washington, DC.

On Lok Senior Health information downloadedJanuary 2001 from www.onlok.org.

Petrisek AC, Mor V (1999) “Hospice in NursingHomes: A Facility-Level Analysis of theDistribution of Hospice Beneficiaries,” TheGerontologist, vol.39, no.3, pp. 279-290.

26


Scitovsky A (1994) “The High Cost of DyingRevisited,” The Milbank Quarterly, vol.72, no.4,pp.561-591.

Spence, DA and JM Wiener. (1990). “NursingHome Length of Stay Patterns: Results From the1985 National Nursing Home Survey,” TheGerontologist, vol. 30, no. 1, pp. 16-20.

Spillman BC and Lubitz J “New Estimates ofLifetime Nursing Home Use: Have Patterns ofUse Changed?” Gerontological Society ofAmerica annual meeting, Washington, D.C.,November 2000.

Stephenson J (November 15, 2000) “Palliativeand Hospice Care Needed for Children with Life-Threatening Conditions,” Journal of theAmerican Medical Association, vol.284, no.19,pp.2437 -2438.

Temkin-Greener H, Meiners MR, Petty EA,Szydlowski JS, (1992) “The Use and Cost ofHealth Services Prior to Death: A Comparison ofthe Medicare-Only and the Medicare-MedicaidElderly Populations,” The Milbank Quarterly,vol.70, pp. 679-701.

Tilly J, Goldenson S, Kasten J, O’Shaughnessy C,Kelly R, Sidor G, (2000) Long-Term Care ChartBook: Persons Served, Payors, and Spending,Congressional Research Service, Washington, DC.

Urban Institute estimates based on HCFA-64and HCFA-2082 reports.

Wiener JM, Wall S, Liska D, Soscia S, (1998)Health Policy for Low-Income People inAlabama, The Urban Institute, Washington, DC.

Zerzan J, Stearns S, Hanson L (2000) “Access toPalliative Care and Hospice in Nursing Homes,”Journal of the American Medical Society,vol.284, no.19, pp. 2489-2494.

27


Table 1—M

edicaid Expenditures for Hospice, FFY 1990-1998

State1990

19911992

19931994

19951996

19971998

United States

$20,231,587 $44,092,149

$84,184,532 $128,896,473

$197,631,713 $288,619,978

$322,401,343 $327,263,161

$325,010,325Alabam

a0

169,185 552,150

772,901 1,117,145

2,358,176 3,233,392

5,099,842 5,361,330

Alaska0

0 0

0 0

0 24,380

52,406 75,360

Arizona0

0 0

0 16,962

1,517 0

0 0

Arkansas0

0 0

0 0

0 1,637,723

2,079,369 3,178,795

California1,398,370

3,618,095 6,838,205

14,001,850 26,023,740

35,009,849 38,957,683

37,931,368 32,427,902

Colorado0

4,331 713,453

1,082,110 2,097,770

4,166,119 5,255,714

4,821,100 5,257,849

Connecticut0

0 0

0 0

0 0

0 0

Delaware

0 0

255,772 240,433

576,695 622,494

1,046,103 777,750

681,498District of Colum

bia 0

0 0

0 0

0 0

0 0

Florida 8,078,319

20,303,012 30,994,185

40,776,343 43,647,375

56,098,375 55,301,090

49,315,483 48,444,311

Georgia 467,921

608,060 1,033,174

2,086,947 3,301,172

6,680,883 9,134,598

15,138,611 17,379,632

Haw

aii 0

0 27,581

177,609 388,536

267,322 303,896

460,416 420,326

Idaho 76,290

55,594 63,769

109,103 163,857

403,352 428,939

391,414 537,068

Illinois 853,898

2,518,935 6,167,618

6,193,764 13,349,735

24,672,877 23,976,984

21,650,973 18,747,727

Indiana 0

0 0

0 0

0 0

0 (4,350)

Iowa

10,973 401,032

795,072 755,592

1,358,698 2,216,997

2,191,623 1,074,526

2,802,567Kansas

0 187,646

609,043 981,663

1,967,346 2,056,915

2,197,811 2,270,140

2,458,179Kentucky

1,940,174 3,219,287

4,777,566 6,883,160

9,664,931 10,802,515

9,131,287 9,754,700

7,561,272Louisiana

0 0

0 0

89,272 247,483

903,012 1,160,070

1,819,083M

aine 0

0 0

0 0

0 0

0 0

Maryland

0 0

0 0

50,200 348,444

1,684,069 5,023,339

2,684,618M

assachusetts 589,785

1,462,871 3,095,835

4,684,834 7,289,974

9,890,240 9,745,063

8,652,782 8,053,232

Michigan

825,920 741,899

3,428,852 5,946,512

9,413,119 11,785,677

12,541,392 12,674,953

13,336,548M

innesota 14,869

256,040 321,151

769,686 1,438,668

5,088,645 5,255,079

4,194,017 4,897,304

Mississippi

0 0

264,071 608,144

1,035,217 2,355,900

2,365,662 3,364,968

4,310,316M

issouri 265,472

747,061 1,360,694

2,434,166 3,801,809

7,185,140 9,268,005

10,069,300 8,668,745

Montana

72,329 65,861

172,482 225,433

337,384 300,408

322,534 246,039

291,534

Source : Urban Institute Estim

ates based on HCFA-64 data.

28


Tabl

e 1

(con

tinu

ed)

Med

icai

d Ex

pend

itur

es f

or H

ospi

ce,

FFY

1990

-199

8St

ate

1990

1991

1992

19

93

1994

19

95

1996

19

97

1998

Uni

ted

Stat

es

$20,

231,

587

$4

4,09

2,14

9

$84,

184,

532

$1

28,8

96,4

73

$197

,631

,713

$2

88,6

19,9

78

$322

,401

,343

$3

27,2

63,1

61

$325

,010

,325

Nebr

aska

0

0

0

0

10

7,98

2

304,

685

34

3,87

7

880,

187

1,

386,

581

Neva

da

0

0

0

0

0

0

0

0

259,

542

Ne

w H

amps

hire

0

0

0

0

0

0

0

0

0

Ne

w J

erse

y 0

0

0

67

1,15

9

1,53

0,74

1

3,34

4,08

1

5,42

1,99

7

7,61

3,76

9

8,88

4,24

7Ne

w M

exic

o 68

,441

71

,940

41

3,27

6

475,

400

97

3,96

0

1,47

0,05

9

1,75

0,22

5

1,63

9,13

5

1,48

9,24

5Ne

w Y

ork

1,43

3,27

7

1,92

5,34

1

3,10

7,85

7

5,60

6,35

7

9,48

0,34

8

18,9

51,6

00

23,7

72,7

86

24,1

67,4

26

25,3

27,7

72No

rth

Caro

lina

1,19

6,95

3

1,55

7,65

6

3,30

5,00

5

7,46

5,30

1

11,0

21,3

40

10,5

53,0

11

10,6

03,4

26

10,6

00,6

77

8,37

2,63

5No

rth

Dako

ta

0

0

0

104,

443

45

8,61

1

547,

917

45

6,56

7

847,

326

85

4,29

6Oh

io

0

703,

116

2,

067,

988

3,

964,

952

7,

806,

457

12

,560

,207

18

,482

,765

21

,665

,301

19

,215

,540

Okla

hom

a 0

0

0

0

0

0

0

0

0

Oreg

on

0

0

0

0

0

5,23

4

943,

391

58

0,20

8

309,

661

Penn

sylv

ania

23

2,15

1

309,

073

65

1,48

1

1,28

7,03

0

1,59

1,58

2

3,70

8,63

3

5,09

7,74

9

4,85

7,19

7

3,86

5,06

9Rh

ode

Isla

nd

26,3

69

66,5

82

30,1

58

75,1

47

110,

527

27

9,70

9

671,

859

1,

236,

172

99

3,03

5So

uth

Caro

lina

0

0

0

0

0

0

1,53

6,06

3

2,68

3,67

3

2,52

4,92

0So

uth

Dako

ta

0

0

19,3

01

73,5

94

96,3

87

89,3

58

104,

872

14

2,09

6

106,

840

Tenn

esse

e 0

0

95

0,13

2

1,60

7,63

6

984,

475

93

,156

6,

357

0

57

2Te

xas

2,66

3,67

5

4,71

4,71

2

11,1

17,6

01

16,2

89,9

89

29,7

96,7

02

40,4

47,4

14

43,0

85,2

72

42,6

59,2

47

47,6

08,5

66Ut

ah

0

0

17,5

74

40,8

50

706,

862

4,

187,

344

3,

670,

200

(4

46,6

09)

767,

945

Verm

ont

16,4

01

39,5

27

65,0

99

90,7

99

151,

088

14

3,71

2

171,

519

28

2,28

0

334,

720

Virg

inia

0

57

,673

31

0,85

4

603,

822

99

6,13

1

1,52

9,46

5

2,28

1,16

6

2,66

9,19

2

3,15

1,73

6W

ashi

ngto

n 0

0

0

42

4,62

3

2,83

8,24

5

4,37

9,57

9

4,81

6,62

6

4,31

7,97

6

4,54

3,23

7W

est

Virg

inia

0

0

0

0

0

69

3,11

4

1,02

1,34

9

887,

651

1,

051,

787

Wis

cons

in

0

287,

620

65

7,53

3

1,38

5,12

1

1,85

0,67

0

2,77

2,37

2

3,20

2,57

0

3,57

9,38

0

4,40

6,41

3W

yom

ing

0

0

0

0

0

0

54,6

68

197,

311

16

5,12

0

Sour

ce:

Urb

an I

nsti

tute

est

imat

es b

ased

on

HCF

A-64

dat

a.

29

Table 2—Various Per Capita Measures of Medicaid Expendituresfor Hospice, FFY 1998 (using HCFA-64 expenditures)

Hospice Patients Spending Per Patient Spending Per PersonState (HCFA-2082)

United States 51,722 $6,284 $1.20 Alabama 755 $7,101 $1.23 Alaska 11 $6,851 $0.12 Arizona 4 N/A N/A Arkansas 551 $5,769 $1.25 California 6,122 $5,297 $0.99 Colorado 1,232 $4,268 $1.32 Connecticut 46 N/A N/A Delaware 120 $5,679 $0.92 District of Columbia 96 N/A N/A Florida 7,583 $6,389 $3.25 Georgia 2,885 $6,024 $2.28 Hawaii 0 N/A $0.35 Idaho 116 $4,630 $0.44 Illinois 1,659 $11,301 $1.55 Indiana 378 N/A N/A Iowa 614 $4,564 $0.98 Kansas 579 $4,246 $0.93 Kentucky 1,629 $4,642 $1.92 Louisiana 588 $3,094 $0.42 Maine 0 N/A N/A Maryland 561 $4,785 $0.52 Massachusetts 1,754 $4,591 $1.31 Michigan 740 $18,022 $1.36 Minnesota 875 $5,597 $1.04 Mississippi 449 $9,600 $1.57 Missouri 2,049 $4,231 $1.59 Montana 0 N/A $0.33

Source: Urban Institute estimates based on data from HCFA-2082 and HCFA-64 reports and July1998 population estimates from the Population Estimates Program, Population Division, U.S.Census Bureau.


30


Table 2 (continued)—Various Per Capita Measures of Medicaid Expendituresfor Hospice, FFY 1998 (using HCFA-64 expenditures)

Hospice Patients Spending Per Patient Spending Per PersonState (HCFA-2082)

United States 51,722 $6,284 $1.20 Nebraska N/A N/A $0.83 Nevada 55 $4,719 $0.15 New Hampshire 0 N/A N/A New Jersey 1,471 $6,040 $1.10 New Mexico 277 $5,376 $0.86 New York 3,465 $7,310 $1.39 North Carolina 1,508 $5,552 $1.11 North Dakota 175 $4,882 $1.34 Ohio 3,401 $5,650 $1.71 Oklahoma N/A N/A N/A Oregon 83 $3,731 $0.09 Pennsylvania 654 $5,910 $0.32 Rhode Island 229 $4,336 $1.01 South Carolina 445 $5,674 $0.66 South Dakota 0 N/A $0.15 Tennessee 0 N/A N/A Texas 5,547 $8,583 $2.42 Utah 161 $4,770 $0.37 Vermont 71 $4,714 $0.57 Virginia 598 $5,270 $0.46 Washington 976 $4,655 $0.80 West Virginia 244 $4,311 $0.58 Wisconsin 935 $4,713 $0.84 Wyoming 31 $5,326 $0.34

Source: Urban Institute estimates based on data from HCFA-2082 and HCFA-64 reports andJuly 1998 population estimates from the Population Estimates Program, Population Division,U.S. Census Bureau.

31


Chart 1. Selected Features of the Case Study Sites

PlanSponsorship

Populationserved

Enrollment

Composition

of teamm

anagingcare

CapitatedPaym

ents

QualityAssuranceM

ethods

EverCare

A for-profit Medicare m

anaged careplan, w

hich is a subsidiary of UnitedHealthCare Corporation.

Medicare beneficiaries w

ho areeligible for parts A and B and w

holive in nursing hom

es. 70 percentare dually eligible for M

edicare andM

edicaid.

Voluntary.

Physicians and nurse practitioners.

Medicare’s paym

ent is the adjustedaverage per capita cost m

inus fivepercent.M

edicaid’s payment is based on

adjusted average per capita cost.

A clinical quality comm

ittee meets

monthly to discuss quality issues

and progress with the plan’s quality

initiatives. The plan also trackssentinel events, such as unexpecteddeaths.

Florida Hospice of the SunCoast

Non-profit hospice.

The hospice serves three categoriesof M

edicaid beneficiaries - dyingchildren and adults, patients w

ithAIDS, and nursing hom

e residentsw

ho are dually-eligible.

Voluntary.


Hospice receives Florida M

edicaidrates for physician, nursepractitioner, hom

e care aide, andhospice services provided.

Annual audits of service delivery,tracking of patient and fam

ilycom

plaints, and consumer

satisfaction surveys. The qualityassurance program

s are tailored tothe local results on these m

easures.

Comm

unity Medical Alliance

Subsidiary of Neighborhood HealthPlan-a non-profit m

anaged care plan.

All enrollees are Medicaid

beneficiaries -persons with

advanced AIDS or severedisabilities; and technologydependent children, high riskchildren and adolescents w

ithm

ajor behavioral health problems.

Voluntary.


Annual negotiation of rates with

the Massachusetts M

edicaid basedon costs incurred during theprevious fiscal year.

Comparison of utilization data to

benchmarks, such as adm

issions tohospital, and frequency of contactsw

ith enrollees, incidence ofdecubitus ulcers, and im

mune

system functioning in the AIDS

population. Patients also havegrievance procedures they can use.

On Lok

Non-profit managed care plan.

Persons age 55 and older who need

nursing facility care. About 90percent of enrollees are duallyeligible for M

edicare and Medicaid.

Voluntary.

Physicians, nurse practitioners,social w

orkers, therapists,dietitians, and transportation andhom

e care workers.

Medicare’s paym

ent is 2.39 times

the adjusted average per capitacost. M

edicaid’s payment is 90

percent of what the state pays for a

nursing home resident in the San

Francisco Bay area.

Annual analysis of deaths andcom

fort care plans. Theinterdisciplinary team

s’perform

ances are compared and

education is provided as necessary.

32


Figure 1—Distribution of Hospice Patients and Revenuesby Payer Source, 1995

Distribution of Hospice Patients by Source of Coverage, 1995

Distribution of Hospice Revenues by Payer Source, 1995

Other 11%

Medicaid 8%

Private Insurance 12%

Medicare 65%

Indigent 4%

Medicaid 7%

Private Insurance 12%

Other 7%

Medicare 74%

Source: Facts and Figures on Hospice Care in America, National Hospice and Palliative Care Organization, 2001

33


350

325

300

275

250

225

200

175

150

125

1007550250

Figure 2—State and Federal M

edicaid Hospice Expenditures, Federal Fiscal Years 1990-1998

19901991

19921993

19941995

19961997

1998

$20.3

$44.0

$84.1

$128.8

$197.6

$288.6

Millions of Dallars

$322.4$327.2

$325.0

Source: Urban Institute Estimates based on HCFA-64 data.

Spring 2001Last Acts National Program Office1620 Eye Street, N.W.Suite 202Washington, D.C. 20006-4017Phone: (202) 296-8071Fax: (202) 296-8352Karen Orloff Kaplan, ScD Director

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