Medicare and End-Of-Life Care

Last acts® Financing Committee

Marilyn Moon and Cristina Boccuti Medicare and End-of-Life Care

The Medicare program, which serves people age 65 and older and those with disabilities, is the most important source of health insurance for Americans at the end stages of their lives. Therefore, its rules regarding methods and levels of payment and covered benefits have a strong impact on end-of-life care. Medicare offers a hospice benefit that covers palliative care services for people with terminal illness. Medicare and End-of-Life Care

Marilyn Moon and Cristina Boccuti The Urban Institute 2100 M Street, NW Washington, DC 20037 (202) 261-5256 [email protected]

We gratefully acknowledge funding for this project from Last Acts®, a Robert Wood Johnson Foundation initiative. Theresa Varner and Andy Schneider, co-conveners of the Last Acts Financing Committee, provided helpful comments on earlier drafts of this paper, as did Joshua Weiner, Judy Feder, Stephen Connor, and Karen Orloff Kaplan. We are grateful to Krista Dowling for her research assistance.

The views expressed in this paper are those of the authors and should not be attributed to The Urban Institute. Medicare and End-of-Life Care

Executive Summary

The Medicare program, which serves people While hospice use has tripled in the last age 65 and older and those with disabilities, is decade, our research finds that some benefi- the most important source of health insurance ciaries are less likely than others to enroll in for Americans at the end stages of their lives. hospice care. For example, males and minorities Therefore, its rules regarding methods and levels are less likely to elect hospice care than females of payment and covered benefits have a strong and whites. Decedents who also have Medicaid impact on end-of-life care. Medicare offers a assistance (dual eligibles) are less likely to hospice benefit that covers palliative care enroll in the Medicare hospice benefit than services for people with terminal illnesses. While those who do not. In contrast, Medicare 23 percent of Medicare beneficiaries who died in decedents in managed care are more likely to 2000 took advantage of the hospice benefit, the elect hospice care than those in the traditional remainder relied on other parts of the Medicare fee-for-service program. Cancer diagnoses are program to obtain end-of-life care. This paper the most prevalent in hospice care, but non- examines Medicare’s role in facilitating access cancer diagnoses (such as heart disease and Across health to end-of-life care for hospice and non-hospice Parkinson’s disease) have become more frequent care settings, beneficiaries. We describe and discuss the over the last decade. end-of-life benefits covered and the payment Medicare relies systems used for different provider types, as Medicare covers many services outside of the on different they relate to end-of-life care, and note poten- hospice benefit that are also useful to people tial areas of improvement. facing terminal illnesses. For example, Medicare payment covers skilled nursing services to home health methods and Medicare’s Role in Facilitating Access patients, skilled nursing facility patients and to End-of-Life Care hospital inpatients. Notably, however, bereave- payment rates ment and pastoral care services are not covered Medicare’s hospice benefit provides access to outside the hospice program. While Medicare to cover the palliative care for terminally ill beneficiaries who covers prescription drugs for skilled nursing voluntarily agree to forgo curative treatment for cost of end-of- facility (SNF) and hospital inpatients, it does their terminal illness. Covered hospice services not cover most oral prescription drugs (includ- life care. include treatment to alleviate physical symptoms ing those for pain) for home health patients. (such as pain) and the provision of bereavement However, many beneficiaries with supplemental services (emotional and spiritual) for patients insurance (particularly Medicaid assistance) have and family members. The hospice benefit also some access to outpatient drug coverage. covers up to five days of respite care. To elect the Medicare hospice benefit, beneficiaries Medicare Payment Methods and Spending must have a statement from their physician, certifying that they are terminally ill with a life Across health care settings, Medicare relies on expectancy of about six months or less, if the different payment methods and payment rates to disease runs its normal course. People who live cover the cost of end-of-life care. Medicare pays longer than originally expected may remain in hospice providers a fixed amount on a per diem the hospice program as long as their prognosis basis. SNFs, home health agencies and hospitals continues to fit the eligibility requirement. are also paid on a prospective basis but, unlike

1 Medicare and End-of-Life Care hospice, their payment rates are adjusted by number of people now benefit. In addition to more detailed patient characteristics related to the hospice program, Medicare contributes to expected treatment costs. Hospice agencies have the Program for the All-inclusive Care of the expressed concerns that Medicare’s fixed daily Elderly (PACE)—a small but expanding coor- hospice payments do not take into account the dinated care program for frail, elderly nursing- extra costs incurred during the initial days of a home-eligible adults who are usually in the last hospice patient’s enrollment, which is a problem two or three years of their life. Since PACE because an increasing number of hospice admits patients based on their functional status patients do not initiate hospice care until one and acuity level, their enrollees can enter a week before their deaths. coordinated care program (with many palliative services available) earlier than patients who Terminally ill Medicare beneficiaries in HMOs enroll in Medicare hospice. also may enroll in hospice care, in which case the HMO receives a lower monthly payment but A number of changes—many of them quite is not financially responsible for the hospice modest—could be made to the Medicare pro- care. Beneficiaries also have the choice to dis- gram to improve both access and quality of enroll completely from their HMO, which may be care provided to beneficiaries facing death. preferable in cases where beneficiaries must pay For example, Medicare could better publicize high monthly premiums. Under the hospice little-known policies to physicians, such as benefit, Medicare beneficiaries have relatively (1) their ability to bill for advance care planning few out-of-pocket expenses. sessions; (2) their ability to recertify hospice patients who survive longer than was expected; Spending for decedents accounts for more than and (3) their new ability to register as a one-quarter of Medicare’s total annual spending, a specialist in pain management with Medicare, share that has remained stable for two decades. if applicable. Better consumer information The Medicare hospice program, which accounts for for patients and their families would also about 1 percent of Medicare’s annual payments, be useful. was designed not as a Medicare cost-reducer, but as a program that provides appropriate care for The hospice benefit also faces several chal- dying patients. Accordingly, our research finds lenges that might be addressed with adjust- that average spending on decedents who used ments in payment and eligibility policy; these hospice care in the last calendar year of life could be tested through demonstration projects ($19,950) is not dramatically different from the supported by the Department of Health and amount spent on decedents who did not use Human Services. For instance, trial adjustments hospice care ($17,790). Though Medicare spend- to hospice payments to account for patients ing on hospice users is somewhat higher, these with short stays or who need the provision of figures are quite close considering that some unusually expensive palliative treatments may portion of those decedents who did not elect provide useful solutions to current reimburse- hospice died relatively suddenly and therefore ment problems. More flexible eligibility rules used few medical services of any kind. could allow hospice care to be available to a wider range of Medicare beneficiaries. Best Practices and Potential Improvements for End-of-Life Care Conclusion

While Medicare has made some inroads in Much remains to be done to move the pallia- improving care at the end of life, only a small tive care needs of people at the end of their

2 Medicare and End-of-Life Care lives to a more mainstream position within ment. The list of best practices remains limited; Medicare. Most Americans who die are being the small number of physicians and patients served by the Medicare program, yet Medicare’s who are knowledgeable about these issues con- attention to the end-of-life issue is largely stitutes a major barrier. Even with attention to confined to hospice, a relatively small though budget constraints, however, a number of im- growing program. A careful look at end-of-life provements to end-of-life care could be made care ought to explore both hospice and tradi- through either regulatory or legislative changes tional care settings to find areas for improve- on a modest scale.

3 Medicare and End-of-Life Care

I. Introduction

Medicare is the primary health insurer for more managed care program called Medicare+Choice. In than 80 percent of the people who die each year this paper, therefore, we take a broad view of in the United States (Hogan, 2001). Therefore, end-of-life care options. Specifically, we examine its rules regarding payment and covered benefits the services that Medicare does and does not have a strong impact on health care provision cover and its systems of payment by type of care and spending during the dying process. Some and setting, discussing advantages and disad- beneficiaries who face terminal illnesses may vantages for both patients and providers. Payment prefer palliative care—focusing on alleviating adequacy and access to care are important con- physical symptoms and addressing psychological, siderations, for example. social and spiritual issues—rather than curative treatment for their illness. Other beneficiaries in Beneficiaries who qualify for Medicaid and similar circumstances may desire more aggressive those in managed care plans face special circum- medical care. Some may want both. These de- stances that we also discuss here. Spending on cisions are highly personal and individual, and health care in the last year of life is high, as one require knowledge of how Medicare provides might expect, given the illnesses that accompany access to various types of services in different death. We therefore present research findings settings. In this paper we explore the answers to (both ours and other researchers’) on spending three major questions in order to understand trends for care in the last year of life. We Medicare’s role in end-of-life care, with special conclude this paper with some suggested changes emphasis on Medicare’s hospice program. to the Medicare program that could enhance the availability and quality of care provided to benefi- •How does Medicare facilitate the provision of ciaries near the end of their lives. end-of-life care services to meet the needs of dying beneficiaries? What Is End-of-Life Care? What Is Palliative Care?

•How does Medicare spend its resources on Definitions of what constitutes end-of-life end-of-life care? care and palliative care and the relationship between the two vary considerably among •How can Medicare improve end-of-life care? experts, patients and providers. In this paper we regard end-of-life care as a broader term that Medicare’s hospice benefit was established in refers to all health care provided to people with 1983 as a specific palliative care benefit for those a terminal illness, whether the prognosis is a in their last six months of life. In 2000, 23 day or a decade. We refer to palliative care as a percent of the beneficiaries who died received particular type of end-of-life care that terminally hospice care (Hogan, 2002 cited in MedPAC, ill people may receive, usually by choice. Specif- 2002). However, because hospice is only one of ically, palliative care is noncurative care that the several types of providers that administer care focuses on controlling symptoms such as pain, to Medicare beneficiaries who are dying, a larger maximizing personal functional activities, and share of beneficiaries receive end-of-life care in addressing the emotional, spiritual and social Medicare’s fee-for-service program or in its concerns associated with death and dying.

4 Medicare and End-of-Life Care

Medicare’s hospice benefit was designed specif- principles for providing good palliative care to ically for those who want to receive only pal- people who have an incurable, progressive liative care. illness. Last Acts defines palliative care as “care that achieves the best possible quality of life Palliative care is often contrasted with cura- through relief of suffering, control of symptoms tive care and people tend to focus on palliative and restoration of functional capacity, while care only when they have exhausted the treat- remaining sensitive to personal, cultural and ments available for curing a disease. In practice, religious values, beliefs and practices.” Five the lines between cure and relief of suffering general goals relevant to the provision of pal- may be blurry; palliative care may be needed for liative care are outlined:1 many years and not just in the last few months of life, and some patients may seek active 1. Respecting patient preferences. treatment throughout a terminal illness. These variations highlight the need to consider both 2. Providing comprehensive care. philosophies of care when investigating Medicare’s role in end-of-life care. Thus, in our 3. Maximizing interdisciplinary resources. look at the services people use at the end of their lives, we examine the effects of Medicare 4. Acknowledging caregiver concerns. regulations on how patients may receive palliative and curative care in different settings. 5. Creating health care systems flexible enough to support these goals. The Precepts of Palliative Care—The Last Acts campaign has adopted a set of fundamental

II. Medicare’s Role in Facilitating Access to End-of-Life Care

Medicare’s Palliative Care Benefit: The hospice beneficiary voluntarily agrees to The Medicare Hospice Program forgo curative treatment for the terminal ill- Medicare’s hospice benefit provides access to ness.2 By relinquishing such services, hospice palliative care for those beneficiaries who have beneficiaries are eligible to receive palliative terminal illnesses. To elect the Medicare hospice care administered through a Medicare-approved benefit, beneficiaries must be eligible for hospice program. The restrictions on hospice Medicare (Part A) and have a statement from reflect the fact that Congress was only willing their physician certifying that the patient is ter- to pass an added benefit in 1983 if it were minally ill with a life expectancy of about six structured so that it would not add substan- months or less, if the disease runs its normal tially to Medicare’s costs. As a consequence, not course. Beneficiaries are allowed two 90-day only were eligibility requirements restrictive, periods of hospice care and an unlimited number but enrollees also had to forgo certain Medi- of 60-day periods. However, each hospice elec- care benefits in exchange for the expanded tion must be accompanied by a physician’s services that hospice provides. These limitations statement certifying that the patient can rea- have created some barriers for the hospice sonably be expected to live for six months or less. program.

5 Medicare and End-of-Life Care

Table 1: Medicare Benefit Eligibility and Coverage of End-of-Life Services, by Provider Type, 2002

Hospice Home Health SNF Hospital

Eligibility Must have a life Must be generally Must have a prior Must be considered expectancy of 6 months homebound with a hospitalization of 3 medically necessary or less and agree to skilled health care days or more and forgo curative service needed require daily inpatient treatment skilled nursing or rehab services

Health Care Services

Skilled Nursing Covered in full Covered in full. Nursing Covered in full Covered in full must be intermittent or part-time. Maximum of 35 hrs/week of skilled nursing and home health aide services combined

Skilled Therapy Covered in full Covered in full Covered in full Covered in full (PT/OT/Speech)

Home Aide Services Covered in full Covered in full Not applicable Not applicable (e.g., dressing, feeding)

Homemaking Covered in full Not covered Not applicable Not applicable Services/Custodial Care (e.g., cooking)

Physician Services Covered in full for Not part of the home Not part of the SNF Covered in full for hospice-affiliated health benefit, but benefit, but covered teaching physicians; services; 20% Part-B covered under Part B under Part B with 20% 20% coinsurance coinsurance applies for with 20% coinsurance coinsurance applies for all other services not affiliated physician services with the hospice (e.g., patient’s personal physician)

Nutritionist Services Covered in full Not part of the home Covered in full Covered in full health benefit, but covered under Part B for patients with end- stage renal disease or diabetes

Medical Social Covered in full Covered in full Covered in full Covered in full Services

6 Medicare and End-of-Life Care

Table 1 (continued)

Hospice Home Health SNF Hospital

Health Care Services

Bereavement and Covered in full for Not covered Not covered Not covered Pastoral Care patient and family members

Respite Care Covered with 5% Not covered Not applicable Not applicable coinsurance; maximum 5 days per stay

Continuous Nursing Covered in full for a Not covered Covered in full Covered in full medical crisis

Prescription Drugs Covered if related to Not part of the home Covered in full Covered in full pain and symptom health benefit, but management of some specified oral, terminal illness; inhalation, and non- maximum co-payment self administered drugs of $5/prescription are covered under Part B with 20% coinsurance

DME and Medical Covered in full DME is covered with Covered in full Covered in full Supplies 20% coinsurance; Medical supplies are covered in full.

Curative Treatment Not covered for Covered Covered Covered terminal condition

Room and Board Not covered Not covered Covered in full Covered in full

Notes: Under the SNF benefit, beneficiary cost-sharing increases considerably after 20 days. Additional cost sharing for deductibles may apply. For 2002, the hospital deductible is $812 per qualified admission; Part-B provided services have a $100 deductible; Home Health and Hospice care have no deductibles. SNF is Skilled Nursing Facility. DME is Durable Medical Equipment.

Source: Medicare guidebooks for beneficiaries. Medicare Rights Center, and discussions with CMS staff.

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Table 1 lists services that are covered by the care, up from 9 percent in 1992. While cancer Medicare hospice benefit. Most hospice care is diagnoses are the most prevalent in hospice based on routine home care and provides access care, accounting for 51 percent of all hospice to physical, psychological, social and spiritual beneficiaries’ diagnoses in 2000, non-cancer care for dying persons, their families and other diagnoses (such as heart disease and Parkinson’s loved ones. Specifically, the Medicare hospice disease) have grown considerably over the last benefit covers skilled nursing care, hospice decade—increasing 557 percent since 1992, physician services, nutritionist services, medical according to this research. appliances and supplies, prescription drugs, home health aide services, homemaker services, Using the Medicare Current Beneficiary Survey therapies (physical, occupational and speech), (MCBS), we examined Medicare beneficiary data and bereavement counseling for the patient to analyze the characteristics of beneficiaries and/or family members. Also, Medicare covers who used hospice care during the calendar year up to five days of respite care designed to give of their death, against those who did not. We informal caregivers some relief. The respite care pooled four years of data to increase sample size can be provided to the patient in a freestanding and thus the accuracy of our findings. Table 2 hospice facility, a hospital or a nursing home. presents our results. The average age of hospice As noted, the Medicare hospice benefit does decedents was 78, one year less than the not cover curative treatments related to the average age of Medicare decedents overall. terminal condition, nor general room and Decedents under age 65, who were eligible for board. Medicare because of a disability or end-stage renal disease, were less likely to choose hospice Hospice care may be provided to Medicare care (11 percent), than their older counterparts beneficiaries in a number of settings: patients’ (17 percent). homes, nursing homes, skilled nursing facilities, freestanding hospice facilities and hospital-based Other demographic characteristics were asso- units. Hospice enrollees select a program rather ciated with some differences in hospice election. than a facility and can potentially receive care A slightly larger proportion of female decedents in several types of facilities before dying. Thus it (17 percent) than male decedents (15 percent) is not easy to determine where hospice care is chose hospice care; 17 percent of white Medi- being delivered. A large portion of Medicare’s care decedents elected hospice, which was hospice users receive care in their homes; in notably higher than the 11 percent rate for 1993, almost 80 percent of elderly hospice users minority decedents. were able to die at home (Hogan, 2001). With respect to insurance coverage, 26 percent of Medicare decedents enrolled in Medicare+ Who Participates in Medicare’s Hospice Choice elected hospice care—a higher rate of Benefit? Who Does Not? hospice election than decedents in fee-for-service The number of Medicare beneficiaries taking Medicare (15 percent).3 For Medicare decedents part in Medicare’s hospice program tripled in the with full Medicaid coverage (dual eligibles), 1990s. A recently published report to Congress 13 percent participated in hospice care. Benefi- states that 464,000 beneficiaries received ciaries with more limited Medicaid assistance hospice care in 2000, up from 143,000 in 1992 (e.g., to cover Medicare premiums) had slightly (Hogan, 2002 as cited in MedPAC, 2002). This higher rates of hospice election (16 percent). report also finds that 23 percent of the Medicare In contrast, 17 percent of decedents without beneficiaries who died in 2000 used hospice Medicaid assistance received hospice care.

8 Medicare and End-of-Life Care

Table 2: Demographic Characteristics of Decedents, by Hospice Status

Decedents with Decedents with Hospice Use No Hospice Use Age average age 78 79 <65 11% 89% 65+ 17% 83%

Gender Male 15% 85% Female 17% 83%

Race White 17% 83% Nonwhite 11% 89%

Education* Less than 8th grade 13% 87% Some high school 20% 80% High school diploma 17% 83% Some college or more 19% 81%

Income** <100% FPL 14% 86% 100–199% FPL 16% 84% 200–299% FPL 16% 84% 300%+ FPL 20% 80%

Insurance Medicaid Medicaid Buy in 13% 87% QMB/SLBM Buy in 16% 84% No Medicaid assistance 17% 83% Medicare+Choice Any HMO enrollment 26% 74% No HMO enrollment 15% 85%

Residence Community 18% 82% Facility 11% 89% Both 19% 81%

* Education levels were not reported for 11% of these decedents. ** Federal Poverty Levels (FPL) were calculated using ASPE HHS Poverty Guidelines applicable to decedents' year of death.

Source: Urban Institute analysis of 1995-1998 Medicare Current Beneficiary Survey (MCBS) Cost and Use Files.

9 Medicare and End-of-Life Care

Because Medicaid eligibility is means-tested, in rural areas the use of hospice care is growing trends in hospice use by income track closely faster than in urban areas, the rate of rural bene- with trends associated with Medicaid assistance. ficiaries using hospice is 25 percent lower than Low-income decedents had lower rates of that of urban beneficiaries (MedPAC, 2002). The hospice use than decedents with higher number of hospices participating in Medicare incomes. Specifically, 20 percent of decedents increased by 89 percent from 1992 to 2002 with incomes of 300 percent of the federal (MedPAC, 2002). Gage and Dao (2002) found that poverty level and above used hospice. In the West North Central region has the highest contrast, 14 percent of decedents with incomes number of hospice agencies per beneficiary (9.8 below the federal poverty level used hospice. per 100,000) while the Middle Atlantic region has the lowest (3.7 per 100,000). However, these Decedents who entered a nursing facility during calculations do not account for the size of the the calendar year of their death were more likely hospice agency, so these numbers can offer only to elect hospice care (19 percent) than decedents limited comparisons about the availability of who resided in a nursing facility from the start of services by region. the calendar year of their death, among whom 11 percent elected hospice care. Of decedents End-of-Life Care for Medicare Beneficiaries who never resided in a nursing facility (i.e., Outside Hospice Settings To the extent resided in the community) throughout the To the extent that dying beneficiaries receive calendar year of their death, almost 18 percent that dying some form of health care prior to death,5 the chose hospice. The lower rate of hospice election majority receive end-of-life care in settings beneficiaries in the continuous nursing home population may other than hospice—either because beneficiaries indicate that diagnoses associated with long-term receive some are unaware of the hospice benefit, or do not care are not as appropriate for the Medicare choose to participate in it, or because they are hospice benefit, as compared to diagnoses for form of health not considered eligible, given the lengthy or un- beneficiaries with at least some residency in the predictable course of their illness. The services care prior to community during their calendar year of death. these beneficiaries receive—and those that It may also be the case that nursing home resi- death, the Medicare covers—depend heavily on the site dents are receiving adequate care in their facility, where the services are rendered. By provider majority or that they and their families are unaware of the type, Table 1 lists those Medicare-covered hospice option or eligibility for it. receive end- services that may be considered end-of-life care when provided to terminally ill patients. The of-life care in A recent report to Congress states that benefi- provider types include hospice, home health, settings other ciaries today generally have greater access to skilled nursing facility (SNF) and hospital. Eligi- hospice care than in the early 1990s, as evi- bility rules for recipients and cost-sharing lia- than hospice. denced by increases in both the use of hospice bilities are also listed in this table. Beneficiaries services and the supply of providers (MedPAC, receiving end-of-life care outside the hospice 2002). The availability and use of hospice care benefit probably experience more cost-sharing varies geographically. States with the largest per- than if they were in hospice care (depending on beneficiary enrollment in hospice are Arizona (15 their individual circumstances). per 1,000), Florida (13 per 1,000) and Colorado (12 per 1,000) (Gage and Dao, 2000).4 States The Home Health Benefit—While both a with low rates of hospice use per beneficiary are terminally ill hospice patient and a terminally ill Alaska, Maine and Utah-each with fewer than 4 home health patient may reside at home, each is per 1,000. Recent research shows that although eligible for a different set of services, as listed

10 Medicare and End-of-Life Care in Table 1. Under the home health benefit, of Medicare’s reimbursement systems follows in Medicare covers skilled nursing care, rehabili- the next section. tative therapies, nursing aide services and durable medical equipment. To qualify for the The Skilled Nursing Facility (SNF) Benefit— home health benefit, beneficiaries must be con- Beneficiaries with terminal illnesses, who have sidered generally homebound. been discharged from a hospital (after a stay of three days or more) may receive services in a While Medicare’s home health benefit includes skilled nursing facility if they require inpatient many services that terminally ill beneficiaries skilled nursing or rehabilitative service. This need, there are several palliative care services it benefit, though, is not designed for people who does not cover. For example, home health does will require these services for more than three not include the comprehensive coordinated care weeks; beneficiary cost-sharing increases dra- that is a hallmark of hospice, such as 24-hour matically on the 21st day. The SNF benefit access to care. The home health benefit also covers continuous nursing care, rehabilitative does not cover bereavement counseling for the therapies, prescription drugs, medical supplies patient and/or the patient’s family, nor most and equipment. As noted in Table 1, it does not oral prescription drugs, including those for pain. cover bereavement and pastoral care either for Respite care that could assist informal family the patient who is dying or for his or her family caregivers with short breaks is not covered under members. Medicare’s home health benefit, nor are homemaking services, custodial care and nutritional Medicare also covers room and board under counseling.6 the SNF benefit, whereas under the hospice benefit the beneficiary is normally liable for Due to legislative and regulatory changes over these costs. This distinction creates the finan- time, the home health benefit has gradually cial incentive for terminally ill patients dis- become an alternative to hospice care for some charged from a hospital to choose—at least beneficiaries with chronic and long-term care initially—the SNF benefit, despite its curative needs. For instance, in 1989, after a period of and rehabilitative nature, over the hospice tight regulatory control, beneficiaries became benefit (Zerzan et al., 2000). They may still eligible to receive daily home health visits, elect hospice care, however, at a later date. rather than being restricted to intermittent In theory, dually eligible beneficiaries do not care. This benefit change allowed people with encounter this incentive because Medicaid pays chronic and ongoing medical problems to receive hospice providers for room and board in nursing home health services—transforming Medicare’s facilities; in practice, however, there may be home health benefit from one focused on barriers to electing hospice care while in a patients needing short-term, post-acute care Medicaid nursing facility (see Tilly and Wiener, to one that also served patients who needed 2001). longer-term care. The Hospital Benefit—Forty-four percent of Despite these eligibility increases, evidence is Medicare decedents die in hospitals—making the mounting that indicates that access to home hospital the care site with the largest share of health services has decreased, especially for Medicare beneficiary deaths (Hogan, 2001). This Medicare patients with chronic illnesses (Stoner means that although hospitals are designed to et al., 1999). Reasons for this decrease may provide intensive curative treatment, they are relate to changes in Medicare’s method of also frequently in a position to provide end-of- payment to home health agencies. A discussion life care. In hospitals, Medicare beneficiaries are

11 Medicare and End-of-Life Care

covered for the same end-of-life care services as reavement and pastoral care for the hospital in- they are under the SNF benefit (Table 1). These patient or the family. In 2002, beneficiaries are include continuous nursing, prescription drugs, liable for an $812 deductible for the hospital nutritionist services, durable medical equipment stay and increased per day cost-sharing after the and supplies, and room and board. As in the SNF 60th day in the hospital. benefit, Medicare does not specifically cover be-

III. Payment Methods and Spending

Medicare Payment Rates and Methods home, the rate is usually $110 per day in 2002.7 Across health care settings, Medicare relies on This payment applies to more than 95 percent of different payment methods and payment rates to all Medicare hospice patients (NHPCO, 2001). cover the cost of end-of-life care. Table 3 provides When extra services are required, such as an in- a summary of payment systems for hospice and patient hospital stay, Medicare reimburses at one non-hospice care. Some of the financial incentives of three other higher payment rates, up to $644 associated with payment methods are discussed per day. These per diem payments are intended in the section that follows. to cover the providers’ costs of furnishing all the services included in the Medicare hospice Hospice Rates—Medicare pays hospice benefit, on average. For some patients—such as providers a fixed amount on a per diem basis. those requiring expensive medications—the cost For hospice services that are provided in the of providing care may exceed the amount

Table 3: Medicare Payment Methods, by Type of Provider, 2002

Skilled Nursing Hospice Home Health Facility Hospital

Unit of Payment Per day Per 60-day episode of Per day Per qualifying care admission

Patient/Payment 4 payment rates 80 Home Health 44 Resource Utilization About 500 diagnosis- Classification corresponding to the Resource Groups Groups (RUGs) related groups (DRGs) level of care provided:* (HHRGs) corresponding corresponding to corresponding to the • Routine home care to the patient’s clinical predicted use of patient’s medical ($110) status and functional nursing and rehab condition and • Continuous home needs services for the patient treatment plan care ($644) • Inpatient respite care ($114) • General inpatient care ($491)

* These are base payments for fiscal year 2002. They do not include later payment adjustments made to reflect geographic differences in health care wages.

Source: Medicare Program Memoranda and applicable Congressional Federal Registers.

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Medicare pays the agency per day. However, for agencies are paid a fixed amount over 60-day others who require less costly treatments, the time periods. Recent research (Stoner et al., hospice agency may spend less than the amount 1999) has begun to document that this payment it receives from Medicare per day. The agency is system, introduced in the Balanced Budget Act free to keep these excess payments as they are of 1997, created an incentive for home health intended to help offset the expense of caring for agencies to avoid patients who have chronic the more costly patients. care needs. Hospital admissions are paid a pre- determined fixed amount based primarily on the As with any prospective payment system, this patient’s diagnosis. Because the home health payment mechanism encourages the agency to and hospital payment systems are not based on streamline costs, but it also implicitly creates per diem payments, shorter episodes of care financial incentives to avoid costly patients and within each payment group are generally more to limit extremely expensive services. Unlike profitable for the provider, whereas just the SNF, home health, and hospital payments, opposite is true for hospice and SNF. Medicare’s hospice reimbursement system does not include a case-mix adjuster—a mechanism Payment and Coverage of End-of-Life Care for for basing reimbursement rates on patient char- Beneficiaries in Managed Care acteristics, such as diagnosis. Case-mix adjusters (Medicare+Choice and PACE) are designed to pay providers higher amounts for patients who are expected to be costlier to Medicare+Choice—Medicare beneficiaries treat, and thus reduce, to some extent, the enrolled in a private plan—usually an HMO— provider’s incentive to avoid these patients. through the Medicare+Choice (M+C) program may choose to receive end-of-life care under the Hospice agencies report that another concern Medicare hospice benefit while still remaining in with Medicare’s system for reimbursing hospice the HMO, because Medicare’s hospice benefit may care is that it creates problems covering the have lower cost-sharing and include more costs of patients with short lengths of stay. services for treating terminal illness than are These people have high overall costs because offered by their HMO. In cases where a patient’s the initial and final days in hospice care are HMO covers services over and above those the most expensive days for the hospice agency covered by traditional Medicare, enrollees may to provide. This problem is compounded by retain access to those additional services (as well the increasing numbers of hospice patients as curative treatment unrelated to their terminal who die within one week of admission. In 2000, condition) through their HMO, even when they this was the case for 30 percent of Medicare elect to participate in Medicare hospice. If they hospice beneficiaries (Hogan, 2002 in MedPAC, wish, however, hospice beneficiaries can disenroll 2002). from their HMO, unlike other beneficiaries who are scheduled to be “locked in” for at least part SNF, Home Health and Hospital Payment of the year beginning in 2005. Disenrollment Method—Like Medicare’s hospice payments, the may be preferable for terminally ill beneficiaries SNF prospective payment system also pays a in plans with monthly premiums because they fixed amount on a per diem basis. But SNF may no longer want or need the extra benefits patients are classified into some 40 case-mix provided by the HMO (e.g., dental and drug groups to determine their daily payment rates, coverage). However, beneficiaries who have other based on their anticipated service use. Home health complications (e.g., diabetes) may wish to health providers are also paid through a continue in the HMO for treatment of symptoms prospective payment system. Home health unrelated to their terminal illness.

13 Medicare and End-of-Life Care

When an HMO enrollee elects the Medicare Among PACE enrollees who died in 2000, almost hospice benefit, and remains in the HMO, the half (47 percent) were able to die at home (NPA, patient’s selected hospice agency, not the 2002). Unlike the Medicare+Choice program, PACE patient’s HMO, becomes responsible for all costs enrollees may not take part in the Medicare associated with the terminal illness. The hospice hospice program unless they disenroll from PACE.9 agency is paid directly by Medicare on the same However, PACE patients virtually never choose to basis as described earlier. HMOs, therefore, have drop their PACE enrollment in order to receive the a financial incentive to encourage their ter- Medicare hospice services because PACE has a minally ill enrollees to elect Medicare’s hospice more generous benefit package (Fitzgerald, 2001). benefit, especially if the HMO anticipates that For example, PACE-covered benefits include ex- caring for the terminal illness will be expensive. tensive counseling options, prescription and non- Further, if the HMO does not expect the patient prescription drugs, eye and dental care, and to use many services unrelated to the terminal transportation services. Also, PACE enrollees in illness (e.g., vision care), the HMO has a nursing homes are able to transition smoothly financial incentive to retain the enrollment in from curative to palliative care while remaining in order to continue receiving a portion of its the same facility, and receiving care from the Medicare monthly payments for that beneficiary. same team of interdisciplinary caregivers—a comfort to beneficiaries who are nearing the end PACE is a Given both provider and beneficiary in- of life. centives, it is not surprising that over a four- community- year period, 26 percent of M+C decedents used PACE receives fixed per-member per-month based managed hospice, 11 percentage points more than payments from Medicare, Medicaid and private Medicare decedents who were not enrolled in payers for all recipients, regardless of their health care system HMOs (see Table 2).8 Other research has found status (although participants must be quite frail that offers that Medicare hospice users who were enrolled to enroll initially). PACE programs assume full in an HMO had longer lengths of stay in the financial risk for all enrollees, and therefore have comprehensive hospice than those not enrolled in an HMO the financial incentive to prevent costly hospital- (Vernig et al., 1999). It could also be that a izations. The amount Medicare pays PACE pro- health care greater interest in hospice care within the M+C grams is based on Medicare’s payment to HMOs and social population may reflect the HMO enrollees’ higher in the enrollee’s county, multiplied by 2.39 to rate of acceptance of a “managed” approach to account for the increased cost of treating frail, services to medical care—somewhat consistent with the set elderly participants. Medicare’s median monthly frail, elderly of palliative care services offered by the payment in 2000 was $1,321; Medicaid’s was Medicare hospice benefit. $2,422 (NPA, 2002). Enrollment in PACE programs adults, usually is gradually increasing. Total average daily census for the last The PACE Program—If it is available in their in 2000 was 6,575 PACE enrollees with an addi- area, frail, elderly nursing-home-eligible benefi- tional 1,121 in organizations currently applying two or three ciaries have the option of enrolling in the to Medicare for PACE certification (NPA, 2002). Program of All-inclusive Care for the Elderly Due to the high long-term-care costs for frail, years of an (PACE). PACE is a community-based managed care elderly individuals, most PACE enrollees qualify for enrollee’s life. system that offers comprehensive health care and Medicaid benefits (in addition to Medicare). social services to frail, elderly adults, usually for the last two or three years of an enrollee’s life. Issues Unique to Dual Eligibles Since PACE enrollees usually remain in the program until death, they often transition to end-of- Medicare beneficiaries with incomes low life palliative care within the PACE program. enough to be eligible for Medicaid face a

14 Medicare and End-of-Life Care number of unique circumstances with respect is obligated to pay the hospice agency at least to end-of-life care. For example, many dually 95 percent of what it would have paid the eligible beneficiaries have Medicaid access to nursing home had the patient not elected drug coverage for the treatment of all diseases hospice (potentially saving the state some subject to state formulary restrictions (Tilly money). The hospice agency is then free to pay and Wiener, 2001). Thus the advantage of hav- the nursing home whatever amount was nego- ing access to drug coverage in hospice may not tiated in the contract between the nursing home offer extra financial help to them. The PACE and the hospice for room and board and services program, for example, can serve these needs for provided to hospice patients. Tilly and Wiener frail dual eligibles. Additionally, depending on (2001) indicate that refusal by many nursing state Medicaid programs, some dually eligible homes to accept lower payments may discourage beneficiaries have access to home and com- hospices from working in this environment. munity care (Tilly and Wiener, 2001). All these However, a 1997 report by the Office of the factors may help to explain why fewer dual Inspector General for the Department of Health eligible beneficiaries receive hospice care. and Human Services expressed concerns that nursing homes could be receiving room and For those dual eligibles participating in the board payments for hospice patients that exceed Medicare hospice program, Medicaid typically what Medicaid would have otherwise paid, im- covers the beneficiary’s Medicare cost-sharing, plicitly raising the issue of potential kickbacks such as the $5 copayment for prescription drugs, and overuse of the hospice benefit. Better un- and facility room and board costs, if needed. Re- derstanding of the relationship between hospice search has shown that Medicaid-covered hospice organizations and nursing homes is needed. beneficiaries remain in hospice longer (Gage and Dao, 2000). This finding may suggest that dually Prescription Drug Coverage covered beneficiaries enter hospice care with longer life expectancies associated with progres- Important differences in Medicare’s coverage sively degenerative diagnoses, such as dementia of prescription drugs exist across settings and and frailty. Indeed, often their eligibility for benefit structures. Under the Medicare hospice Medicaid has resulted from extended time spent benefit, prescription drugs are covered for pal- in a nursing home prior to electing hospice liative purposes only and are limited to the care. Six states do not offer Medicaid hospice treatment of the terminal condition. Such drugs benefits. Further research is needed on how the typically include those that assist with pain absence of a Medicaid hospice program affects management and symptom control, including 10 low-income Medicare beneficiaries. psychological distress. Recent research has found that beneficiaries who require very Nursing Home Hospice Patients—When a expensive medications (e.g., palliative chemo- terminally ill, dually eligible nursing home therapy, new brand-name pain medications) may resident elects hospice (and remains in the face barriers in accessing hospice agencies nursing home), the nursing home no longer bills because the agencies must bear the cost of the the state Medicaid program for that patient’s drugs out of their fixed daily payment from care. Instead, the nursing home bills and re- Medicare (Huskamp et al., 2001; Mahoney, 2002 ceives payment from the hospice agency elected cited in MedPAC, 2002). by the patient. The hospice then bills its state Medicaid agency for the patient’s room and For non-hospice beneficiaries living at home, board, in addition to billing Medicare for the the Medicare fee-for-service program does not patient’s hospice care. The state Medicaid agency generally cover outpatient drugs—whether they

15 Medicare and End-of-Life Care are considered palliative or curative—although a spending for decedents accounts for 28 percent small number of outpatient drugs, specified indi- of Medicare’s total annual spending. Research vidually by legislation, are covered by Medicare examining completed Medicare claims during under Part B. These drugs include, among others, the last year of life estimates that average per- those that are not self-administered (e.g., in- beneficiary Medicare payments during the last fusion drugs such as chemotherapy, and intra- year of a beneficiary’s life amounted to $26,000 venous pain medications), oral antinausea drugs (in 1997 dollars), approximately six times higher for people receiving chemotherapy, and inhala- than Medicare’s average annual spending per in- tion drugs requiring the use of a nebulizer.11 dividual for surviving beneficiaries (Hogan et al., While these covered drugs are important to 2001). This finding is not surprising, given that many beneficiaries who are dying from diseases dying people are generally sicker. Moreover, this such as cancer and chronic obstructive pul- represents spending of all types and is not monary disease, many palliative drugs are limited to costs of providing palliative care. missing from this list—specifically, topical ointments for common skin ulcerations, and We found that among those beneficiaries effective oral drugs for acute pain, bladder and whose 1998 Medicare costs ranked in the top 5 bowel problems, and psychological distress. As a percent of per-beneficiary spending, fewer than result, terminally ill patients who do not elect a quarter were decedents. And among those who hospice, or are not eligible for hospice care, are were both top spenders and decedents, hospice liable for the cost of these outpatient drugs, as users represented only 6 percent. This finding are all Medicare beneficiaries. In some cases, indicates that extraordinarily expensive health they may have supplemental coverage for pre- care is most often spent on Medicare survivors, scription drugs—a fact that may affect their and is not limited to end-of-life measures. Other interest in hospice. research suggests that end-of-life care for the very old is not as medically aggressive as that Medicare provides full drug coverage to ter- for younger Medicare patients. In the last two minally ill hospital inpatients. In general, these years of life, Medicare spends, on average patients may be hospitalized as a result of the (in 1996 dollars), $37,000 for 75-year-old acute medical event that caused their terminal decedents, compared to $21,000 for those who prognosis (e.g., heart attack), or they may be died at the age of 95 (Spillman and Lubitz, readmitted sporadically due to exacerbations of 2000). their ongoing terminal condition (e.g., chronic obstructive pulmonary disease). In many cases, The Medicare hospice program accounts for the patient may not be able to afford the appro- about 1 percent of Medicare’s annual payments. priate outpatient drug therapy at home that From inception, its mission has not been to be a could help prevent these hospitalizations. Medicare cost-reducer, but rather a program that Medicare’s home health benefit does not cover provides appropriate care for dying patients. As most outpatient drugs. such, Table 4 shows that average Medicare spending in the last calendar year of life on a Medicare Spending on End-of-Life Care decedent who used hospice care ($19,950) is not dramatically different from the amount spent Contrary to claims that Medicare spending on a decedent who did not use hospice care over time has increased disproportionately for ($17,790).12 Though Medicare spending on those who are dying, the ratio of spending on hospice users is somewhat higher, these figures beneficiaries during their last year of life has are quite close considering that some portion of remained stable for two decades. Medicare the decedents who did not elect hospice died

16 Medicare and End-of-Life Care

Table 4: Spending in Last Calendar Year of Life

Medicare Spending Total Hospice Hospital All Other Beneficiaries Spending Care Inpatient Care Services*

Used hospice $19,950 $4,186 $9,257 $6,506

Did not use hospice $17,790 $0 $11,188 $6,602

All Payer Spending

Used hospice $27,202 $4,186 $10,618 $12,398

Did not use hospice $26,047 $0 $12,292 $13,755

* Includes services provided to hospice patients by nonhospice-affiliated physicians.

Note: Excludes Medicare beneficiaries in managed care.

Source: Urban Institute analysis of 1995–1998 MCBS Cost and Use Files.

relatively suddenly and therefore used few (Hogan et al., 2001). Table 4 shows that total medical services—very different from hospice health care expenditures in the calendar year patients who typically require a considerable of death for hospice decedents ($27,202) are amount of medical services before conceding the also somewhat higher than for non-hospice terminal nature of their illness. Additionally, decedents ($26,047), by an amount very similar lower spending on inpatient hospitalizations for to the difference in Medicare payments for decedents who elected hospice care, as shown in hospice and non-hospice decedents.13 Table 4, suggests that hospital care is likely to be associated with the curative treatment pro- Out-of-pocket expenses for Medicare benefi- tocols that hospice patients have agreed to ciaries in their last year of life vary by setting forgo. and type of care they receive. For example, hospice beneficiaries face very few cost-sharing In addition to Medicare, other sources of requirements. Beneficiaries with home health are payment enter into the total expenditures for responsible for coinsurance only on durable beneficiaries’ end-of-life care. For example, out- medical equipment and are fully liable for most of-pocket spending accounts for 18 percent of outpatient medications. Non-hospice benefi- total spending in the last year of life, Medicaid ciaries who require sporadic hospitalizations for almost 10 percent, and other payers for 12 have greater out-of-pocket expenses because percent, leaving Medicare spending to cover a they are liable for deductibles ($812 per hospital little more than 60 percent of decedents’ costs admission in 2002).

17 Medicare and End-of-Life Care

IV. Best Practices and Potential Improvements in End-of-Life Care

Best Practices PACE program is founded on a long-term-care model, its arrangement allows patients to While Medicare has made some inroads in im- receive end-of-life services that are based more proving care at the end of life, the examples of on their individual functional status and acuity current best practices affect only a small propor- level than on their life expectancy, as is the tion of those beneficiaries who are nearing the case with hospice care. As a result, chronically end of their lives. About 2 million Medicare ben- ill Medicare beneficiaries in the PACE program eficiaries die each year, most of whom receive may receive appropriate palliative services earlier care in more traditional settings and programs than Medicare hospice patients. Once they are that may not meet their needs. It is useful to in PACE, this occurs without a break in the co- summarize some of the positive steps that have ordinated care management that they are receiv- been taken and to consider other ways to move ing. In Wisconsin, the Wellspring Program has constructively in the direction of better care. also found a way to provide quality care to Medicare terminally ill Medicare beneficiaries outside the Medicare supports several useful programs that hospice program.15 These two programs high- supports address end-of-life care for terminally ill benefi- light what can be done in a more coordinated several useful ciaries. As it currently exists, the Medicare environment, but PACE in particular has not hospice benefit offers a generally appropriate expanded as rapidly as many of its supporters programs that method for financing end-of-life care for people had hoped it would. with terminal illnesses, such as cancer, that are address end- characterized by functional declines and suf- Also supporting end-of-life care is Medicare’s of-life care for fering primarily in the last several months of fee-for-service payment policy which covers their lives. With these caveats, hospice offers advance care planning—discussions between terminally ill comprehensive care that is sensitive to the physicians and their patients that identify the beneficiaries. needs of patients and their families. Its con- circumstances in which the patient would prefer tinued growth over time—averaging annual in- palliative care versus curative treatment. If creases of 16 percent between 1992 and 2000— advance care planning constitutes the principal attests to its success. The per diem method of part (more than 50 percent) of a physician visit, payment for hospice care provides flexibility to physicians may bill for it. Physicians who are deliver the services most needed by the patient knowledgeable about this policy now have an in- (Huskamp et al., 2001). This flexibility could centive to spend time with a patient to discuss allow some hospices to work creatively with the advance care planning. This consultation may Medicare benefit to go beyond the required allow patients to consider formal options such as services.14 In general, however, Medicaid has hospice as well as less formal, but planned more flexibility than Medicare to experiment courses of future care. Not covered in regular with alternative approaches (Tilly and Wiener, Medicare, however, are the social and supportive 2001). services that may be extremely important for many terminally ill Medicare beneficiaries. In addition to its hospice benefit, Medicare contributes to the financing of frail, elderly Finally, HMOs are free to be creative in design- patients through PACE programs. Though the ing new approaches to treating terminally ill

18 Medicare and End-of-Life Care patients. Since the coordinated care environ- Hospice—a guidebook distributed to people ment is often well suited for managing chronic taking part in the hospice benefit—and on its illnesses such as lung and heart disease, Medi- Web site, which is accessed by Medicare con- care may want to find ways to encourage HMO sumers across the country. involvement in treating terminal illnesses. In general, however, current financial incentives Improvements to the Hospice Benefit— exist for HMOs to refer terminally ill enrollees to Hospices face several challenges that might be hospice care. Also, Medicare beneficiaries with addressed with adjustments in payment policy multiple care needs have had low participation and eligibility policy. With respect to payment rates in managed care organizations (GAO, issues, hospice organizations argue that fixed 2000). per diem payments work best for hospice agencies that care for patients with lengthier What Else Can Be Done? stays because care during the first and last several days of a patient’s stay are the costliest A number of changes—many of them quite for the hospice to provide. In addition, lengthier modest—could be made to the Medicare hospice stays allow the patient and family to program to increase access to care offered near benefit most fully from the hospice services that the end of life and improve some of the care Medicare covers, such as bereavement coun- that is now available. Improvements could be seling. This implies two types of needs: first, made for both hospice and non-hospice patients finding ways to encourage patients to enter who need palliative care. hospice earlier (often through earlier physician referrals), and second, ensuring that payments The Precepts of Palliative Care—These fun- for those who have very short stays are adequate damental principles, developed by Last Acts, for their more intensive needs. In the first in- were mentioned earlier in the introduction. stance, careful attention to how patients are These simple, basic precepts for providing good certified and better education of the physicians palliative care—respecting patient preferences, who counsel such patients may be in order. providing comprehensive care, maximizing inter- Hospice care remains a foreign concept for many disciplinary resources, acknowledging caregiver people, doctors included. In addition, more concerns, and creating flexible health care flexible eligibility rules could allow hospice care systems—can provide future researchers with to be available to a wider range of Medicare useful means for assessing the quality of end-of- beneficiaries. To address the second issue, a life care. minimum total payment or a higher per diem in the last seven to ten days of life might be ap- Medicare could encourage the application of propriate. these fundamental principles in a number of ways that are described below. Equally important Another potential problem related to hospice is the need for education of both providers and financing is the expense of some palliative patients. For example, Medicare could fund treatments. Radiation or chemotherapy for pain provider seminars and continuing education relief, for example, can be very expensive. If the courses to clarify hospice benefit regulations hospice is expected to absorb this in its per and also introduce the Precepts of Palliative Care diem payments, less of this type of care may in all care settings. To encourage beneficiaries to be furnished to the patient, even if it might take part in achieving the best care possible, improve patient comfort. While one of the ad- Medicare could print the Last Acts’ definition of vantages of hospice care is access to outpatient good palliative care in its Medicare Guide to prescription drugs, this benefit is less clear in

19 Medicare and End-of-Life Care areas where regular Medicare also provides 2002 cited in MedPAC, 2002). Potentially, one coverage, such as chemotherapy and intravenous reason for the comparably lower rate of non- pain management.16 cancer diagnoses is the difficulty physicians face in making life expectancy prognoses for many of The Centers for Medicare & Medicaid Services these non-cancer diagnoses. More flexible eligi- (CMS) should continue its efforts to make better bility rules could allow hospice care to be information about Medicare coverage and eligi- available to a wider range of Medicare benefi- bility rules available to patients who have ciaries. Is it just the six-month prognosis that terminal illnesses and to the physicians who are needs attention? Eligibility measures other than treating them. For example, Medicare’s current time constraints could be considered, as well. allowance that permits beneficiaries to re-elect hospice care if their terminal illness runs a more Improvements Outside the Hospice gradual course than originally expected is ad- Benefit—At the inception of the Medicare vantageous both for the patient and for hospice hospice program, much of the early emphasis on providers. Unfortunately, physicians are often offering extra services at the end of life only in unaware that legally, they may recertify a the hospice setting was to avoid the high costs patient for hospice care, even after the patient of providing a new set of benefits that would has been in hospice care for six months, pro- constitute a major expansion of Medicare vided that the patient maintains a reasonable coverage. In fact, this has not become a major prognosis of six months or less to live. Improv- problem; instead, the question is whether the ing communication to physicians about their majority of beneficiaries who realistically will ability to recertify patients for hospice care remain outside hospice are getting reasonable would be helpful because many physicians may care. Indeed, the basic Medicare benefit does be concerned about being accused of Medicare little to facilitate end-of-life or palliative care fraud if their patients remain in hospice care outside the formal environments where such care longer than six months. There is no indication is recognized, such as hospice. that the recertification process is unusually cum- bersome; CMS reports that its denial rate for A further issue is whether hospice is the pre- hospice benefit certification (including both ferred environment for all individuals nearing initial and recertifications) is less than 1 percent the end of their lives, or whether it is more rea- (Community-State Partnerships, 2001). sonable for many to remain in the standard Medicare program, but perhaps receive some ad- Also with respect to eligibility, there should ditional services and/or a slightly different mix be an investigation into whether the six-month of services. Another reason for beneficiaries with prognosis is the best means for determining grim prognoses to resist hospice treatment is appropriateness for hospice care. Hospice has their unwillingness to give up on curative care, proven to work well for people with very pre- especially when the curative treatment is not dictable life expectancies, such as cancer particularly painful. For example, recent im- patients, but its limited time frame may not fit provements in medical treatments (in chemo- the needs of patients whose end-of-life course is therapy, for example) translate to less patient much less predictable (Lynn, 2001). Although discomfort. Consequently, beneficiaries may be the number of non-cancer diagnoses (such as more likely to postpone hospice, even when they Parkinson’s disease) in hospice care has grown would be considered eligible (Mahoney, 2002 considerably in recent years, cancer still ac- cited in MedPAC, 2002). Medicare’s traditional counts for the majority (51 percent) of all fee-for-service program may never achieve the Medicare-covered hospice diagnoses (Hogan, coordination and comprehensiveness of services

20 Medicare and End-of-Life Care such as hospice or PACE. However, small changes planning counseling from a physician. This to care outside hospice could nonetheless be ex- modest step could help in achieving one of the tremely important for those facing death. precepts of palliative care—a team approach— without requiring that beneficiaries become in- For end-of-life and other palliative care volved in a full-scale hospice program. The most issues to be taken seriously, they have to be problematic change needed in this regard, how- recognized in Medicare’s rules and payment ever, is coverage of prescription drugs. It would systems. For example, a 1999 MedPAC study be difficult to extend coverage for such drugs to found that the rule allowing physicians to be some but not all Medicare beneficiaries in the reimbursed explicitly for end-of-life planning is regular program. The likelihood of a universal not widely known, even by experts in end-of- drug benefit under Medicare has declined with life care. CMS could clarify and publicize to the events of 2001, although for beneficiaries in physicians the availability of Medicare payment need of palliative care as well as many others, for advance care planning under the Medicare this is an important omission from the current Fee Schedule. Medicare also needs to commu- Medicare benefit package (see Ault and Hash, nicate its recent policy of recognizing pain man- 2001). agement as a physician specialty. This policy enables geriatricians and internists who spe- Not all provision of palliative care needs to be cialize in pain management to bill Medicare for thought of as an additional benefit adding to For end-of-life consultations requested by the patient’s primary Medicare’s costs. Rather, the issue is whether care physician. Although this billing policy may appropriate care is offered in hospitals, skilled and other help patients to receive better pain relief at the nursing facilities and home health. In these palliative care end of their lives, Medicare still does not rec- settings, where prospective payment provides ognize the more comprehensive field of palliative some incentives to offer less care, it is impor- issues to care as a specialty. Establishing a palliative care tant to ensure that guidelines for discharge be taken specialty would raise awareness and could boost decisions, for example, require that palliative the quality of care for seriously ill and dying pa- care needs be taken into account. Discharging a seriously, they tients through increases in medical education on patient just a few hours or days before death palliative care and potential research opportu- should be viewed as inappropriate if that indi- have to be nities (Cassel, 2000). vidual has substantial palliative care needs. recognized in Such a discharge is likely to be against both the The inclusion of palliative care coursework in patient’s and the family’s wishes. Hospitals have Medicare’s Medicare-funded medical education could also be the flexibility to keep patients longer and guide- rules and required. Teaching hospitals provide medical lines for their peer review organizations could be students with a natural learning environment for developed to encourage it as part of appropriate payment care of the dying elderly, given their large share end-of-life care. In home health, the new pro- systems. of Medicare patients. However, instruction on spective payment system needs to be examined palliative care should extend to other settings, for its use and effectiveness at the end of life. such as nursing facilities and homes. Further, for patients who do not choose Modest service expansions could also help. hospice, the hospital may well be the de facto For example, a discrete number of counseling best site in which to offer additional services sessions with social workers or others who take such as counseling and advance planning. A a more complete view of planning for the end more proactive effort in this regard could help of life might be covered, in conjunction with to avoid taking actions against patients’ wishes certain types of hospital stays or with advance while they are hospitalized. Better coordination

21 Medicare and End-of-Life Care of care for hospitalized patients would go a long Alzheimer’s disease or chronic obstructive pul- way to improving end-of-life care for those who monary disease, for instance, might be managed are not in formal programs. For example, such better if they received a combination of home emphasis might well help patients with chronic health and hospice care services, or if they were lung and heart disease—who are likely to face admitted to hospice programs without a life- multiple episodes of hospitalization—plan for a expectancy restriction. course of treatment and make decisions ahead of time. Conclusion

Controversy over payment levels in the In sum, much remains to be done to move the Medicare+Choice program may also be an area palliative care needs of people at the end of where explicit attention to end-of-life care is their lives to a more mainstream position within relevant. That is, end-of-life care should be Medicare. Most Americans who die are being part of any policy debate on how to encourage served by the Medicare program, yet Medicare’s private health plans to enroll patients with sub- attention to end-of-life issues is largely confined stantial health care problems (including terminal to hospice, a small, but growing program. A illnesses). careful look at end-of-life care ought to explore both hospice and traditional care settings to The Department of Health and Human Services find areas of improvement. The list of best (DHHS) has several mechanisms that can support practices remains limited; the small number of further research on best practices for palliative physicians and patients who are knowledgeable care. For example, DHHS could fund demon- about these issues constitutes a major barrier. stration projects that test the use of modified Even with attention to budget constraints, benefit designs for meeting the various needs of however, a number of improvements could be dying patients depending on their medical char- made through either regulatory or legislative acteristics and acuity level. Patients with changes on a modest scale.

Endnotes

1. These precepts have been endorsed by 3. Included in the percentage of Medicare+ more than 150 organizations that deal with Choice decedents who elected hospice care (26 end-of-life care issues. For further information percent) are decedents who may have withdrawn on these Precepts of Palliative Care, go to from their HMO as well as those who remained www.lastacts.org. in their private plan.

4. Gage and Dao (2000) point out that these 2. For medical problems unrelated to their states similarly have the highest proportion of terminal illness, hospice patients are eligible to beneficiaries enrolled in HMOs. receive Medicare-covered curative and/or rehabilitative services. For example, if a Medicare 5. Our research shows that less than 2 percent cancer patient in the hospice benefit sustains a of Medicare decedents have no health care spend- hip fracture, then Medicare will cover the ing in the last calendar year of life. This figure patient’s hip treatment, independent from the does not account for services received that are hospice care. unrelated to the cause of death.

22 Medicare and End-of-Life Care

6. An exception is made for patients with for measuring precise costs of hospice care as end-stage renal disease and those with compared to other treatments, since many other diabetes. adjustments to the data would be needed to do so. 7. Each Medicare hospice payment rate is adjusted for geographic difference in health care 13. When decedents were categorized by wages. income levels, we found no clear pattern relating income to spending in the last calendar year 8. Similar results were also reported by Hogan of life. et al. (2001). Note that this percentage includes beneficiaries who disenroll from the HMO once 14. As an example, Tilly and Wiener (2001) they go into hospice. present a case study of The Hospice of the Florida Suncoast, but as the authors note, much 9. Though PACE programs provide palliative of the creative work, such as providing palliative care to Medicare beneficiaries, PACE programs care even to those who are still receiving cura- are not Medicare-certified hospice providers. tive services, is funded by the Medicaid program.

10. Beneficiaries are liable for a maximum co- 15. The Wellspring Program is an alliance of payment of $5 per prescription. 11 nonprofit nursing facilities in Wisconsin explicitly formed to address public and payer 11. Beneficiaries receiving these drugs are concerns about the quality of nursing home care. liable for a 20 percent coinsurance which, in Staff empowerment and frequent resident as- light of recent government reports, can be ex- sessments play a major role in Wellspring’s goal pensive given the retail markup for many of of providing high standards of care. these drugs (GAO, 2001). 16. Chemotherapy drug costs have become a 12. Our calculations were based on the last highly controversial issue; when revisiting the calendar year of life rather than the last year of costs of this treatment, it might be appropriate life because of dataset and project limitations. to examine whether an adjustment for hospice The findings should not be used as a means also needs to be part of the discussion.

References

Ault T and Hash M. Expanding Prescription Drug Hospitals.” Health Affairs, 19(5): 166–172, Coverage in Medicare: Issues for End-of-Life Care. 2000. Report funded by Last Acts, a Robert Wood Johnson Foundation initiative, September 2001. Center for Medicare Education.”The PACE Model.” Issue Brief, 2(10), 2001. Blackford C. Center for Medicare and Medicaid Services, telephone interview conducted on Community-State Partnerships to Improve End- December 10, 2001. of-Life Care. “Hospice Care Part I: A Policy- maker’s Primer on Hospice Care.” Issue Brief, 11, Cassel CK, Ludden JM, Moon GM. “Perceptions of August 2001. Barriers to High-Quality Palliative Care in

23 Medicare and End-of-Life Care

Fitzgerald P, National PACE Association, National PACE Association (NPA). PACE Profile telephone interview conducted on October 30, 200: PACE Revenues and Expenditures 2001. (Alexandria, VA: NPA, 2002).

Gage B, Dao T. Medicare’s Hospice Benefit: Use Spillman B and Lubitz J.”The Effect of Longevity and Expenditures 1996 Cohort (Washington: on Spending for Acute and Long-Term Care.” ASPE, March 2000); information downloaded New England Journal of Medicine, 342(19): from www.aspe.hhs.gov/search/daltcp/Reports/ 1409–1415, 2000. 96useexp.htm. Stoner D, Goldberg HB, McCallum-Keeler G, Gerow K, DataPACE program manager, National Robinson C. Medicare Payment Advisory PACE Association, telephone interview conducted Commission (MedPAC) Home Health Agency on January 11, 2002. Survey (Cambridge, MA: Abt Associates, 1999).

Hogan C, Lunney J, Gable J, Lynn J. “Medicare Tilly J and Wiener, J. Medicaid and End-of-Life Beneficiaries’ Costs of Care in the Last Year of Care. Report funded by Last Acts, a Robert Wood Life.” Health Affairs, 20(4): 188-195, 2001. Johnson Foundation initiative, Spring 2001.

Hogan C, Lynn J, Gabel J, Lunney J, O’Mara A, U.S. General Accounting Office (GAO). Wilkinson A. “Medicare Beneficiaries’ Costs and Medicare+Choice: Payments Exceed Cost of Fee- Use of Care in the Last Year of Life,” submitted for-Service Benefits, Adding Billions to Spending, to the Medicare Payment Advisory Commission, GAO/HEHS-00-161 (Washington: GAO, August Washington, May 1, 2000. 2000).

Huskamp HA, Buntin MB, Wang V, Newhouse JP. U.S. General Accounting Office (GAO). Medicare: “Providing Care at the End of Life: Do Medicare Payments for Covered Outpatient Drugs Exceed Rules Impede Good Care?” Health Affairs, 20(3): Providers’ Cost, GAO-01-1118 (Washington: GAO, 204–211, 2001. September 2001).

Lynn J. “Healthcare Issues at the End of Life.” Vernig B, Persily N, Morgan R, DeVito C. “Do Selected articles reprinted from Journal of the Medicare HMOs and Medicare FFS Differ in Their American Medical Association and the Joint Use of the Medicare Hospice Benefit?” The Commission on Quality Improvement (Santa Hospice Journal, 14(1): 1–12, 1999. Monica, CA: RAND, 2001). Zerzan J, Stearns S, Hanson L. “Access to Medicare Payment Advisory Commission Palliative Care and Hospice in Nursing Homes.” (MedPAC). Medicare Beneficiaries’ Access to Journal of the American Medical Association, Hospice (Washington: MedPAC, May 2002). 284(19): 2489–2494, 2000.

National Hospice and Palliative Care Organization (NHPCO). Key Facts about Hospice Care (Alexandria, VA: NHPCO, December 2001).

24 Medicare and End-of-Life Care

Marilyn Moon and Cristina Boccuti

September 2002

Last Acts National Program Office 1620 Eye Street, N.W. Washington, D.C. 20006-4017 Phone: (800) 341-0050 Fax: (202) 296-8352 Karen Orloff Kaplan, ScD Director

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