Hospice and Medicare: 20 years of growth
It began as a cost savings initiative
Hospice was made eligible for Medicare reimbursement under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), about 10 years after hospice was introduced in the United States. While the first standards for hospice care were formulated in 1974 by a committee of the International Work Group on Death and Dying, Medicare did not have any formal standards for the treatment of the terminally ill, nor did it offer reimbursement for services related specifically to palliative care.
Governmental initiatives and not-for-profit foundation funding fueled the spread of hospices across the country. Typical of this trend were grants to three hospice demonstration projects in 1978 by the National Cancer Institute to study costs of care and types of care provided. Eventually, this lead the Health Care Financing Administration (HCFA) to initiate its own research and demonstration studies to examine the costs, benefits, and feasibility of having Medicare pay for hospice care.
The Robert Wood Johnson Foundation and the John A. Hartford Foundation also supported early hospice research. The W.K. Kellogg Foundation in 1981 awarded a grant to the Joint Commission on Accreditation of Hospitals to investigate the status of hospice in the United States and develop standards for accreditation.
Congress in 1982 introduced hospice into the Medicare program as a cost-savings provision after a Congressional Budget Office study asserted that hospice utilization would result in sizable savings over conventional hospital care. Because the benefit was created so quickly and represented a new area of health care, two special provisions were included in the legislation. First, a sunset provision stipulated that without congressional intervention, the law would expire in November 1986. Second, an evaluation of the impact of the benefit was mandated.
Initially, Medicare’s hospice benefit consisted of three benefit periods, with a lifetime limit of 210 days of coverage. Patients who lived longer but who still required hospice services were cared for by the hospice without charge to Medicare or the patient as a condition of providers’ participation in the program. Further, if patients were unable to pay for services, the hospice was not allowed to discharge them on that basis. The belief was that by putting hospice providers at risk for delivering services after a given length of time, they would only enroll seriously ill beneficiaries, despite the difficulties of predicting survival.
According Medicare, the benefit was limited to 210 lifetime days for several reasons. First, the limit was consistent with results from the National Hospice Study, which found that more than 95% of the 15,000 patients in the study were on hospice for fewer than 210 days.
Also, hospice was cost-effective for shorter episodes, which Medicare considered to be stays lasting up to 100 days. The saving associated with reduced hospital use in the last weeks of life was offset by the cost of additional services in longer hospice episodes.
Recognizing the difficulty of making a prognosis of six months of less, Congress later repealed the 210-day limit for services furnished on or after Jan 1, 1990. Four benefit periods replaced the 210 days: The first two were limited to 90 days each and the third period to 30 days, while the fourth period was unlimited. However, beneficiaries could have no more than four benefit periods.
The original Hospice Medicare Benefit (HMB) established four graduating levels of hospice care that are still used today: routine home care, continuous home care, inpatient respite care, and general inpatient care. The 1982 HMB also established another fixture of hospice care — the interdisciplinary team: physician, registered nurse, social worker, and pastoral or other spiritual counselor. The HMB called for the collective team, including the patient and family, to participate in assessing, coordinating, and providing the appropriate palliative and supportive care to hospice patients and their families.
That concept now is one of the hallmarks of hospice care. The hospice team helps establish the patient’s plan of care, providing or supervising hospice care and services and periodically reviewing and updating the care plan. The interdisciplinary team also manages the patient’s discomfort and symptom relief. Implicit in the interdisciplinary team concept is the idea of communication among the team members, and among team members, the patient, and the patient’s family, to ensure continuity of care. Unlike multidisciplinary care, in which each area decides what is best from within its own discipline, everyone on the hospice interdisciplinary team offers input on all issues facing a patient.
The original hospice legislation required hospices to use volunteers and to keep records tracking their use. TEFRA also required hospices to track any cost savings or expansion of care provision facilitated by the use of volunteers. Volunteers were considered key to the hospice movement. Although the number of volunteers hospices used varied markedly, proponents thought that volunteers’ continuous involvement was important in preserving the hospice philosophy. The final hospice regulations contained a requirement that volunteer efforts should account for at least 5% of total hospice personnel efforts. This requirement was added because HCFA said the intent of the law was to develop standards to monitor the level of volunteer activity so as to prevent substantial diminution of the proportion of volunteers.
20/80 provision emphasizes home care
The hospice benefit was designed so that most services were provided in the patient’s home. To support this focus, TEFRA contained a 20/80 provision, which limited a provider’s total inpatient care days to 20% of all care delivered during a year by a given hospice. This provision did not apply to each individual, because some patients might need to stay far longer in an inpatient setting. The provision was intended to control costs, prevent the program from becoming an exclusively inpatient model, and preserve hospice’s philosophy of care in a home environment.
Another major provision of the original Medicare hospice legislation was that hospices assess families’ bereavement needs. Although payment stops at the time of death, hospice providers have always been required to provide bereavement services for up to one year following the death of a patient.
In 1986, the Consolidated Omnibus Budget Reconciliation Act (COBRA) repealed the sunset provision for Medicare’s hospice benefit included in TEFRA. In addition, COBRA stated that terminally ill patients residing in nursing facilities could elect Medicare hospice care and be paid Medicare’s routine home care rate. COBRA also gave states the option of adding a hospice benefit to their Medicaid programs. Today, 38 states have hospice Medicaid benefits.
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