Medicare Modernization Act Offers
New End-of-Life Care Provisions

Although the financing and delivery of end-of-life care may not make frequent front page news, the inclusion of increased hospice benefits in the Medicare Modernization Act (MMA) evidences congressional concern about this important aspect of health care. Experts meeting at a recent conference, NIH State-of-the-Science Conference on Improving End-of-Life Care also expressed concern about the need for continued research on care at the end of life.

The new MMA provisions address cost, access, and quality, all critical issues in end-of-life care. The four new provisions that enhance the current Medicare hospice benefit include:

Nurse Practitioners: The MMA provides that nurse practitioners will be permitted to serve in place of an attending physician as the health care provider "having the most significant role in the determination and delivery of medical care" provided to the beneficiary for patients who elect the Medicare hospice benefit. However, they are not authorized to certify a terminal diagnosis, which can be done only by a physician.

Rural Hospice Demonstration Project: The Centers for Medicare and Medicaid Services (CMS) is required to conduct a demonstration project to examine hospice care in rural areas. The demonstration authorizes three hospice programs to provide care in a facility of 20 or fewer beds located in rural areas in which Medicare beneficiaries are currently unable to receive hospice care for lack of an appropriate caregiver.

Hospice Consultation Services: This provision provides coverage for a one-time consultation service for a terminally ill individual who has not yet elected the hospice benefit. The consultation includes evaluation of the patient's need for pain management, symptom management, and care options. The hospice is paid an amount equal to the payment under the Medicare physician fee schedule for an evaluation and management visit for problems of moderate severity and requiring medical decision-making of low complexity.

Use of Arrangements to Provide Core Hospice Services: The legislation permits the utilization of arrangements with other hospice programs to provide core services in extraordinary circumstances, such as unanticipated high patient loads. Hospices may also contract with other providers for highly specialized services, including nursing services.

HCFO Research Informs Policy and Practice

The work of HCFO grantees provides information useful in implementing and understanding the impact of the MMA's end-of-life provisions. HCFO research in this area addresses the potential cost savings under the Medicare hospice benefit, out-of- pocket expenses, variation in cost and utilization for managed care versus fee-for-service patients, and factors affecting end-of-life care for those dually eligible for Medicare and Medicaid benefits.

The HCFO work of Donald Taylor and colleagues at Duke University examines the diffusion of hospice use among Medicare beneficiaries. Taylor's analyses to date suggest that the issue of whether hospice saves Medicare money is highly complex and is complicated by variations in when hospice is initiated. Among the questions Taylor examines is whether the potential benefit of hospice for Medicare beneficiaries is being realized.

Jon Gabel, from the Health Research and Educational Trust, focuses on the experiences of managed care versus fee-for-service Medicare beneficiaries at the end of life. Gabel's analyses include an examination of the appropriateness of drug prescribing in the last year of life. Findings suggest that rates of inappropriate prescribing are higher for healthier populations than other studies have reported. Preliminary findings also suggest that both claims expenses and use of services are considerably lower in managed care than in Medicare fee-for-service.

In their HCFO project, Korbin Liu and colleagues at The Urban Institute focus on beneficiaries, near the end-of-life, who are dually-eligible for Medicare and Medicaid. Liu is examining patterns of service use and expenditures by Medicare and Medicaid (dual-eligible) beneficiaries during their last year of life. Findings to date identify high acute care costs for blacks, under-65 Medicare beneficiaries, and dual eligibles during the last month of life. The researchers question whether an increased use of hospice and other long-term care services may be able to stem these end-of-life costs.

As the aging baby boomers move to their last years of life, there is likely to be continued growth and utilization of hospice programs. The Medicare hospice benefit and other end-of-life services will become increasingly important. Determining how best to deliver and finance high-quality services will be a challenge for policymakers. HCFO research, as well as careful tracking of the impact of the new MMA end-of-life provisions, may answer many of the pressing questions that will inevitably arise.

HCFO Grants Addressing End-of-Life Care

Title: Does Hospice Save Medicare Money?
Institution: Duke University
Principal Investigator: Donald H. Taylor, Jr., Ph.D.
Time: October 2003 - September 2005

Does hospice save money for the Medicare program and does hospice have any effect on out-of-pocket expenses incurred by families of terminally ill Medicare beneficiaries? The study focuses on the Medicare hospice benefit. The researchers will conduct a literature review and empirical analyses to answer the above questions. They hypothesize that "hospice can provide effective palliative treatment to terminally ill patients while saving money for the Medicare program, by reducing expensive curative care that must be foregone to obtain hospice benefits." The objective of this study is to inform policymakers about key issues that affect the ability of hospice to save money, including length of stay, underlying disease, and the propensity of hospice and non-hospice patients to use health care services.-hospice patients to use health care services.

Title: The Treatment of Dying Medicare Managed Care Patients: The Role of Social and Economic Factors
Institution: Health Research and Educational Trust
Principal Investigator: Jon R. Gabel
Time: November 2002 - March 2005

What is the cost and utilization of services during the last two years of life for Medicare managed care patients and fee-for-service Medicare patients? The researchers are analyzing data from provider, beneficiary, plan benefit, prescription drug, clinic and office encounters, and laboratory and x-ray services database files for the managed care and fee-for-service populations. Patients who disenrolled from United HealthCare's Medicare managed care and returned to fee-for-service are also being studied. Major causes of death such as cancer, chronic obstructive pulmonary disease [COPD], chronic heart failure, stroke, and dementia are being analyzed for utilization and costs. The researchers are addressing the following questions: 1) What are the costs and use of services associated with end-of-life care for major causes of death? 2) For the major causes of death being studied, how do cost and treatment patterns in end-of-life care vary according to area resources and financial arrangements? 3) What are differences in the site of death of Medicare managed care patients for these three major causes of death? 4) How does continuity of care vary among managed care settings? 5) What are the economic and other factors that determine continuity of care? 6) What is the cost of prescription drug coverage for end-of-life patients? 7) What is the appropriate method of prescribing and dispensing for the five study conditions? 8) What economic and socio-demographic factors explain differences across areas in end-of-life prescribing? The objective of the project is to guide administrators, legislators, and providers as they make decisions about end-of-life care.

Title: Factors Affecting End-of-Life Care fore Beneficiaries Who Are Dually Eligible for Medicare and Medicaid
Institution: The Urban Institute
Principal Investigator: Korbin Liu, Ph.D.
Time: October 2002 - March 2005

What are the factors affecting end-of-life care for the dually eligible? Using the "Multi-State Dual Eligible Data Files" developed by Mathematica under contract with CMS, researchers at the Urban Institute are examining: (1) services provided by the Medicare and Medicaid programs, as well as variations among states; (2) the composition of and proportion of expenditures on end-of-life care (e.g., hospital, physician, prescription drug, long-term care); (3) variation in use and expenditures over time between health and long-term care services; and (4) variation by race and age in utilization, expenditures, and source of financing end-of-life care. The objective of this study is to inform policymakers and providers about the patterns of use of care at the end-of-life by dual-eligibles in order that they might re-examine and improve current policies addressing such care.

HCFO Publication Addressing End-of-Life Care

Austin, B.J. and L.K. Fleisher. Financing End-of-Life Care: Challenges for an Aging Population, AcademyHealth, February 2003.