The financial outlook for home-based palliative care programs that operate outside capitated MCOs is far less predictable due largely to the implementation in 2000 of a Medicare prospective payment system (PPS) for home health agencies that creates financial incentives for providers to limit lengths of stay and the number of home visits. Medicare covers the bulk of home health care provided in the U.S., so this sweeping payment reform has had an enormous impact on the home health industry.
Medicare's PPS changed the payment rules for home health agencies, but not other program features. Eligibility rules, for example, are unchanged. Medicare covers the cost of home health care for patients who:
Covered services also are unchanged and include:
Traditionally, home health agencies have been reimbursed for the kind of complex care management that palliative care programs provide under the umbrella of "management and evaluation of a care plan (M&E)." This skilled nursing service, first approved by Medicare in 1989, is considered "reasonable and necessary" when "underlying conditions or complications require that only a registered nurse can ensure that essential nonskilled care is achieving its purpose (Medicare Manual, Section 205.1 B2)."
Four components must exist for care to qualify for M&E coverage:
Introduction of the PPS has not changed the fact that M&E is still a qualified Medicare home health service for which home-based palliative care programs can expect reimbursement. What has changed under PPS is that home health agencies can no longer bill by the visit. For this reason, M&E is a less viable option for the long-term management of patients with life-threatening chronic illnesses.
Under PPS, home health agencies are required to conduct a comprehensive assessment of each patient. Assessment results are used to assign the patient to one of 80 Home Health Resource Groups (HHRGs). The agency then receives a predetermined, fixed reimbursement based on the patient's HHRG for each covered 60-day "episode of care."
Just as implementation of a hospital-based PPS led to patients being discharged "quicker and sicker," the home health PPS creates a financial incentive for agencies to reduce lengths of stay and number of home visits. This in turn can lead to patient creaming, with HHAs limiting their services to healthier patients. The Center to Advance Palliative Care (www.capc.org) warns that "this creates a serious problem for patients that need end of life care: those with substantial disability, complex illnesses, and unpredictable timing of serious need (2000)."
In fact, the system has some built-in flexibility to accommodate patients with greater than usual needs. Medicare, for example, pays HHAs a higher rate for those patients with greater needs. Patients also are reassessed during each episode of care, with payments adjusted if there is a significant change in a patient's condition. Finally, agencies can receive additional "outlier" payments for a patient if the cost of care for that individual is significantly higher than the predetermined payment rate.
In practice, however, this wiggle room affords a little, but not much leeway. It is impractical, for example, to build a palliative care program on outlier payments, which are meant to be an exception to the rule, not the norm. Management and evaluation of a care plan, one of the most applicable skilled nursing services for patients needing palliative care, may be deemed reasonable and necessary for about two months, but questionable after that. And many palliative care patients, though seriously ill, may not have greater healthcare needs than other home health patients, and so may not qualify an agency to receive higher payments.
In the final analysis, home care providers of palliative care are challenged to receive reimbursement for end-stage, chronic illness care. Consequently, community-based palliative care programs must make the most of Medicare payments for home health services, while also taking advantage of other funding sources (e.g., foundation grants, charitable contributions, research initiatives, etc.) to sustain their programs. The Center to Advance Palliative Care (www.capc.org) recommends "consulting available billing guides to determine what services can be billed and what codes to use, as well as working closely with local Medicare carrier medical directors to clarify billing issues and opportunities (NHPCO/CAPC, 2000)."
Some HHAs offer palliative care through community-based Medicaid waiver programs that provide comprehensive, long-term home care for patients who are covered by Medicaid. These care-management programs offer a home-based alternative to older adults who otherwise would need nursing home care. A myriad of in-home health and supportive services are available, including skilled nursing care, home health aide services, rehabilitation therapy, respite care, transportation, and more.
Not every state administers a Medicaid waiver program, and in the states that do, not every waiver program is designed to provide long-term home care. To find out if and how the program operates in your state, visit the Centers for Medicare and Medicaid Services' State Waiver Programs and Demonstrations Web site at www.cms.gov/medicaid/waivers/waivermap.asp.
For more information about the TriCentral Palliative Care Toolkit visit www.growthhouse.org/palliative/. All content is Copyright © 2002, 2003 by Richard D. Brumley, M.D. All rights reserved. No part of this toolkit may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without written permission from the publishers. This guide to developing home-based outpatient palliative care services was developed through a grant to the Kaiser Permanente TriCentral Service Area from The Project on Death In America. The Kaiser Permanente TriCentral Palliative Care Program is a Sustaining Member of the Inter-Institutional Collaborating Network On End-of-life Care (IICN) which links major organizations internationally.
