A comparative analysis of Medicare home care cost savings for the terminally ill.

Claims histories of 1,148 Medicare beneficiaries who died of cancer were examined to determine if traditional home care, compared to hospice home care and conventional oncological care, achieved substantial cost savings. Using analysis of variance and the test for the difference between percentages, the study indicated that although traditional home care beneficiaries were about one-third more costly during the last 24 weeks of life than either the hospice home care or conventional care patients, there appeared to be some cost savings during the last 4 weeks of life. The analysis clearly showed that the substitution of home care visits for hospital days occurred much more readily in hospice home care than in traditional home care. As a consequence, the cost savings potential of hospice home care was substantially greater. The study did not show a tendency for daily hospital costs to decline among the hospice or traditional home care patients as death approached. Thus, the hypothesis that home care services achieve cost savings by reducing the daily cost of hospital inpatient care was not supported.     

Hospice enrollment and evaluation of its causal effect on hospitalization of dying nursing home patients

OBJECTIVE: To examine the patient, nursing home (NH), hospice provider, and local market factors associated with the selection of the Medicare hospice benefit by eligible NH residents, and evaluate the causal effect of hospice on end-of-life hospitalization rates. DATA SOURCES/STUDY SETTING: Secondary data for 1995-1997 for NH residents. STUDY DESIGN: This retrospective cohort study includes NH residents in five states (Kansa, Maine, New York, Ohio, South Dakota) who died in the years 1995-1997. Medicare claims identified hospice enrollment and hospitalizations. Geocoding of NHs, hospice providers, and hospitals was used to identify local markets. The two outcome measures are hospice enrollment and hospitalization of NH residents in their last 30 days of life. DATA COLLECTION/EXTRACTION METHOD: A file was constructed linking MDS assessments to Medicare claims and denominator files, NH provider files (OSCAR), hospice provider of service files, and the area resource file. PRINCIPAL FINDINGS: Twenty-six percent of hospice and 44 percent of nonhospice residents were hospitalized in their last 30 days of life (odds ratio [OR] 0.45; 95 percent confidence interval [CI]: 0.42-0.48). Adjusting for confounders, hospice patients were less likely than nonhospice residents to be hospitalized (OR 0.47; 95 percent CI: 0.45-0.50). Adding inverse propensity score weighting, hospice patients were still less likely than nonhospice residents to be hospitalized (OR 0.56; 95 percent CI: 0.53-0.61). CONCLUSIONS: Hospice selection introduces some bias in the evaluation of the causal effect of hospice on end-of-life hospitalization rates. However, even after adjusting for selection bias, hospice does have a powerful effect in reducing end-of-life hospitalization rates.     

A Comparative Analysis of Medicare Home Care Cost Savings for the Terminally Ill

Claims histories of 1,148 Medicare beneficiaries who died of cancer were examined to determine if traditional home care, compared to hospice home care and conventional oncological care, achieved substantial cost savings. Using analysis of variance and the test for the difference between percentages, the study indicated that although traditional home care beneficiaries were about one-third more costly during the last 24 weeks of life than either the hospice home care or conventional care patients, there appeared to be some cost savings during the last 4 weeks of life. The analysis clearly showed that the substitution of home care visits for hospital days occurred much more readily in hospice home care than in traditional home care. As a consequence, the cost savings potential of hospice home care was substantially greater. The study did not show a tendency for daily hospital costs to decline among the hospice or traditional home care patients as death approached. Thus, the hypothesis that home care services achieve cost savings by reducing the daily wst of hospital inpatient care was not supported.     

Including hospice in Medicare capitation payments: would it save money?

Hospice services received by Medicare risk-based health maintenance organization (HMO) enrollees are paid on a non-capitated basis, creating financial incentives for HMOs to encourage their terminally ill patients to elect hospice. Using Medicare administrative records for 1998, we found that hospice enrollment in the last month of life was significantly higher among HMO enrollees than among beneficiaries in fee-for-service (FFS). However, low mortality rates among HMO enrollees produced similar population-based rates of hospice use in the HMO and FFS sectors. Simulations showed that including hospice care under capitation payments in July 1998 would have produced very small savings for Medicare.     

The effects of hospice coverage on Medicare expenditures.

This article reports on the findings of a study of the effects of the hospice program on Medicare Part A expenditures during the first three years of the program. The analysis compared treatment costs between hospice beneficiaries and nonbenefit patients with diagnosis of malignant cancer during their last seven months of life. It was estimated that during the first three years of the hospice program, Medicare saved $1.26 for every dollar spent on Part A expenditures. While the methodology included use of data from Medicare claims to adjust for confounding factors, including self-selection bias, our estimated savings might still have been overstated due to persistent selection effects. The extent of savings also varied according to the hospice's organization. Freestanding hospices, in contrast to those affiliated with either a hospital, nursing home, or home health agency, achieved the greatest savings by utilizing home care more extensively. However, we note that payment rates are increasing and the limits on the benefit period are being lifted, making it possible that the savings related to the hospice program found in this study will not continue. Of greater importance may be the long-term access and quality effects engendered by the benefit's preference for home care.     

Hospice values, access to services, and the Medicare hospice benefit.

The Medicare benefit has been an important force in shaping the American hospice movement during the 1980's. Hospice reimbursement under Medicare added legitimacy to the movement, increased access to hospice care for some Medicare beneficiaries, and provided financial support to Medicare certified hospice programs. But the increased access for some may come at the cost of decreased access for others, and the price of reimbursement may be the erosion of hospice as a unique form of terminal care in this country. It is up to hospice professionals to balance the fiscal realities of providing hospice care without losing sight of the values and philosophies that have made hospice a "special kind of care."     

Large variations in Medicare payments for surgery highlight savings potential from bundled payment programs

Payers are considering bundled payments for inpatient surgery, combining provider reimbursements into a single payment for the entire episode. We found that current Medicare episode payments for certain inpatient procedures varied by 49-130?percent across hospitals sorted into five payment groups. Intentional differences in payments attributable to such factors as geography or illness severity explained much of this variation. But after adjustment for these differences, per episode payments to the highest-cost hospitals were higher than those to the lowest-cost facilities by up to $2,549 for colectomy and $7,759 for back surgery. Postdischarge care accounted for a large proportion of the variation in payments, as did discretionary physician services, which may be driven in turn by variations in surgeons' practice styles. Our study suggests that bundled payments could yield sizable savings for payers, although the effect on individual institutions will vary because hospitals that were relatively expensive for one procedure were often relatively inexpensive for others. More broadly, our data suggest that many hospitals have considerable room to improve their cost efficiency for inpatient surgery and should look for patterns of excess utilization, particularly among surgical specialties, other inpatient specialist consultations, and various types of postdischarge care.     

The costs of a pediatric hospice program.

The recent literature on economic issues of hospice care leaves several questions unanswered. The most important issue concerns how this type of care can be made financially attractive to patients and families for whom it is a medical option. A major study of a home-based pediatric hospice program permitted a more careful analysis than was previously feasible of the charges for hospice care and how those charges are paid. Data on provider utilization and duration in the program were obtained retrospectively on 177 patients. Costs of incidental expenditures and indirect costs were obtained prospectively from the families of 27 patients. A cost model was developed which is general enough to be used by other hospitals that might contemplate establishing a similar hospice program. Our findings are that insurance coverage, especially for publicly funded patients, is likely to be a major impediment for families deciding whether or not to use a hospice program at home.     

What does hospice cost?

This paper presents the preliminary results of the economic analyses of the National Hospice Study (NHS), mandated by the United States Congress to investigate the implications of including hospice services in Medicare. Data were collected over an 18-month period from approximately 4,000 patients receiving hospice and conventional terminal care in 25 hospices and 12 conventional care sites. Subsequent analysis may lead to changes in the specific results, and some of the differences may be due to confounding variables that cannot be adjusted for. According to these data, hospital based (HB) hospice costs per day are 44 per cent higher than home care (HC) hospice costs per day ($95 versus $66, respectively). In addition, per patient hospice costs are 24 per cent more for patients enrolled in HB than in HC hospices ($5,890 versus $4,758, respectively). The proportional difference between HB and HC in cost per patient is smaller than the cost per day difference due to the shorter average HB length of stay, 62.3 days compared to 72.5 days for HC. Regarding the cost savings of hospice compared to conventional care, HC hospice costs are lower than conventional care costs regardless of length of stay. However, HB costs seem lower than conventional care costs only for patients with lengths of stay less than two months. Hospice and conventional care patients appear to differ with respect to predisposition toward intensive health care utilization. When this difference is explored more thoroughly in subsequent analyses, the estimated cost differential between hospice and conventional care may change.     

What length of hospice use maximizes reduction in medical expenditures near death in the US Medicare program?

Hospices have been expected to reduce health expenditures since their addition to the US Medicare benefit package in the early-1980s, but the literature on their ability to do so is mixed. The contradictory findings noted in previous studies may be due to selection bias and the period of cost comparison used. Accounting for these, this study focuses on the length of hospice use that maximizes reductions in medical expenditures near death. We used a retrospective, case/control study of Medicare decedents (1993-2003, National Long Term Care Survey screening sample) to compare 1819 hospice decedents, with 3638 controls matched via their predicted likelihood of dying while using a hospice. Variables used to create matches were demographic, primary medical condition, cost of Medicare financed care prior to the last year of life, nursing home residence and Medicaid eligibility. Hospice use reduced Medicare program expenditures during the last year of life by an average of $2309 per hospice user; expenditures after initiation of hospice were $7318 for hospice users compared to $9627 for controls (P<0.001). On average, hospice use reduced Medicare expenditures during all but 2 of hospice users' last 72 days of life; about $10 on the 72nd day prior to death, with savings increasing to more than $750 on the day of death. Maximum cumulative expenditure reductions differed by primary condition. The maximum reduction in Medicare expenditures per user was about $7000, which occurred when a decedent had a primary condition of cancer and used a hospice for their last 58-103 days of life. For other primary conditions, the maximum savings of around $3500 occurred when a hospice was used for the last 50-108 days of life. Given the length of hospice use observed in the Medicare program, increasing the length of hospice use for 7 in 10 Medicare hospice users would increase savings.     

Creating a MEDPAR (Medicare provider analysis and review) analog to the RUG-III (Resource Utilization Groups, Version III) classification system

As Medicare payments for post-acute institutional care continue to rise sharply, policy interest in the clinical characteristics of beneficiaries admitted to nursing homes and their variation across facilities has stimulated research into case mix. Measures of Medicare skilled nursing facility (SNF) case mix are important in relating payments to the care requirements of residents. The Resource Utilization Groups, Version III (RUG-III) classification system uses a new minimum data set that is not currently available nationally. In preparation for a multi-State demonstration, we needed to simulate at least the first-level splits at the national, State, and facility level. Therefore, we developed proxy measures using comparable data available on the National Claims History files. The analog is an easily programmed measure of the acuity/severity of beneficiaries' conditions across a Medicare Part A SNF stay in 75 percent of the SNF providers. This can be a method for estimating changes in case mix over the years, and differences across provider types and States.     

Cost savings in hospice: final results of the National Hospice Study.

Medicare inpatient and home care costs over the last year of life of terminal cancer patients served in two types of hospices and in conventional care (CC) were compared as a part of the National Hospice Study (NHS). Both home care (HC) and hospital-based (HB) hospice patients had lower costs in the last month of life than did CC patients. HC patients substituted home care for inpatient care, yielding cost savings for lengths of hospice stay of up to 1 year. Although HB patients added home care to relatively high levels of inpatient care, their ancillary costs per inpatient day were significantly lower than those of CC patients. Thus, HB costs over the last year of life were also somewhat less than those of CC. The size of the savings associated with hospice care is sensitive to the type of hospice and the length of stay distribution of patients served; patients served longer have significantly higher costs in the last year of life.     

Cost and effects of performance feedback and nurse case management for medicare beneficiaries with diabetes: a randomized controlled trial.

Nurse case management has been shown to improve the quality of diabetes care in closed model health maintenance organizations and Veterans Affairs medical clinics. A randomized controlled trial of a similar intervention within HealthTexas Provider Network, a fee-for-service primary care network in North Texas, demonstrated no benefit in processes of care or clinical outcomes for Medicare diabetes patients. To investigate whether the case management model impacted the cost of diabetes care from the Medicare perspective, we compared the average payments and charges incurred between intervention arms: claims-based audit and feedback; claims- and medical-record-based audit and feedback; and claims- and medical-record-based audit and feedback plus a practice-based diabetes resource nurse. Following adjustment for baseline differences between groups, no significant differences were observed. Thus, within this setting, it appears the nurse case management model produced no improvement in either clinical quality or in costs associated with diabetes from a Medicare perspective.     

More Comprehensive Care Among Family Physicians is Associated with Lower Costs and Fewer Hospitalizations

PURPOSEComprehensiveness is lauded as 1 of the 5 core virtues of primary care, but its relationship with outcomes is unclear. We measured associations between variations in comprehensiveness of practice among family physicians and healthcare utilization and costs for their Medicare beneficiaries.METHODSWe merged data from 2011 Medicare Part A and B claims files for a complex random sample of family physicians engaged in direct patient care, including 100% of their claimed care of Medicare beneficiaries, with data reported by the same physicians during their participation in Maintenance of Certification for Family Physicians (MC-FP) between the years 2007 and 2011. We created a measure of comprehensiveness from mandatory self-reported survey items as part of MC-FP examination registration. We compared this measure to another derived from Medicare’s Berenson-Eggers Type of Service (BETOS) codes. We then examined the association between the 2 measures of comprehensiveness and hospitalizations, Part B payments, and combined Part A and B payments.RESULTSOur full family physician sample consists of 3,652 physicians providing the plurality of care to 555,165 Medicare beneficiaries. Of these, 1,133 recertified between 2007 and 2011 and cared for 185,044 beneficiaries. There was a modest correlation (0.30) between the BETOS and self-reported comprehensiveness measures. After adjusting for beneficiary and physician characteristics, increasing comprehensiveness was associated with lower total Medicare Part A and B costs and Part B costs alone, but not with hospitalizations; the association with spending was stronger for the BETOS measure than for the self-reported measure; higher BETOS scores significantly reduced the likelihood of a hospitalization.CONCLUSIONSIncreasing family physician comprehensiveness of care, especially as measured by claims measures, is associated with decreasing Medicare costs and hospitalizations. Payment and practice policies that enhance primary care comprehensiveness may help “bend the cost curve.”     

Realigning incentives in fee-for-service Medicare

This paper proposes Medicare payment reform built on the fee-for-service system, with incentive payments to eligible provider organizations determined by their rate of increase in cost per patient compared to the overall growth rate in the community. By planning and monitoring how care patterns are altered to achieve greater efficiency, policy-makers can align the incentives of Medicare and the provider organization better than using either fee-for-service or capitation alone. This reform, unlike capitation, maintains Medicare's historical role as insurer and focuses providers on managing care.     

An economic history of Medicare part C

Context: Twenty‐five years ago, private insurance plans were introduced into the Medicare program with the stated dual aims of (1) giving beneficiaries a choice of health insurance plans beyond the fee‐for‐service Medicare program and (2) transferring to the Medicare program the efficiencies and cost savings achieved by managed care in the private sector. Methods: In this article we review the economic history of Medicare Part C, known today as Medicare Advantage, focusing on the impact of major changes in the program's structure and of plan payment methods on trends in the availability of private plans, plan enrollment, and Medicare spending. Additionally, we compare the experience of Medicare Advantage and of employer‐sponsored health insurance with managed care over the same time period. Findings: Beneficiaries’ access to private plans has been inconsistent over the program's history, with higher plan payments resulting in greater choice and enrollment and vice versa. But Medicare Advantage generally has cost more than the traditional Medicare program, an overpayment that has increased in recent years. Conclusions: Major changes in Medicare Advantage's payment rules are needed in order to simultaneously encourage the participation of private plans, the provision of high‐quality care, and to save Medicare money.     

Preventive services for the elderly: would coverage affect utilization and costs under Medicare?

OBJECTIVES. This study was undertaken to determine whether adding a benefit for preventive services to older Medicare beneficiaries would affect utilization and costs under Medicare. METHODS. The demonstration used an experimental design, enrolling 4195 older, community-dwelling Medicare recipients. Medicare claims data for the 2 years in which the preventive visits occurred were compared for the intervention (n = 2105) and control (n = 2090) groups. Monthly allowable charges for Part A and Part B services and number of hospital discharges and ambulatory visits were compared. RESULTS. There were no significant differences in the charges between the groups owing to the intervention, although total charges were somewhat lower for the intervention group even when the cost of the intervention was included. Charges for both groups rose significantly as would be expected for an aging population. A companion paper describes a modest health benefit. CONCLUSIONS. There appears to be a modest health benefit with no negative cost impact. This finding gives an early quantitative basis for the discussion of whether to extend Medicare benefits to include a general preventive visit from a primary care clinician.     

Do HMOs reduce health care costs? A multivariate analysis of two Medicare HMO demonstration projects.

Charge data from two Medicare HMO demonstration projects were analyzed to determine if prepaid plans achieved cost savings for enrolled beneficiaries. Fallon Community Health Plan of Massachusetts did not reduce total charges significantly for survivors in their first year postenrollment. However, the plan enjoyed reductions in total charges per month after the first year of nearly 38 percent (41 percent for Part A; 31 percent for Part B). Savings for decedents were more modest, reducing total charges per month by around 27 percent (19 percent, Part A; 68 percent, Part B). Greater Marshfield Community Health Plan of Wisconsin was not successful in controlling charges during the demonstration period. Marshfield incurred losses in the first postenrollment year for survivors due to a 38 percent increase in total charges per month (18 percent, Part A; 73 percent, Part B). In the second year postenrollment, the Marshfield plan was able to reduce losses for survivors to roughly 11 percent (-6 percent, Part A; 44 percent, Part B). For decedents, Marshfield experienced an increase in total charges per month of approximately 21 percent relative to fee-for-service comparisons, with Part B charges again much higher than those of the comparison group (47 percent).     

Geriatric versus non-geriatric approach of care to moderate Pra risk senior population

A total of 432 members of Senior Dimensions, a second-generation social health maintenance organization, residing in northern Nevada were identified as moderate risk by P(ra) screening criteria for the time period of July 1, 2002, through June 30, 2003. Of these members, 166 were impaneled to a practice that only provides care for seniors (age 65 years or older), Geriatric Care of Nevada (GCN), and 266 members were impaneled to multiple primary care providers with standard community-based practices (non-GCN). An annualized cost comparison per unit of service provided as derived from the adjusted use data showed an average savings of $760.00 per member per year for the GCN over the non-GCN population. These savings have occurred apart from the provider fee reimbursement. This represents a potential savings of more than $760,000.00 per year per 1000 moderate P(ra) risk members within a Medicare managed care program.