Shumlin administration opposes hospice waiver

A key provision in a House bill that could lead to major savings and improved quality of care at the end of life has met unexpected opposition from the Department of Vermont Health Access.

At an April 15 Senate committee hearing on H.201, Betsy Forrest, the director of of the department’s health care affordability project, indicated that DVHA was unwilling to apply for a Medicare waiver for an “enhanced hospice benefit.”

Enhanced hospice benefits increase the eligibility period for hospice care from six to 12 months and allow hospice patients to receive curative and palliative care simultaneously.

In her testimony to the Senate committee, Forrest said the design of H.201 was influenced by a hospice pilot study by Aetna that documented a 22 percent reduction in end-of-life costs.

The Aetna study design included two groups of beneficiaries who received comprehensive case management. One of the two groups was also given expanded hospice benefits. Beneficiaries in this group were allowed to enroll in hospice with a prognosis of 12 months rather than six, and they did not have to give up curative care, as Medicare hospice guidelines require.

Forrest cited an article about the Aetna project that ranks Vermont in the bottom 10 percent of states in hospice utilizationbottom 10 percent of states in hospice utilization.

Increased use of hospice could play a crucial role in controlling health care expenses. Hospice care, which is typically delivered at home, costs significantly less than hospital care at the end of life, and that is when 77 percent of medical treatment and expenditures take place, according to the Vermont Program for Quality in Health Care, Inc..

Proponents consider the waiver important because doctors are often reluctant to make a six-month prognosis, which Medicare now requires for hospice eligibility: Doctors say it’s difficult to predict how rapidly many diseases will progress. And patients — especially young adults — are unwilling to give up searching for a cure even as they are dying.

The enhanced hospice benefit waiver is one of the provisions that gives the hospice and palliative care bill “a lot of teeth and meat,” said Cindy Bruzzese, executive director of the Vermont Ethics Network. Her organization supports Section 3, the part of the bill that includes the waiver.

Rep. Bill Frank, D-Underhill, who sponsored the bill in the House, explained that the Medicare waiver was added as a floor amendment, and “didn’t have the full discussion (with testimony) in the committee.”

Forrest said of Section 3, “We were unaware that that provision had been inserted by the House until after it passed the House. We had some concerns about it because we were predicting there would be a cost attached to it.”

In an interview, Forrest said she was concerned about the cost to the state of analyzing data for the Medicare waiver amendment request. She estimated it would include $36,000 for a position and $40,000-65,000 for a data analysis contract. (The costs would affect the 2012 fiscal year budget.)

There’s a break-even point beyond which it actually costs more to have people in hospice than not. The break-even point for cumulative savings is well under 12 months.”
– Betsy Forrest

Instead of requesting a Medicare waiver to allow the state to obtain federal Medicaid matching funds to provide an enhanced hospice benefit, as Section 3 prescribes, Forrest said DVHA recommends that “we incorporate it into our grant application for the ‘dual eligibles’ project.” (Dual eligibles are people eligible for both Medicaid and Medicare benefits.) “Assuming we get the planning grant, we could use federal planning grant money for that piece,” she said. Vermont’s total Medicare population is about 98,000 and its dual eligible population 18,000.

Forrest conceded that the dual eligible request would not provide any information about the fiscal impact of extending the Section 3 provisions to all Medicare recipients 65 and older, but she said, “in the course of that project we would be able to learn more about whether the 12-month extension is actually effective.”

She noted, however, that it might not be possible to get a Medicare waiver for extending hospice eligibility to 12 months: The Affordable Care Act (the federal health care reform law passed last year) authorizes hospice demonstration projects to test concurrent care, but it says nothing about testing extended eligibility.

“We’re not opposed to the idea of a pilot project that evaluates the effectiveness of a hospice expansion for Medicaid and Medicare,” Forrest wrote in an email. “We believe, however, that it should be done within the context of the dual-eligible demonstration program, which will be looking at the larger picture of how health care services, including palliative and hospice care, can be more effectively coordinated to produce better outcomes for patients.”

Dr. Robert Macauley, a clinical ethicist at Fletcher Allen Health Care, addressed DVHA’s concerns in an email to Rep. Ann Pugh, chairwoman of the House Committee on Human Services, where H.201 originated. He wrote: “DVHA attributes the benefits shown in the Aetna study to case management rather than expanded access to hospice. Regardless of whether this is true, the bottom line is that expanded hospice saves money (even taking into account the $400/patient outlay for case management). It would seem, then, that DVHA’s argument is that expanded hospice doesn’t save “enough” money, so we should avoid doing that in favor of, what?”

A study from Duke University showed that hospice use reduced Medicare expenditures during the last year of life by an average of $2,309.

In Macauley’s eyes, rolling the hospice pilot project into the dual eligible study would dilute the pilot program and cause delay and confusion.

If you bundle one thing with something else, he said, “Whatever you bundle it with may cause more confusion about outcomes and may cause more debate about whether we should even do it. So what you end up doing is you imperil the institution of it and you imperil the evaluation of it.”

Supporters proposed a compromise that would keep the waiver in the bill but give VDHA an extra year to write the application. “We can appreciate that there’s a lot coming down the pike right now with health care reform,” Bruzzese said.

Advocates encourage early use of hospice because of the improvement it makes in the quality of patients’ lives and because it supports the financial viability of non-profit hospices. According to the Dartmouth Atlas, the average hospice stay in the last six months of life for Vermonters who died from 2004-07 was slightly less than 10 days.

In elaborating on VDHA’s concerns about the potential cost of the enhanced hospice benefit, Forrest cited a Duke University study that focused on finding the break-even point for hospice stays and on minimizing Medicare expenditures.

“There’s a break-even point beyond which it actually costs more to have people in hospice than not,” Forrest said. “The break-even point for cumulative savings is well under 12 months,” she added. Extending the hospice benefit to 12 months would mean not only higher costs for case management, but greater claims costs, Forrest told the committee.

The Medicare Payment Advisory Commission — MedPAC — has been studying hospice economics for several years and notes that the nationwide growth in the length of hospice stays and Medicare spending on hospice has been driven by for-profit providers. All of Vermont’s home health and hospice agencies are nonprofits, except for Bayada Nurses, a very recent entry into the field.

MedPAC data show a sobering picture of the finances of hospices like Vermont’s.

In 2008, nonprofit hospices nationwide had average margins of 0.2 percent. Rural hospices had margins of 1.3 percent. Hospices that ranked in the lowest fifth for average length of stay had margins of -10.1 percent. And hospices that ranked in the lowest fifth for patient volume had average margins -9.8 percent.

“I think it’s really kind of scary,” Bruzzese said.

She observed that the costs of caring for hospice patients are highest at the beginning and end of stays. When stays are compressed into a very short period, she said, “It makes it really challenging for these not-for-profit hospices to stay viable financially and care for patients. That’s just a huge concern for me, because our whole state relies so heavily on our not-for-profit hospice system.”

Noting Vermont’s aging population, she added, “We need to make sure that the length of stay in these programs is long enough so that it optimizes care for the patient and allows our hospice programs to continue to thrive. It’s a real need.”