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In the preferred setting?

Reimbursement's role in hospice vs. skilled nursing

By Paul Barr
Posted: January 19, 2013 - 12:01 am ET

Too many dying elderly patients are going into skilled-nursing facilities after leaving the hospital, experts say, and Medicare's reimbursement approach for nursing homes and hospice care is largely the reason.

Medicare's reimbursement structure gives seriously ill and possibly dying Medicare patients and their families a choice for the patient to either go into a nursing home for skilled nursing or enter hospice care after leaving the hospital. Because the Medicare hospice-care benefit doesn't include living accommodations, many patients choose a skilled-nursing facility even though a prognosis that death is imminent means hospice treatment would likely be a better option.

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“It's kind of a sad state of affairs,” says Candis Armour, executive director of Solari Hospice Care, Las Vegas. Patients who would prefer the end-of-life care that hospice offers—services that aim to manage pain and limit treatments and procedures that offer little therapeutic benefit and can be provided at home—often end up going into a skilled-nursing facility, which essentially has the opposite approach, and seeks to improve the patient's health, Armour says.

“The patient in the skilled-nursing facility may have to agree to things they don't want,” Armour says.

The issue has been discussed in elder-care circles for years, but a study published online last October in the Archives of Internal Medicine quantified the problem. The authors of the study, “Use of the Medicare posthospitalization skilled nursing benefit in the last 6 months of life,” sought to identify patterns of care involving the use of skilled-nursing facilities and hospice care.

Among the results was a finding that roughly one in 11 seniors died while in a skilled-nursing facility, a number the authors found to be “strikingly” high. The finding suggests that some patients are going into skilled-nursing facilities to receive end-of-life care, which is contrary to the mission of those facilities, says Dr. Katherine Aragon, one of the authors and a palliative-care physician for Lawrence (Mass.) General Hospital.

Staying home

The authors also found that Medicare beneficiaries living in their homes or elsewhere in the community were more likely to die in a nursing home and less likely to die at home—where most patients would rather be—if a patient received care in a skilled-nursing facility at some point in the last six months of life.

Among seniors who were living in the community and had received the skilled-nursing benefit, 42.5% died in a nursing home, 10.7% died at home, 38.8% died in a hospital and 8% died elsewhere. That contrasts sharply with results for seniors living in the community who had not received the skilled-nursing facility benefit. In that group, 5.3% died in a nursing home, 40.6% died at home, 44.3% died in a hospital and 9.8% died elsewhere.

“This has been a problem forever,” says Carla Braveman, vice president of home and community services at not-for-profit Elliot Health System, Manchester, N.H. “When the patient most needs (hospice), we can't be there because of a payment issue.”

The Medicare long-term-care payment structure gives everyone involved—except the hospice-care provider—reasons to push for a severely ill patient possibly near the end of life to go into a skilled-nursing facility even though hospice care might be the preferred setting.

Though limited to 100 days—with copayments kicking in after 20 days—the Medicare skilled-nursing benefit includes 24-hour oversight, and room and board and must follow a minimum three-day hospitalization. Elderly patients leaving the hospital with the prognosis they don't have long to live may need the kind of high-attention care that a spouse or other family member is unable or unwilling to perform.

In those cases, admission to a skilled-nursing facility as a Medicare patient might seem like an attractive alternative when a patient doesn't have a family member able or willing to provide near-constant assistance. Hospice offers limited respite services to caregivers.

The patient and family also might not have the financial resources to pay for privately funded nonskilled nursing-facility care—also known as custodial care—that would allow the patient to receive Medicare hospice care in a nursing home stay. Armour says it would cost about $6,000 a month to pay privately for a nursing-home stay. Even if it's only for a month or two, many patients and families can't afford it or don't want to pay that much, making Medicare-covered skilled-nursing facility care more attractive because it costs them nothing.

Under rare circumstances, a patient can be treated in a skilled-nursing facility for one condition while still on the hospice benefit for another, but those patients made up less than 1% of hospice patients in the study.

One option for hospice-eligible people leaving the hospital and needing shelter is Medicaid, which will pay for nursing home care—but only if they have depleted all their assets. Applying can be a lengthy and tedious process, and approval for those who qualify often wouldn't come quickly enough for them to enter the nursing home before they die, Braveman says.

Industry executives contacted for this story, including Braveman, don't point the finger at skilled-nursing facilities, even though they may benefit from the situation by getting patients they might not normally treat.

“I wouldn't necessarily blame the skilled-nursing facilities,” Braveman says. “There's no mechanism for payment for the nursing homes.”

The American Health Care Association, a nursing home industry group, estimated that the Medicare Part A skilled-nursing reimbursement is on average $467 per patient a day, including any copayments but not including Medicare Advantage Part C payments. Hospice providers, meanwhile, are paid a base rate of $153 a day in the current federal fiscal year, but can get as much as $896 a day during a “crisis,” according to the Medicare Payment Advisory Commission. The CMS defines a crisis as a situation in which the hospice patient needs at least eight hours of continuous medical care to ease pain or manage acute symptoms, and must mainly be provided by a licensed nurse. Both hospice rates are subject to adjustment for regional wage differences.

Nationally, Medicare paid $31.8 billion for skilled-nursing facility care in 2011 and $27 billion in 2010, according to MedPAC. Medicare paid $13 billion for hospice care in 2010, the latest year for which data is available.

Sentara Healthcare, Norfolk, Va., avoids the financial incentive conflicts between hospice and skilled-nursing care because it offers both types of care, says Bruce Robertson, president of Sentara Life Care, the system's long-term-care division.

Sentara is a proponent of hospice, and recently opened an inpatient hospice facility in Virginia Beach, Va., within an assisted-living facility. The hospice will care for Medicare hospice patients living in the home who need the Medicare program's short-term hospice benefit, a spokesman says. The typical stay would be five to seven days, he says. If the hospice facility is successful, Sentara will consider adding one at an assisted-living facility in Norfolk, Robertson says.

Changes proposed

But hospice care is not universally praised. Dr. Peter Boling, a professor and chairman of geriatric medicine at Virginia Commonwealth University, says that in his experience, the hospice protocols when followed strictly may lead to patients inappropriately entering hospice. As he has gained clinical experience treating seriously ill patients, he says that he has chosen to treat some patients who meet the criteria for entering hospice who have gotten better. The issue of finding the moment in time when there's no hope of recovery left is a difficult one, he says.

Meanwhile, some hospice providers are reportedly under scrutiny from the federal government for keeping patients for too long. Kaiser Health News reported last week that at least one and probably more hospices are being examined because too many of their patients are not dying, leading to extended reimbursement.

One solution to the hospice vs. skilled-nursing debate calls for Medicare to offer a blended benefit of some sort in which a skilled-nursing stay can accommodate hospice care as well.

“Payment systems need to put the patient first,” says Corina Tracy, senior vice president of national operations for Hospice Compassus, a for-profit hospice-care provider based in Brentwood, Tenn., with more than 50 locations. If they need both, they should get both, Tracy says.

“I think hospice is a fantastic program,” but it doesn't offer complete care, says Dr. David Gifford, senior vice president of quality and regulatory affairs at the AHCA. To have Medicare pay for hospice care to patients in a nursing home could be beneficial, he says.

However, major changes to the hospice benefit in the current fiscal environment seem highly unlikely, Armour says. “Medicare is looking to cut things, not bring on new benefits.”

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