Medicaid is an important payer of nursing home (NH) care, with 70% of all US NH days paid for by Medicaid.1
Therefore, it is likely that Medicaid NH reimbursement policies and rates influence NH care and management decisions. In fact, Medicaid reimbursement policy and rates have been found to be associated with NH hospitalizations.2
In addition, longitudinal analyses have found changes in state Medicaid reimbursement policies and rates result in changes in NH resident acuity,3
and resident outcomes.5
Whether Medicaid NH reimbursement policies and rates affect the use of Medicare hospice in NHs is unknown. However, given the important role of Medicare hospice in NHs and the variation in its use across states,6
an understanding of whether and how Medicaid reimbursement policies and rates affect hospice use is important.
Only a third of the half million older adults who died in NHs in 2006 received Medicare hospice.6
Yet, the provision of high-quality end-of-life care is a challenge for many NHs, and the experience of dying in NHs for many residents (and their families) is less than optimal.7–14
Dying NH residents who receive hospice compared with those who do not have fewer invasive treatments,15,16
better pain management,17,18
and fewer hospitalizations.19
In addition, families of NH residents who died report higher satisfaction with end-of-life care when residents do versus do not receive hospice care,7–9
and in NHs with a greater intensity of hospice use both hospice and nonhospice residents have higher-quality end-of-life care processes and fewer hospitalizations.20,21
Hospice care is also beneficial to NHs as hospice collaborations offer NHs an opportunity to provide intensive palliative care services to dying residents without acquiring additional palliative care staffing, particularly the staffing needed to provide psychosocial and spiritual support to dying residents and their families. In fact, the overwhelming majority of US NHs contract with hospices to obtain expertise and assistance in caring for NH residents at the end-of-life.22
Nursing homes can offer Medicare hospice care by developing collaborations (including formal contracts) with Medicare certified hospice providers.23
A Medicare beneficiary who resides in a NH is eligible for hospice care if his/her attending physician and the hospice medical director certify in writing that she/he has a prognosis of 6 months or less (if the disease runs its normal course). Use, however, not only varies across states but by numerous other factors.
In NHs, Medicare hospice use has been found to vary by resident characteristics (eg, race, sex, diagnoses, other) and by NH-level (eg, profit and chain status, other) county-level (eg, NH bed occupancy, hospital beds, other) factors.24
Unique to NHs, given the lesser presence of physicians, hospice referral and the timing of referral is greatly influenced by NH staff members’ recognition of terminal decline, their beliefs about hospice, and their initiative in suggesting hospice to residents/families and physicians.25
Furthermore, it is likely that these staff processes and attributes conform to NH administrators’ attitudes and support for hospice, which are known to vary.26
Payer type can also be a major barrier to NH hospice use as terminally ill residents receiving Medicare Part A Skilled Nursing Facility (SNF) care cannot simultaneously access Medicare hospice (if SNF care is related to their terminal condition), but (Medicare eligible) Medicaid or private-pay residents can access hospice. For private-pay residents, residents and families may be hesitant to choose hospice as they would lose the (substantial) Medicare copayment for SNF care. For Medicaid residents, NHs differ in their willingness to suggest hospice for residents receiving Medicare SNF care since with hospice enrollment NH payment converts to the much lower Medicaid per diem versus the higher Medicare per diem. In addition, when dual-eligible residents elect hospice the NH’s Medicaid per diem payment rate is reduced to 95% of the allotted rate and paid directly to the hospice (who then “passes” the payment onto the NH). Therefore, hospice referral means NHs not only receive 5% less of their per diem rates when dual-eligible residents enroll in Medicare hospice, but they may also experience slower “pass-through” payments.
Given the above and the importance of Medicaid as a NH payer,1
it is possible that NHs may modify the magnitude of their hospice use in response to changes in Medicaid NH reimbursement policies and/or rates. Specifically, changes that result in higher NH per diem rates may decrease a NH’s willingness to promote the use of hospice as a 5% reduction applied to a higher base rate will result in greater revenue loss. Therefore, even though there are many benefits hospices bring to NHs (palliative care expertise, additional one-on-one care, payment for medications and durable medical equipment relating to terminal illnesses, other), we hypothesized that policy or rate changes resulting in higher Medicaid payment rates would result in lower rates of NH hospice use.
To examine the above beliefs we focused on 2 changes: a state’s introduction of Medicaid NH case-mix reimbursement and an increase in a state’s Medicaid NH per diem rate. Case-mix reimbursement results in higher payments to NHs when residents have higher acuity. Accordingly, previous research has found a state’s implementation of case-mix reimbursement results in a 2.5% increase in the average acuity of new NH admissions and in a 1.3% to 1.4% increase in average acuity for long-stay residents.3
Of note, although most dying residents do not receive rehabilitation services (which can result in higher payments in states using resource utilization groups for case-mix adjustment), dying residents are considered clinically complex and often require extensive services or special care which places them in higher reimbursement groups than many Medicaid NH residents. Therefore, given this higher acuity, of interest is whether the introduction of case-mix reimbursement results in decreases in NH hospice use (to retain 100% of the higher case-mix revenues) or rather in increases in use (to obtain hospice expertise and assistance in caring for higher acuity residents). Similarly, of interest is whether hospice use decreases when a state’s Medicaid NH per diem rates increase.
This research, by using data from 1999 to 2004 and a difference-in-differences analytic approach, tests the effect of the introduction of Medicaid case-mix policy and of NH rate increases on the use of Medicare hospice care in NHs. If changes in Medicaid reimbursement policies do affect the use of NH hospice then the differing use of hospice across states could be moderated somewhat through policy changes.