Article co-authored by Patti Moore and Naomi Naierman:
“Bad Things Can Happen To A Good Policy: The Case of the Hospice
Medicare Benefit”

The National Hospice and Palliative Care Organization defines hospice:

“Ša team-oriented approach to expert medical care, pain management, and emotional and spiritual support expressly tailored to the patient's needs and wishes. Support is extended to the patient’s loved ones, as well. At the center of hospice is the belief that each of us has the right to die pain-free and with dignity, and that our families will receive the necessary support to allow us to do so.”

I. Origins of Hospice
It is widely accepted that the origins of the concept and term "hospice" began in the 4th century in Europe (361 A.D.). Hospices were a Œway station¹ or a stopping off place for travelers in need of rest or comfort during their long journeys on the Crusade trails. In fact, one can still see those ancient hospices in some areas in Europe.

Dame Cicely Saunders of London, England is credited as the founder of modern day hospice. In 1967, she started St. Christopher¹s Hospice just outside of London. The English model was a facility-based program of care for people with a limited life expectancy. These patients would move into the hospice and be cared for by nuns and nurses. This model of care was unique because the patients were in charge of their own care; they could eat and sleep when they wished, and were treated with respect and dignity until their death. This hospice care was very different than the care provided in hospitals, where dying patients were often isolated and their emotional, spiritual and even physical needs were ignored.

In 1969, Dr. Elizabeth Kubler-Ross published her landmark book On Death and Dying, which revealed how imminent death affects the patient, care giving professionals, and the patient's family.

The social revolution of the 1960¹s and the women¹s movement in the 1970¹s led to increased demands for personal autonomy. This led to a desire for more choices in health care. One area that radically departed from conventional health care options was hospice care for the dying. Hospice allowed people to die with dignity in their own homes, surrounded by their loved ones, pain free rather than in a hospital setting.

In 1971, the first hospice was opened in the United States. Connecticut Hospice in New Haven was based on the St. Christopher¹s hospice model of a freestanding home-like facility (Stoddard, 1992).

The interpretation of hospice was broader in the US compared to England. Given great distances in the US between care facilities the limited health insurance in the US, which differed from the English all-inclusive coverage, a greater emphasis was placed on hospice care in home settings. This allowed the few hospice professionals to meet the needs of many more dying Americans.

Between 1971-1983, American hospices relied on volunteer groups offering mostly nursing and supportive assistance, including any tasks the patient and family requested. They provided emotional support for the patient and the family and addressed the patient¹s pain, discomfort and fears. As a result, even now, volunteers are considered the heart of hospice because they offer their care and compassion without any expectation of financial rewards.

In 1974, a committee called the International Work Group formulated the first standards for hospice care on Death and Dying (Kastenbaum, 1975). In 1977, the National Hospice Organization (NHO) was formed to support the hospice philosophy of care for the dying, educate the public, and to serve as a source of information among a growing number of hospices.

II. The Hospice Medicare Benefit: An Innovative Federal Policy

Original Demonstration projects

As the hospice movement continued, the demand for hospice services became greater than the volunteer agencies could provide. As a result, Congress agreed to evaluate the need for a possible payment source for hospice providers.

In 1978, the National Cancer Institute awarded grants to three hospices participating in a demonstration to investigate the costs and to describe the types of care provided to hospice patients. Shortly thereafter, the Health Care Financing Administration (HCFA) was charged by Congress and the Carter Administration to begin demonstration projects to examine the costs, benefits, and feasibility of Medicare reimbursement for hospice care. All existing hospice programs were invited to apply. Of 233 applicants, 26 hospices with diverse organizational arrangements were chosen. The results of this study and others were mixed in terms of cost effectiveness and quality of care but it was generally accepted that there were savings associated with hospice care compared to hospital care (Greer et al. 1983; Mor et al, 1988; Mor and Masterson-Allen, 1987).

United States Representatives Leon Panetta and Bill Gradison supported the hospice bill in the Ways and Means Committee and Senator Robert Dole supported it in the Senate Committee on Finance. As a result of their efforts, the law was enacted as section 122 of the Tax Equity and Fiscal Responsibility Act of 1982.

Congress introduced hospice into the Medicare program as a cost-savings provision, after a Congressional Budget Office study confirmed that hospice care would result in sizable savings over traditional hospital care (Mor and Masterson-Allen, 1987). However, the Reagan Administration opposed the provision due to a concern that there was not yet enough experience with the demonstration project to show that hospice would be cost effective. Nonetheless, the Medicare Hospice Benefit (MHB) was enacted and officially began on January 1, 1983.

Because the MHB was created so quickly and represented a new area of health care, two special provisions were included in the legislation. First, a sunset provision stated that the law would expire in November 1986, unless Congress intervened. Second, an evaluation of the impact of the benefit was mandated.

The unique components of the Medicare Hospice Benefit

For the first time in Medicare¹s history, a hospice benefit was available to terminally ill patients, but only if they chose to waive their rights to traditional Medicare coverage. The MHB was clearly set up to require an "informed choice" for the terminally ill Medicare beneficiary. One choice led to traditional medical care increasingly obsessed with the use of science to combat disease (Hoyer, 2001). The other choice led to hospice care, or "reasonable and necessary for the palliation or management of a terminal condition" provided by an interdisciplinary team. Thus, the MHB officially introduced into the US health care system fundamental differences from traditional Medicare offered to a dying person.

Other unique qualities of the MHB, not available to recipients of traditional Medicare benefit, include:

The Interdisciplinary Team
The MHB required an interdisciplinary team to manage the patient's care. In 1983, the use of an interdisciplinary team without a firmly established hierarchy was uncommon. The use of the team continues today as a hallmark of hospice care. It includes a physician, registered nurse, social worker, bereavement counselor and pastoral or other spiritual counselor. Often, the home health aide and the volunteer are included in the team meetings. Boundaries among members of the team are blurred. This lack of rigidity allows for a more complete assessment of the patient and the family care needs (Connor, 1998). The team meets weekly to develop a plan of care. Unlike multidisciplinary care where each specialty decides what is the best practice in its own discipline, everyone on the hospice interdisciplinary team offers input on all issues facing a patient and family.

The patient and the family/caregiver are the unit of care
Another unique quality of hospice is that the patient and the family are considered the unit of care. Since most hospice care is provided in the patient¹s home, the family plays a major role in the provision of care. It is not uncommon for family to require more support coping with the anticipated death of their loved one than the patient. The hospice team is called upon to train family members to care for the patent. In turn, the family members need bereavement support even before the death.

Management of pain and symptoms related to the terminal illness
Symptom management is a key to excellent hospice care. Hospice nurses and physicians must be trained in opioid pain management, as well as specific therapies for anxiety, depression, nausea, constipation, and other complicated symptoms. The goal is a comfortable death without physical pain. Management of the patients¹ pain is the highest priority upon admission and during the course of care.

Patients and families are trained by the hospice team to understand and recognize signs and symptoms of the patients¹ disease. By educating the patient and the family the hospice team empowers them to make informed decisions about the course of treatment. The primary care giver serves as the coordinator of the patients care.

Physical, emotional and spiritual care
The hospice team considers not only the physical needs, but also the emotional needs of the patient and family. When a person is diagnosed with a terminal illness, the entire family is profoundly affected. The sense of loss is great and the anticipation of loss is significant. The social workers and bereavement counselors help the patient and family face difficult questions about stopping treatment or life support, coping with the overwhelming loss, and managing insurance issues and availability of community services.

Acknowledging one¹s spiritual or religious needs is at the heart of hospice care. The anxiety of death, anger at God, and fears of what may lie beyond this life are issues that dying patients often face. Hospice clergy are trained to help patients find meaning and purpose in their life, without proselytizing about religion.

Volunteers
The original hospice legislation not only required hospices to use volunteers, but it also mandated documentation about their use and cost savings. Volunteers built the hospice movement and their continuous involvement was an important component in preserving the hospice philosophy. The final hospice regulations required at least 5% of total hospice staff hours to be provided by volunteers. This requirement was included because HCFA believed the intent of the law was to prevent the reduction of the use of volunteers over time.

Bereavement Care
Another key provision of the original Medicare hospice legislation was that hospices provide families with bereavement care for up to one year following the death of the patient, although Medicare payment stops at the time of death.

The emotional burden of caring for a dying person can have dire consequences. Caregivers have a 63% greater chance of chronic stress than non-caregivers. This stress is linked to decreased immunity, greater cardiovascular reactivity and slower wound healing (Schulz, Beach, 1999). Therefore, support of the caregiver prior to the patient¹s death and during the bereavement period following the death can significantly improve the health and coping skills of caregivers if not reduce their health care costs.

Additional Services
The all-inclusive benefit also covers homemaker services, physician management services, medical supplies and appliances, home health aides, physical and occupational therapy, speech language pathology services, dietary and other counseling. Many of these are high cost items and yet reimbursement is from the same per-diem rate.

Care is provided primarily in the patient¹s home
The hospice benefit was designed to cover services primarily in the patient's home, unless symptoms or care became unmanageable at home. The original bill contained an 80/20 provision, which limited a provider's total inpatient days to 20% of all patient days delivered in a year by any hospice. This rate did not apply to each individual patient, but rather to the agency as a whole. The provision was intended to control costs, prevent the program from becoming an inpatient model, and preserve the hospice philosophy of care in a home setting.

Hospices rarely have more than 20% of all their patient days in the in-patient level of care. General inpatient care accounted for 11% of total hospice days in 1997. This reflects a more realistic ratio of 90/10, 90% of patients are served at home compared to 10% in an in-patient facility (Gage, Miller, et al, 2000).

In a 1996 Gallup Poll sponsored by the National Hospice Organization, 1007 adults were asked if they were terminally ill with 6 months to live: "would you prefer to be cared for in a nursing home, hospital or similar facility or in your own home?" Results showed that 88% prefer to die at home, and 8% selected a facility. These results reinforce the original hospice premise held in the late 1970¹s that people prefer to die in the comfort of their own home surrounded by loved ones.

Coverage of outpatient prescription drugs
This is one of the most attractive aspects of the benefit for patients. The hospice benefit covers 95% of medication costs for drugs related to the terminal illness, for pain relief and symptom management. This is one of two areas where there is a co-payment to the patient. The drug co-payment is 5% of the cost of the drug, or $5 per prescription item, whichever is less. However, rarely, if ever, does a hospice charge patients the co-payment.

The 6-month rule The benefit defines of "terminally ill" as follows: "The individual has a medical prognosis that the individual¹s life expectancy is 6 months or less." Patients must have a life expectancy of 6 months or less as certified by their physicians and the hospice medical director (Hoyer 1998). While this issue was a minor factor in 1983, it has become a major factor in hospice of 2001. With the discovery of new treatments, additional medications that extend life, and more patients with unpredictable prognosis, it is increasingly more difficult for physicians to predict a prognosis of 6 months or less.

Explicit, precise, and compassionate responses to patients' requests for prognosis should be a key part of a physicians training; however it is not. Medical textbooks and journals do not include the topic of prognosis, and medical schools provided no training in making prognosis. The entire medical profession seems to overlook the importance of making accurate prognosis¹s (Christakis, 1999). Yet to be admitted to hospice, the Medicare Hospice Benefit requires physicians to give patients a prognosis of 6 months or less.

In an effort to assure physicians that certainty of prognosis is not required for a hospice referral, in January 2001 HCFA released a memo to NHPCO clarifying that "a referring physician¹s certification is based upon best clinical judgment" (NHPCO Newsline, 2001). This is a clarification memo not a regulation. However, it will be effective when hospices are faced with a fiscal intermediary who has denied payment based on a patient who has "lived too long".

Benefit periods
Initially, Medicare's hospice benefit consisted of three benefit periods with a lifetime limit of 210 days of coverage. Patients who lived longer were to be served by the hospice without charge to Medicare or to the patient. If patients were unable to pay for services, the hospice was not allowed to discharge them (Hoyer, 1998). In 1983, this risk bearing arrangement was unusual for a Medicare provider; most providers were paid on a fee for service basis. This requirement made hospice a version of managed care before managed care was common.

Since hospice providers were at risk for delivering services after 210 days they had an incentive to enroll only seriously ill patients, despite the difficulties of predicting prognosis.

The original hospice legislation also established four levels of hospice care with corresponding levels of payment. They are capitated, all-inclusive and prospectively set per diems. The amount does not change, regardless of the volume or intensity of services provided. Payment rates are adjusted by the hospital wage index to reflect geographic variations in cost (Gage, Miller, et al, 2000). The four payment levels include:

Routine home care
Patients are at home (or living in a nursing facility), under the care of hospice, receiving less than 8 hours of care per day. Payments for routine home care range from $100-140 per day. Approximately 87% of all Medicare hospice expenditures are for routine home care.

Continuous home care
This care is provided during brief periods of crisis to maintain patients at home. A continuous home care day is at least eight hours long and consists predominantly of continuous nursing care. The payment rate is approximately $565 for 24-hours of care. These payments account for 1% of Medicare hospice expenditures.

Inpatient respite care
Hospice patients may receive respite care in approved facilities on a short-term basis (not more than five days at a time) to give their caregivers a rest. The payment rate for this level is approximately $100 a day. Respite days represented less than 1% of Medicare hospice expenditures.

General inpatient care
Patients may be admitted to approved facilities for pain control or acute symptom management that cannot be controlled at home. This level of care may be provided in a hospital, a hospice inpatient facility, or a skilled nursing facility. The payment rate for this level is approximately $432 a day and represented approximatly 11% of Medicare hospice expenditures.

Beneficiaries are to pay a 5% co-payments for outpatient drugs and for respite care. However, few hospices charge these co-payments due to the difficulty and time required for billing compared to the potential yield.

Therefore, the Medicare Hospice benefit essentially covers 100% of the care for the terminally ill beneficiary and the bereavement support for the family. This is a tremendous relief for most families who have had to bear the financial and emotional burden of the patients¹ terminal illness.

The cost of the Medicare Hospice Benefit

The U.S. spends more per person on health care than any other nation yet it ranks 37th among all nations with respect to access, quality and delivery of health care to its citizens (National Hospice Work Group, 2001). Congress passed the Medicare Hospice Benefit in an effort to reduce the cost of care at the end of life. Medicare data from 1976-1988, revealed that the federal government spends 30% of all medical funds on 5% of beneficiaries in their last year of life (Lubitz and Riley, 1993).

The SUPPORT study of gravely ill hospitalized patients found that 38% of patients who died spent at least 10 days in an intensive care unit (ICU). Under traditional Medicare, the patient is responsible for 20% of hospital charges. The Medicare Hospice Benefit prevents additional financial burden on a grieving family.

In 1988, HCFA sponsored a study of the Medicare hospice benefit during its first three years. This study compared treatment costs between hospice patients and other patients with cancer diagnosis during their last seven months of life. The study estimated that, the government saved $1.26 for every dollar spent on hospice compared to other non-hospice Medicare Part A expenditures. Much of the savings occurred during the last month of life, largely due to home hospice care being substituted for inpatient care (Kidder, 1992).

A 1995 study showed that for every Medicare dollar the federal government spent on hospice, it saved $1.52 in Medicare Part A and part B expenditures. This study also showed that in the last year of life, hospice patients incurred $2,737 less in out of pocket costs than dying patients who did not use the Medicare Hospice Benefit. Those savings totaled $3,192 in the last month of life as hospice home care days often substituted for expensive hospitalizations (National Hospice Palliative Care Organization, 2001).

Although the literature suggests that, for dying patients, hospice care is a cost-effective alternative to conventional care, some have challenged these findings. In a 1994 study, researchers called the cost savings associated with advance directives and hospice care an illusion (Emanuel and Emanuel, 1994). Other researchers suggested that savings could not be generalized beyond cancer patients because the data were limited and there have been too few randomized studies (Gage, Miller, et al, 2000).

III. The Hospice Industry Matures

Original patient profile:

In 1982, the typical hospice patient had cancer, was a homeowner with a caregiver in the home, had a moderate level of education and income, and did not want any further treatments.

Trends in Hospice Patient Profile: Patient Characteristics 1987-1990 1995-96 Sex Female 47% Female 50% Race White 90% White 80% Black 7% Black 11% Age Mean 76 years Over 65 67% Under 45 8% Diagnosis Cancer 85% Cancer 70% Non-cancer 15% Non-cancer 30% (Banaszak-Holl, Mor, 1996) (Gage, Miller, et al, 2000)

Since 1987, these trends began to change as hospices began to serve more patients living alone without caregivers; homeless patients; terminally ill prisoners; Medicaid recipients; children; persons with AIDS; persons with non-cancer diagnosis such as Alzheimer¹s Disease, Chronic Obstructive Pulmonary Disease (COPD), Congestive Heart Failure (CHF), liver and lung diseases which have a less predictable prognosis and are seen as more chronic in nature than cancer; substance abusers; patients with complicated treatments for palliation (radiation, chemo therapy, implanted pumps for delivery of opioids, and blood transfusions).

As suggested by these trends, hospice has become more accessible to a wide variety of Americans with greater health care needs and less financial resources. This has resulted in a greater financial burden on hospices and challenged them to provide a higher level of technical care not previously experienced.

Hospice in the Nursing Home

Medicare hospice beneficiaries residing in nursing facilities represents the fastest growing hospice population since the Medicare Hospice benefit was passed. In 1998, these residents accounted for up to 35% of all hospice beneficiaries in some markets (Petrisek and Mor, 1998).

In some regions of the country, nursing facility administrators "discourage" Medicare hospice enrollment by beneficiaries who qualify for Medicare's Skilled Nursing Facility (SNF) coverage. This "skilled" Medicare coverage pays the nursing facility a higher rate than the standard residential rate paid by Medicaid for room and board. Therefore, there is a financial incentive for the nursing facility to encourage patients to use the "skilled" benefit until it is exhausted, (after approximately 90 days).

For hospice patients living in nursing facilities, enrolled in both Medicare and Medicaid, the nursing facility can only bill for and receive the Medicaid residential rate. Medicare will not pay two providers and thus the hospice would be paid according to the MHB guidelines (Gage, Miller, et al, 2000).

The two types of agencies are often at odds philosophically, if not financially. The typical nursing home staff is trained to care for chronically ill people with rehabilitation needs, while the hospice staff is always trained to provide palliative care at the end of life. There is also potential conflict with which agency is responsible for the patient¹s plan of care.

A recent nationwide study shows that severe pain among elderly nursing home residents is prevalent, persistent and poorly treated (Teno, Mor, 2001). Other studies have demonstrated the value and quality of hospice care used by residents of skilled nursing facilities. One study found that hospice patients in nursing facilities are less likely to be hospitalized in the last 1-6 months of life. This study also revealed that hospice patients in nursing facilities had superior pain assessments since pain was more likely to be detected (NHPCO, 2000).

Among nursing home patients with daily pain, those under hospice care were significantly more likely to be treated with pain medications than those not receiving hospice care. These findings suggest that the "value added" of hospice care may increase the quality of life, at least for nursing home patients who receive hospice in the last few months of life.

Community Advocacy

As hospices have grown they have become trusted agencies in their communities because hospice staff members have provided honest answers to the difficult questions of life and death. As hospice services have expanded, they include community education and outreach programs.

Freestanding, community based, not for profit hospices began offering bereavement services to the community for the non-hospice family members experiencing loss and grief. These expanded services also include advice on living wills, decisions of stopping treatment; children¹s grief camps; symptom management training for physicians; and other health professionals, and web sites as a resource for patients and families.

IV. Changes in the Health Care System
Managed Care and Hospice

Prior to 1997, Medicare beneficiaries were required to disenroll from their HMO if they opted for hospice care. The growth of managed care in the 1990¹s and the large numbers of Medicare beneficiaries enrolled in HMO¹s resulted in conflicts when hospice care was selected. Dying patients wanted both hospice and HMO coverage. In response, federal legislation enacted in 1997 allowed for both types of coverage to be offered simultaneously to terminally ill beneficiaries enrolled in the MHB.

When an HMO enrollee elects hospice coverage, Medicare pays hospice the usual and customary per diem amount for the hospice care and the HMO payment is reduced to 1/12 of the prior monthly capitation. This small capitation rate covers any additional benefits the HMO offers to its enrollees. By allowing the Medicare Hospice coverage to be "carved out" of the HMO¹s primary capitated rate, the beneficiaries have greater choice in their care, the HMO still receives a small payment and the hospice becomes the primary provider of care.

Balanced Budget Act of 1997

Eight items in the Balanced Budget act of 1997 affected hospices. One of the most significant changes was that reimbursement would be based on the location where the hospice service was provided, rather than where the service was billed. Large regional or national hospices typically billed for all their patients at their urban rate, where their administrative offices were located, rather than the much lower rural rate where patients often lived. For some hospices this rate difference was more than $10 per day.

The second major change was to restructure the hospice benefit periods to include two 90-day periods, followed by an unlimited number of 60-day periods. The hospice medical director would have to re-certify the beneficiary¹s status as terminally ill at the beginning of each benefit period. This expansion of the unlimited benefit period would allow the hospice and the patient more flexibility, should the illness stabilize and the patient request discharge from hospice. This change would prevent patients from losing the lifetime benefit of 210 days (Gage, Miller, et al, 2000).

The BBA of 1997 also allowed for HMO enrollees who needed hospice to receive both HMO and hospice coverage simultaneously. These changes resulted in more flexibility for patients to move in and out of their hospice benefit coverage depending on their condition, preventing any loss of hospice benefit days for patients.

Hospice providers were pleased with the increased flexibility the BBA offered them as well. With new treatments offered to patients and diseases with less predictable prognosis, the expansion of an unlimited number of 60-day periods was a relief from financial risk.

Physician Assisted Suicide

Dr. Jack Kevorkian fueled the upsurge in interest in assisted suicide. By revealing that he was assisting patients to commit suicide, he brought to the attention of the American public the cry for help of many chronic and terminally ill people. In the midst of his controversial acts he pointed to the sense of helplessness that occurs when dying people feel they have lost control of their lives and do not want to be a burden on their family.

His drastic measures brought this topic into the open for public debate all over America and the world---something the hospice movement had never been able to accomplish. As a result, more families were beginning to talk about their wishes, and hospices were able to educate the public about their mission.

Clinton Administration¹s Operation Restore Trust

In 1995, Operation Restore Trust was established to identify areas in the Medicare program that might be vulnerable to fraud, waste, and abuse. It was a joint project of the Office of the Inspector General (OIG), HCFA, and the Administration on Aging. Audits were conducted in five states (California, Florida, Illinois, New York, and Texas) where hospice spending represented 40% of total Medicare expenditures. In-depth audits revealed problems related to hospice certification of nursing facility residents and the services they received.

As reported in the March 23, 1997 issue of the US News and World Report hospice advocates believe they were being penalized for their effectiveness. Terminally ill patients often live longer than expected because of the quality of care, says Mary Labyak, who runs the Hospice of the Florida Suncoast.

Mark Cohen spokesperson for VITAS, the largest for-profit hospice in the US, said federal investigators were holding hospice programs to standards that did not exist. For example, investigators were looking for lab test results, X-rays and other "black-and-white" evidence that the patients in the hospice would not live longer than six months. The Medicare Hospice Benefit only requires the opinion of two physicians to certify a patient has less than six months to live.

Some experts contend that federal auditors have it exactly backwards. Rather than penalizing hospices for helping patients live longer, getting terminal patients into hospice programs quicker could save more money. While 15% of hospice patients live longer than six months, according to Dr. Nicholas Christakis, a University of Chicago researcher, 29% of patients die within two weeks of entering hospice. These late enrollees miss the full effect of hospice, and they likely spend their last months in more expensive hospitals.

Since the OIG audits began, the number of long-term hospice patients nationwide has declined, after years of steady growth. In Fla where the audits were initially set) In 1996, at the Hospice of Lake and Sumter Counties in Florida, patient days were down 30% over the previous year, 31 employees were laid off and 59 jobs eliminated. To the government, this was a sign that hospices were being more careful. But Labyak of Hospice of the Florida Suncoast fears the terminally ill are losing access to needed care.

The OIG estimated that 16% of hospice patients living in nursing facilities did not actually qualify for the MHB upon enrollment. Some admissions to hospice were considered premature, even though patients had a terminal illness. The OIG ruled that the patients conditions were not deteriorating, according to the National Hospice Organization¹s (NHO) Medical Guidelines for Determining Prognosis in Selected Non-Cancer Diseases (NHO,1995a). These guidelines were to be used as a reference for hospice medical directors when admitting patients with non-cancer diagnosis like Alzheimer¹s disease, CHF, and COPD. These Guidelines were not mandates and were not intended to be used as regulations, as the OIG interpreted them.

According to the OIG, hospice workers visited beneficiaries living in nursing facilities less frequently than the NHO guidelines suggested (NHO, 1995b). At the time, the OIG recommended reducing the hospice payments for hospice Medicare beneficiaries in nursing facilities or revising the benefit requirements for nursing facility residents (Gage, Miller, et al, 2000). Yet, no changes in the law have been made nor have any repayments been required by the OIG from the affected hospices.

These findings were based on medical reviewers' opinions rather than on empirical data. No comparable group of dying residents of nursing facilities was examined. The hospice industry felt as if it had been judged without a jury of its peers. FBI agents arrived at hospices, demanded charts, refused explanations and left after weeks of investigation. Families were angered and hospices were outraged that the OIG would claim an "inappropriate" admission because a patient died after 7 months rather than 6 months under hospice care.

NHO disputed what in its view were differences in medical opinion used to determine eligibility. Hospices all across the US believe the "intense scrutiny" by the OIG investigations have in part led to underutilization of the MHB, reduced lengths of stay, and a tainted hospice image. The intense OIG scrutiny in recent years may also have contributed to physicians being hesitant to refer patients to hospice. While cancer remains the dominant condition afflicting hospice patients, other chronic terminal conditions, such as congestive heart failure (CHF) and chronic obstructive pulmonary disease (COPD), whose survival rates are more difficult to predict also are occurring more frequently (Gage, Miller, 2000).

The shortened lengths of stay have adversely affected hospices and the patients they care for. A General Accounting Office report found that patients spent two weeks less in hospices in 1998 than in 1992. From 1992 to 1998, the average length of hospice stay declined 20% from 74 to 59 days. The median length of hospice stay declined 27% from 26 to 19 days (US-GAO, 2000). Hospice care has been referred to as a marathon rather than a sprint, therefore shorter lengths of stay do not allow for optimal pain and symptom management or time for trust to be established.

Major Studies

Robert Wood Johnson¹s SUPPORT study
Funded by the Robert Wood Johnson Foundation, SUPPORT, (the Study to Understand Prognoses and Preferences for Outcomes and Risks of Treatment) collected data on about 10,000 seriously ill patients in five teaching hospitals from 1989 to 1994.

This major study documented the failure of physicians to communicate with patients about their care preferences at the end of life and to adequately treat their patients' pain and suffering.

Some of the major findings included:

• Only 47% of physicians knew when their patients preferred to avoid CPR
• 46% of do-not-resuscitate (DNR) orders were written within 2 days of death
• 38% of patients who died spent at least 10 days in an intensive care unit (ICU) • 50% of conscious patients who died in hospital had moderate to severe pain at least 50% of the time according to family members

One of the most insightful explanations of the findings in the SUPPORT study pointed to our culture that forcefully resists the notion of death. Families, health care practitioners, and patients themselves are often unwilling to ask questions and make decisions that would reduce the fear of dying.

The SUPPORT study has since generated further investigations. The Robert Wood Johnson Foundation continues to fund projects to improve end of life care, including expanding the principles and practices of hospice; identifying barriers and opportunities to improve end-of-life care in managed care settings; and developing a toolkit to help hospitals measure quality of care at the end of life.

Study on Pain Management
It is estimated that 60-90% of patients with advanced cancer will experience significant pain (Portenoy 1989). In the past, pain was typically associated with end-stage cancers, but it is now recognized that significant pain can be present at any stage and may be present for long periods of time.

As pain becomes severe, it interferes with normal functions, such as movement, appetite, sleep, emotional well-being and relationships (Ferrell, Wisdom, and Wenzl 1989). Relief of pain can bring remarkable improvements in the quality of life for people who have cancer.

Tragically, cancer pain is often under-treated. It has been estimated that one-half to three-quarters of cancer patients with pain are inadequately treated and that nearly 25% of all cancer patients die with severe unrelieved pain (Daut and Cleeland 1982).

With the passage of the Oregon Death with Dignity Act on assisted suicide, pain management became a national issue and raised expectations to no longer have any patient suffer silently in pain because the physician is afraid to order narcotics for terminal pain management. Pain management has and will continue to improve as more nurses and physicians receive training in this critical area.

In 1998 Bernabei and Gambassi published the findings of their study of Management of Pain in Elderly Patients With Cancer. A group of 13,625 cancer patients aged 65 years and older discharged from the hospital to a variety of nursing home facilities from 1992 to 1995 were interviewed. The researchers found that daily pain was prevalent and was often untreated, particularly among older and minority patients. This is an important and often overlooked medical problem: too many elderly patients with cancer, indeed, cancer patients of all ages suffer needlessly from unrelieved pain.

Medical Education on EOL care
The Education for Physicians on End-of-life Care (EPEC) Project was developed by the American Medical Association (AMA) and funded by a grant from the Robert Wood Johnson Foundation. It is designed to educate US physicians on the essential clinical competencies required to provide quality end-of-life care. At the heart of the EPEC Project is a core curriculum that provides physicians with the basic knowledge and skills needed to appropriately care for dying patients.

The EPEC Curriculum has been designed with input from nationally respected experts in the field and feedback from participants of early training conferences.

V. Living within the Hospice Medicare Benefit in 2001

People are living longer; new treatments for cancer are reducing the predictability of prognosis; more non-cancer (CHF, COPD, Alzheimer¹s, AIDS, ALS) patients are receiving hospice care in a variety of settings: homes, hospitals, nursing homes, adult living facilities, hospice homes, congregate living facilities, prisons, jails, and in homeless shelters.

Since the OIG investigations, physicians have been cautious about signing their names to a document stating that a patient has 6 months or less to live. This has resulted in reduced lengths of stay for hospices until many programs are providing "brink of death" care only days before death.

Fiscal intermediaries vary in their interpretations of the hospice regulations. Medical directors from various regions of the country may not agree on whether the NHPCO¹s guidelines for admission of non-cancer patients are indeed guidelines rather than regulations causing inconsistencies among hospice care. The NHO guidelines are to be used to evaluate a patients¹ condition for admission to hospice. To be eligible for admission to hospice, patients must demonstrate certain levels of disease progression. These levels are based on lab work, physical symptoms, and prior treatments.

Hospices may be more restrictive in their admission guidelines due to high cost of palliative treatments or fear of restrictive oversight from their fiscal intermediaries. They fear a Medicare fixed rate will not cover the expense of new therapies or new expensive drugs for palliation. And they fear that if they admit patients too soon, they will be reprimanded by HCFA and required to pay back any overpayments.

Drug costs for hospice patients have been escalating. The original pharmacy provision in the benefit extrapolated to today¹s dollars is $2.58 per day. The actual costs for medications range from $13-16 per patient day (NHPCO, 2000).

Due to the 6-months requirement by Medicare, some hospices may limit certain admissions including terminally ill children, whose physicians and/or parents refuse to place a time frame on their death.

VI. What is next for Hospice?

The Hospice Successes

In 1999, approximately 2.4 million Americans died. Hospices served nearly 40% of all the predicted deaths (excluding homicide, suicide, accidents, sudden death). To achieve a 40% market share in just 20 years, in any other business would have been seen as miraculous. For example, the United States soft drink giant Coca-Cola, who has been in business since 1886, only had a 44% market share in 1999 while Coke¹s main rival, Pepsi had 31% share of the US market.

Preliminary data from a two year Outcomes Forum Study by the NHPCO and the National Hospice Work Group (NHWG) have shown tremendous satisfaction among hospice users and their caregivers. The results of the two pilot studies indicated that the majority of patients entering a hospice program in pain are made comfortable within days of admission and their wishes to not be hospitalized or submitted to the rigors of CPR are honored. Primary caregivers responding to surveys about their hospice experience indicated that their confidence in caring for the patient increased because of hospice services. They also said they received effective support in preparing for the death and coping with their life changes after the death of their loved one (NHPCO, 2001). In

1999, 75% of non-hospice patients died in either a hospital or nursing home. Nearly 80% of hospice patients died at home supporting the overwhelming majority (88%) of Americans who would choose to stay at home to die (NHPCO, 2001).

The Medicare Hospice Benefit (MHB), is regarded as Medicare¹s "hidden treasure" by Senator Chuck Grassley (R-Iowa), chairman of the Senate's Special Committee on Aging. But since this benefit was incorporated into Medicare in 1982, relatively few families have taken advantage of it.

The hospice model of care with its interdisciplinary team, supportive care, and symptom management is being imitated in a variety of settings: Palliative care programs, managed care case-management, physician practices, PACE (Program of All-inclusive Care for the Elderly) programs and others. The end-of-life care movement is working to build hospice-like features into the health care system. This may be an outcropping of the failure of hospice to interest the majority of people in enrolling in hospice care early enough to make a difference in their long-term treatment choices (Hoyer 2001).

Challenges for Hospice

Death is still a taboo topic in America. A 1999 public opinion survey found Americans over the age of 45 years would rather talk about sex and drugs with their children than discuss end-of-life care with their terminally ill parents. In addition, 80% of the respondents did not understand the concept of hospice.

This survey also reveals that the topic of death is to be avoided. Therefore, if hospice equals death to most people, then unless you are dying, hospice is not on the radar screen of most Americans. The US government offers this comprehensive benefit but more than 90% of Americans do not know that hospice care is a fully covered Medicare benefit.

In the past 6-8 years physicians and other health care professionals in major medical institutions, have developed palliative care programs. These services provide management of pain and other symptoms to hospitalized patients. National studies are underway to measure the outcomes of these programs.

The emergence of palliative care programs has challenged hospices to "prove" their worth. Hospice has been the only comprehensive program of care for the dying until recently. Many hospice leaders believe palliative care programs should be the outcropping of hospice programs not hospitals.

Potential changes to the Medicare Hospice Benefit
If the Medicare Hospice Benefit is to reflect the current needs of Americans, it should:

• Remove any penalties for hospices that exceed average length of stay of 6-months.

• Remove the 6-month criteria for admission. Or, at a minimum, extend the eligibility to 12 months. This would increase appropriate admissions by allowing physicians more flexibility in estimating prognosis. Patients may not be as reluctant to accept hospice if there was no time limit on their life expectancy.

• Create a tiered payment system in which patients who require a high level of intensity of care are billed at a higher rate than those with lower levels. This would be similar to the existing levels of care with more gradations of the levels.

• Allow hospice providers to do other business in addition to hospice care, consult with hospitals and nursing homes to assist in the management of care for the terminally ill or with individuals who have not yet elected hospice (Hoyer 2001). This would extend the hospice concept of care to chronically ill people in need of care provided by expertly trained hospice staff. And it would allow payment to the hospice for those services.

• Simplify the room and board payment system for nursing facility residents who choose hospice. This would prevent the nursing facility from "hoarding" the "skilled" patients to receive higher payments from Medicare. It would also allow facility patient¹s access to the most appropriate care available.

New Models of End of Life Care
Aside from revamping the Medicare Hospice Benefit, the creation of new models of service will be necessary to meet the needs of a growing number of elderly Americans. Examples of new models include:

• Senior care management programs that offer hospice-like services: physical, emotional, spiritual as well as practical and financial assistance to elders.

• PACE (Program of All-inclusive Care for the Elderly) programs offer not only health and social care but also low cost housing for the low income, frail elderly.

• Palliative home care programs offering comfort care to chronically ill.

• The MediCaring model that combines capitated financing and palliative care models for people with chronic and eventually terminal illnesses.

• Palliative care/hospice programs in hospitals and nursing homes offering services and consults to chronically and terminally ill patients.

None of the above ideas (except PACE) are currently funded by Medicare. Therefore demonstrations projects are needed to identify the cost and benefit of such endeavors.

Conclusion

About 80 million Americans are living with chronic diseases such as cancer, heart and lung diseases, dementia and HIV. These long-term illnesses will at some point claim their lives. Living with these medical conditions, means living with increasing disabilities over a long period of time, increasing caregiver burden and stress on the existing system that was created for episodic care and crisis management.

People who are slowly aging are also slowly dying. When hospice care was introduced in the US thirty years ago, people often died from diseases with a predictable course over a short period of time. Today, dying is no longer measured in terms of a few weeks or months; rather it is a process that most often involves a progression over years (National Hospice Work Group, 2001). Therefore, any services that are to be designed for the dying patient and family in the future must plan and accommodate for these changes.