December 2002

Grant Results

National Program

Targeted End-of-Life Projects Initiative

SUMMARY

In 1999, Milan Basta, M.D., Ph.D., Potomac, Md., reviewed Medicaid nursing home reimbursement policies and their impact on palliative care. Because nearly 70 percent of nursing home residents depend on Medicaid to pay for their care, its policies affect the care that dying patients in nursing homes receive.

Basta reviewed Medicaid nursing home care benefits in the 50 states and the District of Columbia, assessed the impact of these benefits on care for dying nursing home residents and identified how Medicaid hospice benefits vary from state to state.

The project was part of the Robert Wood Johnson Foundation (RWJF) program, Targeted End-of-Life Projects Initiative.

Key Results
Basta submitted project results to RWJF in a report entitled A Review of Medicaid Nursing Home Policies and Their Impact on Care at the End of Life. The results included:

  • Nearly 40 percent of people who reach age 65 will eventually spend time in a nursing home, but at present only 1 percent of nursing home residents receive Medicaid hospice benefits.
  • Most states pay a pre-determined rate for a set of defined services, based upon the costs of the facility. About half of the states are experimenting with matching payment to the needs of nursing home residents.
  • Medicaid pays for prescription drugs in only three states.
  • Patients in nursing homes who are eligible for Medicaid and Medicare can receive hospice care in a nursing home through Medicare.
  • Research does not necessarily support the argument that higher Medicaid reimbursement to nursing homes assures higher quality of services.

Key Conclusions

  • A strategy to improve nursing home care at the end of life must include training of staff.
  • Public scrutiny of quality outcomes in nursing homes might promote accountability.

Funding
RWJF supported the project with a grant of $94,939.

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RWJF STRATEGY

This grant was made as part of RWJF's Targeted End-of-Life Initiative, to improve care at the end of life. RWJF has three strategic objectives in its end-of-life grantmaking:

  1. To improve the knowledge and capacity of health care professionals and others to care for the dying.
  2. To improve the institutional environment in health care institutions and in public policies and regulatory apparatus to enable better care of the dying.
  3. To engage the public and professionals in efforts to improve end-of-life care.

This grant falls within the second of these objectives.

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THE PROJECT

Some 20 percent of deaths in this country each year are among nursing home residents. Because nearly 70 percent of nursing home residents depend on payments from Medicaid, its policies have an impact on the care that dying patients in nursing homes receive.

RWJF provided grant support for a review of Medicaid nursing home reimbursement policies and the impact of the policies on palliative care (the total care of terminally ill people, including pain relief). At issue is not only the level of reimbursement, but also the methods used, and their effect on patient care at the end of life.

The project had three components:

  1. A review and documentation of nursing home care benefits provided by the Medicaid programs in the 50 states and the District of Columbia.
  2. An assessment of the impact of these benefits on care for terminally ill nursing home residents.
  3. Identification of how Medicaid hospice benefits vary from state to state.

The principal investigator used numerous sources to prepare the report, including a literature review, governmental statistics and publications (from the Agency for Health Care Policy and Research and the National Center for Health Statistics), and interviews with clinicians who provide end-of-life care.

The project concluded with a report to RWJF entitled A Review of Medicaid Nursing Home Policies and Their Impact on Care at the End of Life. This report covered the following:

  • Key trends in nursing home care.
  • Characteristics of nursing homes and the patients who reside in them.
  • State Medicaid programs.
  • Various Medicaid reimbursement policies for nursing homes.
  • Medicare hospice benefit in nursing homes.
  • Effect of nursing home reimbursement methods on the quality of care given to patients.
  • Strategies needed to improve the quality of care of patients dying in nursing homes.

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FINDINGS

Key findings included:

  • Nearly 40 percent of people who reach age 65 will eventually spend time in a nursing home, but at present only 1 percent of nursing home residents receive Medicaid hospice benefits. However, end-of-life assumptions for many residents are inaccurate at best. For example, one study revealed that 10 percent of patients had a likelihood of surviving six months, while in fact the actual survival rate at six months was 41 percent. According to the principal investigator, these findings suggest that payment policies for nursing homes that focus exclusively on end-of-life care are not likely to be operational given such imprecise determinations.
  • Most states have transitioned from retrospective reimbursement to prospective payments, in which Medicaid pays a pre-determined rate for a set of defined services. Two states (Nebraska and Pennsylvania) continue to use retrospective payments and three (North Carolina, Tennessee and Virginia) combine the two methods. Prospective payments motivate nursing homes to control costs in order to retain profits, a situation that can result in a reduction of services and quality of care.
  • Most states also are electing to pay nursing homes based on costs that are facility specific up to a pre-determined amount.
  • Twenty-six states are experimenting with case mix reimbursement, in which payment is matched to the needs of nursing home residents. Although nursing homes receive higher reimbursement for higher-need residents, this reimbursement method does not necessarily have a positive impact on quality of care. Facilities may correctly classify a resident as needing a higher level of care, thereby generating more income, but fail to provide the services.
  • Medicaid pays nursing homes for prescription drugs in only three states (Delaware, New York and South Dakota). Advances in pain management include high-tech patient-controlled analgesia using morphine infusions. Studies have shown these to be safe and effective, but morphine infusions are expensive and may cost several thousand dollars per month.
  • Medicaid patients in nursing homes who are eligible for Medicare may choose to receive end-of-life hospice care in a nursing home through Medicare.
  • Research does not necessarily support the argument that higher Medicaid reimbursement to nursing homes assures higher quality of services. Findings suggest that policies oriented to having the appropriate incentives, including appropriate staffing attitudes and organizational values, may be more effective for improving quality than trying to provide higher levels of resources.
  • Present nursing home payment systems do not have an explicit focus on residents near end of life, and homes do not separate residents according to who is dying (except for the 1 percent in hospice care).

The report contains a number of conclusions including:

  • A strategy to improve nursing home care at the end of life must include training of staff. Some nursing home residents suffer unnecessarily because physicians and staff lack the knowledge, skills, temperament or motivation to provide good pain relief care.
  • Public scrutiny of quality outcomes in nursing homes might promote accountability. For example, Vermont has a quality incentive payment that measures a facility's performance against a set of critical clinical indicators and rewards facilities for high quality care. The state then publishes quarterly performance reports for consumers' benefit, a potential incentive for nursing homes to improve their standard of care. Rhode Island has expanded its quality incentive program to include end-of-life nursing home care, with results also available to the public.

Communications

The project director prepared a 35-page report for RWJF entitled A Review of Medicaid Nursing Home Policies and Their Impact on Care at the End of Life.

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GRANT DETAILS & CONTACT INFORMATION

Project

A Project to Review Medicaid Nursing Home Reimbursement Policy and the Impact on Palliative Care

Grantee

Milan Basta, M.D., Ph.D. (Potomac,  MD)

  • Amount: $ 94,939
    Dates: May 1999 to December 1999
    ID#:  036576

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Reports

Basta M. A Review of Medicaid Nursing Home Policies and Their Impact on Care at the End of Life. Potomac, MD: Milan Basta, 2000. Prepared for the Robert Wood Johnson Foundation.

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Report prepared by: Lori De Milto
Reviewed by: Janet Spencer King
Reviewed by: Marian Bass
Program Officer: Rosemary Gibson

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