Promoting Excellence : Full Report : Aligning Palliative Care with Capitation

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Sutter Visiting Nurse Association and Hospice

A project of Sutter Visiting Nurse Association and Hospice of Emeryville, California, focuses on patients in capitated Medicare risk plans. Comprehensive Home-based Options for Informed Consent about End-stage Services, or CHOICES, for short, is designed to care for chronically ill, medically unstable, high-risk elders in their own homes. By reducing the incidence of medical crises, emergency room visits and hospitalizations, CHOICES has successfully demonstrated its value and cost-effectiveness.

The patients targeted by CHOICES are at high risk of falling through the cracks of existing regulations and service delivery programs. They don’t meet the Medicare Hospice Benefit’s definition of “terminally ill” because they lack a clear prognosis of six months or less to live. And they are understandably unwilling to forgo life-extending treatment in order to enroll in hospice care. Yet such patients may also be excluded from home health coverage because they are only intermittently homebound or because they lack defined skilled nursing needs. CHOICES’ eligibility criteria were more clinically meaningful and realistic for such chronically ill elderly patients. A diagnosis of an incurable illness and the treating medical professionals’ statement that they “would not be surprised” if the patient were to die within two years sufficed for patients to receive an array of palliative and supportive services from the CHOICES team.

Sutter Visiting Nurse Association and Hospice, Emeryville, California
CHOICES: (Comprehensive Home-based Options for Informed Consent about End-stage Services)
Principal Investigators: Brad Stuart, MD, and Carol D’Onofrio, DrPH
Focus: A program of care coordination, patient/family education, advanced care planning, and home-based medical, psychosocial and end-of-life care for high-risk, medically unstable patients enrolled in Medicare risk plans who otherwise might fall between the cracks of home health or hospice care.

What CHOICES patients need, says co-principal investigator Dr. Brad Stuart, is care coordination, health education, support for advanced care planning and careful management of their medications and symptoms. If they don’t get such support, many of them run into avoidable exacerbations and crises that can land them in an emergency room or an unplanned hospitalization. “This is a project about preventing bad, and costly, outcomes for seriously ill elders, especially hospitalizations. Such crises are common for people this sick, especially under routine and customary—which is to say fragmented—health care,” Stuart says.

The CHOICES team includes a geriatric nurse practitioner, home care nurse, social worker and physician (Stuart). The team offers “transition management,” working with patients living at home, managing their care and building trusting relationships. Over time it becomes possible to clarify patients’ care preferences and start a meaningful dialogue about what lies ahead. But it is not always easy, Stuart says, noting that such clarity often has been more difficult and time-consuming to achieve than anticipated.

The name CHOICES was apt. Patients found its concurrent care valuable by helping them to explore a full range of care options and preferences, often impossible during time-pressured physician’s office visits under managed care. Health plans found that patient and family appreciation for CHOICES’ coordination added value to benefits. Clinicians working in the medical groups appreciated the program’s ability to prevent unnecessary utilization while improving the quality of symptom management, coordination and care planning.

However, the unstable financial terrain of the region’s health care economy, along with shifts in key corporate leadership, mergers and dissolutions among project partners, made it difficult to document CHOICES’ positive fiscal impact—or even to capture the attention of corporate financial officers at the partnering agencies.

Incentives Under Capitation

Sutter VNA and Hospice is a large, established home health and hospice provider in San Francisco’s East Bay within the regional, multi-site, nonprofit Sutter Health system. Under the CHOICES project, Sutter VNA collaborated with North American Medical Management (NAMM), a nationwide physician management group that has many doctor members in the East Bay caring for seniors enrolled on managed health plans.

The cornerstone of capitated managed care is set in holding providers financially responsible for specified health services needed by a defined group of beneficiaries. Avoiding over-utilization is essential for provider organizations to thrive—or even survive—on the permember-per-month capitated rate that managed care companies pay. For a senior population with multiple chronic health conditions, that means supporting patients to make treatment choices reflecting their values and preferences while preventing or responding quickly to medical crises.

“CHOICES was based in a Medicare+Choice HMO setting. That was a fruitful place to innovate, particularly in end-of-life care, because capitated payment means that financing incentives are aligned with better care management to keep people out of the hospital,” Stuart reports. “Unfortunately, the future of Medicare+Choice itself is uncertain. The health care market has definitely changed.” Most of the managed care organizations offering Medicare risk plans in the Bay Area have since dropped Medicare+Choice. NAMM’s enrollment of such patients for medical services under capitation shrank—choking CHOICES in the process.

“The challenge for creative palliative care projects is to shake loose enough savings from preventing hospitalizations and then persuade whomever is paying for those hospitalizations to pay for the preventive coordination, instead,” Stuart says. “The program could pay for itself by saving even a few hospitalizations.” However, amid mergers, changes of leadership and incompatible information systems, cost accounting has proven difficult. The project’s experience underscores the need to collect actual health utilization data, rather than just claims data.

CHOICES’ creators have consolidated their experience in a proposed new endeavor called AIM (Advanced Illness Management) to offer a similar package of staffing and services within a different health care context—home health care under its recently implemented prospective payment system (PPS). “In CHOICES, we provided what the patients needed.We could do that and ignore some of the ‘silos’ or artificial, bureaucratic separations between different categories of service and coverage,” because of capitated financing, Stuart says. “CHOICES made it easy to operate outside of the silos, but in AIM we’ll be consciously operating within the silo of home health care.”

AIM is being designed to provide palliative care coordination in the home at a time when recent changes in home health regulations have thrown the entire industry into turmoil. Stuart is exploring a Medicare waiver or demonstration status to ease some of the home health regulations that don’t exactly fit AIM, including language related to skilled nursing needs, evaluation and homebound status. He hopes to launch the project by the end of 2002, with or without a waiver.

Lessons Learned

Palliating Upstream: The CHOICES program tried to move palliative and end-of-life care upstream, offering it concurrently with active treatment—and succeeded. It was able to serve a broader population than typically enrolled in hospice, including more cardiac patients and others with uncertain prognoses. CHOICES served patients for a median of 260 days, much longer than the local median hospice length of service of 21 days. Therefore, even those CHOICES patients who ended up in hospice with short lengths of stay already had the advantage of earlier palliative care. Pain was being addressed and advanced care plans were in place. Crises and related hospitalizations were uncommon.

Dying at Home: Fifty-nine percent of all patients enrolled in CHOICES who died were at home. Compare that figure with national home death rates of only 22 percent—26 percent for the Northern California region—to see the program’s ability to prevent the crises that lead to terminal hospitalizations. In a capitated health care environment, the rate of deaths at home likely represents substantial cost savings.

The CHOICES approach could be expanded through better coordination with hospitals and especially with emergency room staff, Stuart notes.An integrated health care system potentially could view programs like CHOICES and AIM as a worthwhile investment because home-based transition management and palliative care prevent unnecessary hospitalizations. For example, on average, elderly patients who die at one of the nearest hospitals in the Sutter system do so after 16 days in the hospital—and their Medicare DRG payments on average cover only about a third of the hospital’s costs.

Identifying appropriate patients—while not bringing on too many too soon—is key to the success of this approach. The cost of managing and monitoring chronically ill but stable patients, such as those who suffer from dementias or debilities for years, could become prohibitively expensive. Stuart stresses that the financial viability of programs like CHOICES and AIM depends on identifying and enrolling the highestrisk patients with complex needs. “Transition management is for people who are really sick,” he explains.

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Promoting Excellence in End of-Life Care is a National Program Office of The Robert Wood Johnson Foundation dedicated to long-term changes in health care institutions to substantially improve care for dying persons and their families. Visit for more resources.

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