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Hospice: An HAA/NAHC Historical Perspective

Hospice Assocation of America

What's NewThis is a history of the Medicare Hospice Benefit (MHB), organized by significant events in the year in which they occurred. Our story runs from the initial U.S. Senate Special Committee on Aging hearings on end-of-life care and introduction of the first legislation to create the hospice benefit to the present. It is interesting to note that the President of the National Association for Home Care & Hospice (NAHC) Val J. Halamandaris, former Council of the Senate Special Committee on Aging was the staffer responsible for this hearing at which Elisabeth Kubler Ross testified. The Director of the Hospice Association of America (HAA), Janet Neigh, then an Aging Committee staffer, also assisted with this hearing. NAHC's former Senior Counsel, Frank E. Moss, introduced the first hospice legislation. NAHC, in testimony before the Senate Finance Committee in 1983, pointed out the serious lack of quality and fiscal controls in the benefit as structured. It took 23 years for the MHB to grow enough to get the attention of the Centers for Medicare & Medicaid Services (CMS) for them to devote resources to rewrite the MHB Conditions of Participation (CoP) and include in the final expected version significant quality requirements.

1972: U.S. Senate Special Committee on Aging conducted the first hearing on death with dignity featuring testimony from Elisabeth Kubler Ross on her best-selling book, On Death and Dying.

1974: Senators Frank E. Moss (D-UT) and Frank Church (D-ID) introduced first legislation to provide federal funds to support hospice programs.

In March of this year, The Connecticut Hospice, America's first, began providing hospice care in the home, funded by the National Cancer Institute.

1977 & 1978: The National Cancer Institute provided funding for additional hospices.

1979: The Administration on Aging funded several hospice demonstration projects.

The Government Accountability Office identified 59 hospices and 73 organizations that planned to establish hospice programs. About half were licensed as hospitals, home health agencies or nursing homes. The others were community-based volunteer hospices that did not directly provide services requiring licensure.

The Health Care Financing Administration (now the Centers for Medicare & Medicaid Services) funded 26 hospice demonstration programs across the country.

1982: Largely through the efforts of Senators Robert Dole (R-KS) and John Heinz (R-PA), Congress included a provision to create a Medicare hospice benefit in the Tax Equity and Fiscal Responsibility Act of 1982, with a 1986 sunset provision. Congress was concerned about cost containment and included a cap on both overall annual aggregate per-patient expenses and inpatient hospital utilization. CMS created a prospective daily reimbursement system. The legislation stipulated a 210-day lifetime patient limit on the benefit.

1983: NAHC testified at a hearing held by the Subcommittee on Health of the US Senate Committee on Finance in preparation for creating regulations to activate the benefit. NAHC proposed an amendment to the legislation to allow some contracting so that many "legitimate providers, including many public, city and county health departments, particularly those in rural areas" could participate in the hospice benefit. It was also pointed out that there was a serious lack of quality and fiscal controls which left the program highly susceptible to fraud and abuse. June ‘s 1983 CARING Magazine was a special hospice issue.

NAHC conducted a survey of all US hospice programs to learn how the proposed regulations would affect them. The results showed:

  • 55.3 percent of hospices fit the "Coalition Model" definition (provides service primarily by coordinating and managing the existing nursing, medical and community social services rather than providing all mandated services);
  • 19.7 percent of survey respondents provided all mandated core services directly.
  • There was concern about what would happen when a patient lived beyond the 210-day lifetime limit on the benefit.
  • NAHC printed a Tribute to Dr. Elisabeth Kubler-Ross as the leading advocate of the death awareness movement and prime mover in the field of hospice care in the October issue of CARING. Dr. Kubler-Ross was a major speaker at NAHC's Second Annual Meeting in San Francisco.

1984: NAHC prints a summary of the National Hospice Study in its January 1984 issue of CARING.The study found that the conditions under which demonstration hospices operated were significantly different from those imposed by the enacting legislation. The average length of stay was 62 days for hospital-based agencies and 72 days for home health agency-based; the median stay was 33 and 37 days respectively. Over five percent of patients stayed longer than 210 days. The average cost was $66 in home care programs (7.2 percent inpatient care) and $95 in hospital based agencies (29.2 percent of care in inpatient setting). Freestanding hospices used nearly four times as many volunteer hours as home health agency or hospital affiliated hospices. Hospice is recognized as a viable and medically sound alternative to conventional care. Costs were significantly less than conventional care when the length of stay was under two months. Home Care patients continued to represent cost savings regardless of the duration but hospital based patients cost significantly more when staying longer then two months.

1985: At the request of members, NAHC created the Hospice Association of America (HAA) to provide a unified voice for all hospice providers.

The Omnibus Budget Reconciliation Act of 1985 gave a 10% increase in reimbursement rates, made the Medicare Hospice Benefit permanent and allowed hospices to care for residents of nursing facilities. States were given the option of including hospice in their Medicaid programs. There were 158 Medicare certified agencies.

1986: HAA/NAHC helped push through legislation which included extending the Medicare presumption of waiver of liability to include hospice services.

1988: At a workshop at HAA's Annual Meeting in San Francisco, Government Accountability Office (GAO) survey team members state that preliminary research shows that hospices are not participating in Medicare because reimbursement is inadequate.

1989: HAA played a major role in convincing the Congress to include a provision in the Omnibus Budget Reconciliation Act of 1989 resulting in the first increase in reimbursement since 1985 and tied future rates to the annual change in the hospital market basket.

1990: Again, HAA worked with the Congress to eliminate the 210-day lifetime benefit limitation. An unlimited fourth benefit period was included in the Omnibus Budget Reconciliation Act of 1990. The number of certified agencies grew to 806 that cared for 76,491 persons for an average of 48.4 days. HAA convinced the Health Care Financing Administration (HCFA - predecessor of CMS) to allow some contracting for hospice core services.

1991: Hospice care was authorized in either military hospitals or under CHAMPUS (now TRICARE) in the National Defense Authorization Act. HAA worked with the Commission on the Future Structure of Veterans Health Care (Mission Commission) that released its report recommending inclusion of hospice care in the veteran's benefit package.

1992: Congress passed the Indian Health Care Improvement Act of 1992, calling for a hospice feasibility study. CMS discontinued the hospice cost report. The Hospice Association of America (HAA) created a system of financial data collection for internal use, and pilot tested it at the 1993 HAA/NAHC regional meetings.

1993: The number of hospices participating in the Medicare program had grown from 31 in 1984 to more than 1,288 in 1993. The fastest growth was in home care agency-based and freestanding hospices. The average cost per patient was still significantly less than the Medicare hospice cap amount. Thirty-six states offered the hospice option under their Medicaid programs. Hospice retained its volunteer basis; Medicare-certified hospices nationally used an average of one volunteer full-time equivalency (FTE) for every two employee FTEs. HAA/NAHC helped to ensure that Hospice was included in the President's basic benefits package as a nationally guaranteed benefit under his health care reform proposal. The average length of stay (LoS) increased to 57.2 days for 202,768 MHB patients.

1994: Congress passes a Hospice Association of America proposed provision in the Social Security Act Amendments of 1994 that requires a hospital discharge planner "to evaluate a patient's likely need for appropriate post-hospital services, including hospice services and the availability of those services."

CMS sent out a memorandum alerting the regions of problems regarding questionable certifications and recertifications of terminal illness. This resulted in the first "focused medical review" for hospices and a wake-up call to the industry to improve its documentation and certification procedures or be denied payments.

1995: HAA provided comments on CMS's expanded version of the Hospice Interpretive Guidelines that provided much needed clarification of the conditions of participation. The CHAMPUS Hospice Benefit was implemented June 1, 1995. It mirrors the Medicare Hospice Benefit in conditions of participation and reimbursement.

HAA participated in the CMS Negotiated Rulemaking Committee on the Medicare Hospice Wage Index that recommended a proposed rule to update the hospice wage index (not changed since 1983). CMS guaranteed continuing budget neutrality of the index update each year usually resulting in a higher index than that for the home health benefit.

1996: HAA worked with the Office of the Inspector General (OIG) on its 1996 Work Plan and Operation Restore Trust. The plan focused on investigating how hospices are admitting patients, what services are being provided, and the relationship between hospices and nursing facilities.

HAA participated in the $1.2 million Robert Wood Johnson Foundation-funded campaign to educate consumers and physicians about end-of-life decision-making.

HAA created the Volunteer Hospice Network (VHN) to provide a national forum for volunteer hospices to meet, share information and resources and develop ways to expand their services and cooperate with Medicare-certified hospices.

HAA was named the US coordinator for British Telecommunications' Voices for Hospice, an international fundraising event based in the United Kingdom.

1997: HAA/NAHC worked with the Congress to pass the Balanced Budget Act of 1997 (BBA) that ultimately included some positive and negative Hospice provisions:

  • Payment based on location of service, not hospice agency.
  • Change in benefit periods - now 90-90 and unlimited number of 60-day periods.
  • Hospice responsibility for other items & services in plan of care, such as ambulance services.
  • Contracting with physicians - amended the core service requirement to allow hospice to contract for physicians' services.
  • Waiver of certain staff requirements - physical therapy, occupational therapy, speech language pathology services and dietary counseling available as needed on a 24-hour basis. These waivers available only in an area that is not urbanized and can demonstrate to CMS that it has made diligent efforts to recruit appropriate personnel.
  • Limitation on liability of beneficiaries and hospices for certain hospice coverage denials.
  • Extension of period for physician certification of an individual's terminal illness. Certification must still be obtained within 2 days after hospice care begins but written certification need only be on file prior to submission of a claim. An initial plan of care must be established at the start of care, prepared by the hospice physician or nurse, in consultation with the attending physician (if there is one) or the hospice physician and one other member of the IDG. Certifications of terminal illness must include specific clinical findings and other documentation supporting a life expectancy of 6 months or less.
  • Cuts in reimbursement rates totaling 4.25%.

1998: Hospices nationwide report rapidly declining average and median lengths of stay. The percentage of hospice non-cancer admissions decreases dramatically, reflecting the problems associated with determining a six-month prognosis for these patients.

An Operation Restore Trust (ORT) report on hospice states: "Overall, the Medicare hospice program seems to be working as intended." The Office of Inspector General (OIG) reveals that hospice will not be included in its 1999 work plan.

1999: HAA/NAHC worked with the Congress to enact Balanced Budget Act refinement legislation (PL 106-113) that increased hospice rates in 2001 and 2002 by 0.5 percent and 0.75 percent, respectively.

The US Postal Service issued the Hospice Care commemorative stamp in February.

HAA worked with the OIG on their Draft Compliance Program Guidelines for the Hospice industry.

2000: The office of the Assistant Secretary for Planning and Evaluation (ASPE), U.S. Department of Health and Human Services (HHS) and the Urban Institute, released a study, "Medicare's Hospice Benefit: Use and Expenditures," confirming cost effectiveness of hospice in the last six months of life.

The Medicare Payment Advisory Commission (MedPAC) released a report, "Medicare Beneficiaries' Costs and Use of Care in the Last Year of Life" (May 2000 - No. 00-1) showing that, in 1997, hospice services accounted for only 4% of care given and represented a significantly lower cost per patient than any other Medicare benefit.

GAO released report, "More Beneficiaries Use Hospice; But for Fewer Days of Care" (GAO/HEHS-00-182, Sept. 18, 2000) stating that for the first time, the number of hospices closing in 1999 exceeded new entrants.

HAA/NAHC helped get the Benefits Improvement Protection Act of 2000 (BIPA) enacted. It contained the following hospice provisions:

  • 5% increase in Medicare Hospice Benefit base payment rates,
  • codified physician certification language,
  • called for a Department of Health and Human Services study of physician certification language,
  • mandated a MedPAC report on access to and use of the MHB,
  • created an ability to appeal local medical review policy (LMRP) decisions to Administrative Law Judges.

2001: CMS initiates discussions on Medical Review with Hospice Associations to improve access to hospice.

HAA/NAHC participates in CMS meeting with Hospice and nursing facility associations and representatives of residents to create best practices for caring for hospice patients residing in nursing facilities.

OIG work plan includes focus on hospice plans of care for both nursing home and non-nursing home populations, hospice payments to nursing homes and use of continuous home care.

There were about 2,283 Medicare certified hospices that cared for 579,801 patients for an average of 49.9 days at a cost to Medicare of $6,228 - still well below the per beneficiary cap of $16,650.

2002: MedPAC released report, "Medicare Beneficiaries Access to Hospice (May 2002)" with two recommendations: 1) the Department of Health & Human Services (DHHS) should evaluate hospice payment rates to ensure they are consistent with costs of providing appropriate care; and 2) DHHS should research differences in the care and resource needs of hospice patients, determine whether a case-mix adjusted payment system for hospice care is feasible and study ways to establish a high-cost outlier policy. (

2003: HAA/NAHC helped get Congress to pass the Medicare Prescription Drug and Modernization Act of 2003 (HR 1 and S 1) which: 1) authorized payment for a Hospice palliative care consultation benefit; 2) allowed nurse practitioners to follow their patients onto the hospice benefit; and 3) allowed hospices to contract with other hospices and for highly specialized nursing services. The latest CMS data indicate that 713,400 terminally ill Americans received an average of 57.6 days of hospice care. However, the more important median LoS was 16 days.

2004: MedPAC issued a Report to the Congress recommending the Medicare Hospice Benefit payment system be reviewed and possibly changed but additional data must first be collected and analyzed. The GAO issued a report in response to BBRA 1999 which compared the MHB payment rates to costs and evaluated appropriateness of per diem payments. GAO also recommended that CMS collect comprehensive patient-specific data on costs, visits and services to determine if the per diem payment system and categories need to be modified. CMS estimates that Medicare expenditures for hospice in 2004 were $7.2 billion projected to increase to $8.6 billion for 2005.

HAA's Advisory Board of Directors finalizes the Hospice Patients' Bill of Rights.

2005: The long awaited proposed updated Hospice Conditions of Participation (CoPs) were printed in the Federal Register for comment at the end of May, 2005. HAA offered extensive education for members, seeking input for comments on the proposed CoPs which were submitted at the end of July. CMS now has a maximum of three years after their publication to implement the revised CoPs. CMS has stated the new CoPs should be out by fall of 2007 but they must be released by May, 2008.

2006: CMS issues new requirement for hospice advance beneficiary notice effective September 29, 2006. HAA/NAHC works with CMS to clarify requirements. CMS also issues new requirement effective January 2007 for hospices to bill continuous care in 15-minute intervals and indicate location of patient at time of receiving services. There are increasing numbers of hospice claims being reviewed by the fiscal intermediaries in various parts of the country with a focus on non-cancer diagnoses. CMS funds a hospice quality benchmarking study. HAA/NAHC initiates a hospice benchmarking and quality of care project to help members comply with expected requirements in the new Hospice CoPs. The number of hospices continues to grow, mostly in the for-profit category but nonprofits still represent about 60 percent of certified hospices. Volunteers continue to be an important component of hospice care, but the number of volunteer staff has been on the decline for several years. CMS added a new Tier II survey requirement for a 5 percent targeted survey of State-identified hospices most at risk for quality problems.

2007: CMS retroactively corrects hospice cap calculations for fiscal years 2003 and 2004. Demand letters must be mailed to hospices over the cap by July 31, 2007.

CMS announces it will begin paying hospices based on site of service for the general inpatient and inpatient respite levels of care rather than the location of the hospice, effective January 1, 2008. President Bush's budget includes a proposed permanent reduction of 0.65 percent in the hospice payment update each year. The OIG issues a report, "Medicare Hospices: Certification and Centers for Medicare & Medicaid Services Oversight" in which it is critical of the efforts CMS has expended in its oversight responsibilities. CMS responds that it is increasing its oversight activities and Acting Administrator Leslie Norwalk testifies before the US House of Representatives Committee on Ways & Means that the agency is "concerned about what we've been seeing in hospice" with lengths of stay varying "tremendously in various parts of the country." She also states " Hospice is not intended to be used as a nursing home." CMS anticipates a savings of $0.6 billion through the use of increased targeted medical review.

CMS issues Change Request 5567 requiring hospices to report visits and charges of nurses, social workers, home health aides, physicians and nurse practitioners acting as attending physicians on hospice bills effective January 2008. Working with hospices, NAHC was successful in convincing CMS to grant a six-month extension for this requirement. Hospices must now begin reporting visits/charges effective July 1, 2008. NAHC's Homecare & Hospice Financial Manager's Association developed templates to help hospices develop a charge per visit. NAHC was also successful in its efforts with CMS to restrict inpatient hospice visit counts to employees of the hospice.

2008: CMS released the Medicare Hospice Benefit final Conditions of Participation (CoP) in the June 5 Federal Register to take effect December 2, 2008. The delay in implementation is meant to give hospices time to adjust to the new requirements in the CoP. This is the first time the CoPs have been rewritten since the beginning of the benefit in 1983.

HAA/NAHC will continue to work with the Congress, CMS and other public and private organizations to ensure comprehensive hospice services remain a viable choice for patients at the final stage of life.

References: Hospice Association of America Facts & Statistics, Hospice Forum, Caring Magazine.


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