Quality of Care Under Medicare
Care Management: Policy Considerations for Original Medicare
Research Report
Lisa Foley, AARP Public Policy Institute
June 1999
Table of Contents:
- Introduction
- Beneficiaries Who Would Use Care Management
- Existing Medicare Provisions
- Implications of Payment Reforms for Care Management
- Research Findings Related to Care Management in Medicare
- Challenges for Policy Development
- Conclusion
- References
- Footnotes
- Acknowledgements
Introduction
This Issue Brief is about policy issues that affect the coordination of care for beneficiaries in the original fee-for-service Medicare program who have difficulty managing various aspects of their care. These are beneficiaries who generally have significant health care needs. Many receive services in their homes from multiple providers, possibly over lengthy periods of time. Depending upon their living arrangements and access to informal caregivers, these beneficiaries may lack adequate support to help them navigate the rough waters of health crisis or decline. Medicare policy does not provide for direct assistance with planning and coordinating health care services, although, as discussed below, some care planning takes place in connection with the delivery of certain covered benefits.
While individual needs vary, "care management" for beneficiaries may entail 1) assessing clinical needs and ordering services; 2) arranging and coordinating care among Medicare providers and practitioners; and 3) assisting with referrals or access to other government programs, community-based caregivers, and philanthropic organizations. Depending on the individual needs of beneficiaries. a single provider or the combined efforts of skilled professionals may be involved in managing beneficiary care. For Medicare policymakers, the rising costs of post-acute care and care for chronically ill beneficiaries have led to the idea that some form of organized "care management" can be a mechanism for controlling expenditures, reducing unnecessary services, and generally improving program efficiencies.
The purposes of this Issue Brief are: 1) to present a policy context for viewing proposals related to care planning and coordination, or "care management," in the original fee-for-service program; and 2) to identify and discuss key challenges for developing effective policy.
To present the policy context, the Issue Brief describes the potential users of Medicare care management, and reviews existing provisions related to care planning and coordination. A brief review of relevant research is included. The concluding analysis anticipates and responds to two sets of policy concerns, one relating to beneficiary access to care and the other to the roles of health care professionals, especially physicians, in care planning and coordination.
A note on terminology: This Issue Brief uses such terms as "care management" and "care planning and coordination" instead of the more common term "case management." Although these terms are all similar in meaning for the purposes of a policy discussion, it was felt that "case management" conveys an undesired sense of bureaucracy and a distance between the program and the beneficiaries that care planning and coordination would in fact seek to bridge.
Top of PageBeneficiaries Who Would Use Care Management
Medicare beneficiaries in need of care planning and coordination are typically those with medical needs after hospitalization and those who cannot easily leave home to receive necessary medical attention and related services. These are largely distinct groups of Medicare users with differing needs who would probably use care planning and coordination in different ways.
"Post-acute" Beneficiaries. Approximately 10 million Medicare beneficiaries are discharged from short-stay hospitals each year. According to one analysis, 28 percent of these beneficiaries receive post-acute care within one month of discharge from a hospital.1 They receive this care primarily in skilled nursing facilities (SNFs) or at home from home health agencies. (See Figure 1.) Small percentages of post-acute care users are discharged to rehabilitation facilities or long-term care hospitals. Eighteen percent of post-acute users receive care from more than one provider after hospitalization.2
Medicare beneficiaries receive the same general types of services in SNFs or in their homes. Once initial SNF or home health eligibility criteria are met, Medicare covers medically necessary skilled nursing care, therapy services such as physical, speech, and occupational therapy, and medical equipment and supplies. The home health benefit also covers the services of home health aides, as long as skilled nursing services are also provided to the beneficiary. The SNF and home settings differ in many important respects, with SNFs providing round-the-clock nursing care. Beneficiary coinsurance can be quite burdensome for SNF stays over 20 days ($96.00 per day in 1999), while there are no coinsurance obligations for Medicare home health users.
Long-Term Home Health Users.In addition to beneficiaries recently discharged from the hospital, the Medicare home health population includes a second group. This group consists of beneficiaries living at home with disabilities, chronic conditions, or complex medical needs. Medicare researchers and policy experts have concluded that many of these Medicare beneficiaries are using home health benefits to meet long-term chronic care needs.3 One study found that beneficiaries who had not been hospitalized for at least 6 months previously accounted for 43 percent of home health visits.4 Long-term users receive Medicare home health because of a severe chronic condition, disability, or a combination of poor health conditions. They are too sick to leave home for treatment, and may lack adequate informal caregiving support. In contrast to those needing post-acute care, these beneficiaries use Medicare home health over a longer period, have higher numbers of visits, and utilize home health aide services at higher rates.5 (See Figure 2.)
In recent years, policymakers have begun to focus on Medicare expenditures for these two groups of beneficiaries. Several of the key Balanced Budget Act (BBA) provisions affecting original Medicare were directed at controlling SNF and home health costs, which had become the fastest-growing Medicare costs. However, reforms have not addressed policies for planning and coordination of care for these two groups of beneficiaries. Given the circumstances of these beneficiaries and the program costs of caring for them, further development of Medicare policy related to care management is a logical step.
Existing Medicare Provisions
Before turning to consideration of new policy options, it is important to understand current Medicare provisions pertinent to care management. Some Medicare providers do perform certain care planning and coordination tasks, some of which are covered at least nominally by one Medicare payment mechanism or another. Hospitals, for example, are required to employ discharge planners who serve as intermediaries between beneficiaries and available post-acute care providers. Discharge planning is compensated as a regular part of hospital reimbursement. Physicians, under currently policy, make clinical assessments in order to certify the medical necessity of post-acute and other home health care. This activity is generally not separately reimbursable, although a physician who is actively involved with the supervision of home health plans of care may be separately reimbursed. Finally, nurses and social workers who staff the SNFs and the home health agencies inevitably play a role in clinical assessments, care planning, and referrals, but these activities are generally not separately reimbursed.
These policies taken together reflect a flawed approach that leads to a pair of related problems in the delivery of post-acute care or long-term home health care. The first problem is the lack of formal coordination among the practitioners and providers caring for a beneficiary at any given time. Among the array of professionals serving a beneficiary in these circumstances, no one person or agency is responsible for coordinating the appropriate care. To the contrary, Medicare coverage and reimbursement policies tend to keep these providers and health professionals functionally separate in the post-acute environment.6
In the absence of a patient-centered structure for coordination, a second problem that emerges is the potential for inappropriate "coordination." For instance, a discharge planner may work for a hospital that owns post-acute care units. Such a relationship may produce incentives for the provider to place financial interests above the care needs of the beneficiaries. Physicians responsible for certifying the need for the care may rely on information from an interested provider rather than his or her own observations.7 Although truly corrupt patient-steering practices are subject to Medicare anti-fraud provisions, fraud and abuse enforcement cannot address many of these inherent conflicts of interest. Clinical independence in care management is also important in terms of protecting beneficiary access. This issue will be discussed later in this Issue Brief as a key policy concern.
Implications of Payment Reforms for Care Management
How Medicare reimburses post-acute providers may have important practical implications for care management. The BBA directed the Health Care Financing Administration (HCFA) to begin changing the methodology for reimbursing home health agencies, SNFs, rehabilitation facilities, and long-term care hospitals. The BBA changes are intended to slow the growth of Medicare spending for post-acute care services, and to shift financial risk to the providers, who are believed to be in the best position to efficiently allocate needed services among a mix of clients. When these changes are fully implemented, post-acute care providers will be reimbursed according to rates set prospectively, rather than based on provider-claimed costs. The established rates will reflect beneficiary-specific factors such as the beneficiary's condition, in addition to provider-specific circumstances, such as regional wage levels. The precise methodologies for determining the rates will also vary according to the type of post-acute provider, e.g., home health agency or SNF.
Whereas the incentives of cost-based reimbursement are associated with the potential for overutilization or inefficient care delivery, prospective payment could have the effect of encouraging providers to limit even necessary services in order to maximize profits. From a programmatic standpoint, the function of care management could differ according to the payment incentives. Under cost-based reimbursement, care management could serve as a check on excessive utilization and poorly organized service delivery, while also providing needs assessment and care coordination to beneficiaries. In a prospective payment system, a care manager could function to protect beneficiary access to covered services by documenting care needs, assuring that appropriate medical orders are communicated to providers, and referring beneficiaries to available sources of non-Medicare services.
Research Findings Related to Care Management in Medicare
While care management as a policy option for Medicare has not been subject to a great deal of research, the findings that emerge from various sources tend to confirm the value of care planning and coordination from a beneficiary standpoint. Other issues related to care management, such as financing, costs, and cost-effectiveness, have also been examined, with varying results. The following brief review discusses findings from two relevant pilot projects sponsored by HCFA.
Medicare Care Management Demonstration. Between 1993 and 1995, HCFA tested three different case management approaches in demonstration projects operated respectively by a Medicare fiscal intermediary, a Peer Review Organization (PRO), and a hospital. The intermediary provided health and self-care education to beneficiaries previously hospitalized for congestive heart failure (CHF). In the demonstration at the PRO, there was a mixture of activities involving service coordination and self-care education for beneficiaries with one of two diseases (CHF and chronic obstructive pulmonary disease). The hospital case management project, involving a beneficiary population with varying but typically serious or chronic conditions, focused more on service coordination. The projects varied in other respects, such as participant recruitment and enrollment, and the degree of case manager involvement with the patients.8
Other than findings of high patient satisfaction across the projects, the results of these demonstrations were generally disappointing. In terms of clinical outcomes, hospital readmission rates were not found to be lower in the study groups, compared with control groups. In the case of the hospital-based site, readmission rates were actually higher in the demonstration group. In addition, patient self-care patterns and activities were generally not improved.9 Medicare utilization and costs were not affected over the period of the study. The beneficiaries in the demonstration groups were similar to those in the control groups in their use of services from emergency rooms, post-acute providers, outpatient departments, and physicians. The notable exception was at the hospital-based site, where higher utilization of emergency and outpatient services was observed. Medicare expenditures, overall, were similar between the pilots and the control groups, except that Part B spending was found to be somewhat lower at one site.10
Despite these mixed findings, evaluators hesitated to dismiss care management as a potentially useful service. Reasons for the lack of positive outcomes were identified and explained, with the suggestion that the following four design elements would be important in future pilots:
- full physician involvement on the care management team.
- highly focused interventions and goals.
- trained and experienced care management staff.
- project incentives to reduce or control Medicare costs.11
Evaluators also presented options for structuring a care management program that might lead to lower Medicare costs. Three payment models were suggested for further testing:
- capitated payments to care managers for patients with specified diseases.
- no direct payments for care management, but provisions for sharing of Medicare savings attributable to providers' care management activities.
- direct payment for care management, with bonus payments for achieved savings.12
HCFA is continuing its work in this area. Future pilots can be expected to build upon the results and recommendations of these initial pilot projects.
Care Management in the S/HMO Demonstrations. Other potentially relevant research findings emerge from evaluations of the Social Health Maintenance Organization (S/HMO) demonstration projects. These projects, which have been ongoing at various sites since 1985, provide acute and long-term care to low-income elderly persons. The S/HMOs are reimbursed on a capitated basis, from a combination of funding sources, especially Medicare and Medicaid. The operational aspects of S/HMO programs differ across the projects, and the programs have each evolved separately over the years. Care management has figured prominently at virtually every site:
- The S/HMOs have used care management approaches to assess chronic care needs and authorize services for enrollees.
- Care managers have assisted enrollees in obtaining non-covered services and benefits, such as Social Security entitlements, legal aid, and housing.
An early evaluation report observed that "the case managers have been able to monitor and maximize benefits with considerable success."13 But the evaluators found variability "in the extent to which the acute and long-term services had been integrated to provide an effectively coordinated continuum of care for impaired elderly."14 Subsequently, other reviewers of early S/HMO results have called for better links between S/HMO care management and acute and post-acute care. Two themes emerge from specific suggestions: first, there are opportunities to improve policies and processes for physician presence and involvement in post-acute care planning;15 and second, more activities should be directed at streamlining assessment and coordinating Medicare skilled care with related "community care benefits."16
The data on care management costs are relatively positive in terms of total S/HMO costs, which are financed by Medicaid as well as Medicare. The care management function is reflected as a modest administrative cost, or even as a revenue center to the extent that needs assessments result in Medicaid eligibility determinations.17 However, there is no documentation of overall Medicare savings attributable to S/HMO case management activities. Further, since the S/HMO demonstrations are studies in capitated reimbursement, cost data are not particularly useful in the context of fee-for-service Medicare.
HCFA's research of care management in Medicare and the S/HMOs is generally inconclusive. However, the findings do point in specific directions for further work. First, the weight of the available evidence indicates that Medicare care management holds the most promise when the activities are highly focused, especially if centered on beneficiaries with specified conditions, such as congestive heart failure. Second, while care management in post-acute care may not reduce Medicare costs, the patients nonetheless benefit from efforts of care managers to maximize their care options.
Challenges for Policy Development
To this point, this Issue Brief has outlined the policy context for analyzing proposals that might improve or restructure care management in Medicare. The context is presented in terms of the beneficiaries who may be affected; existing policies and their flaws; the implications of recent changes in reimbursement methodology; and the findings of relevant research. In the following concluding analysis, an attempt is made to identify more clearly the policy challenges that have emerged from the discussion. Viewed broadly, the most significant issues involve protecting beneficiary access and fostering interdisciplinary values in fee-for-service medicine and health services. These are distinct problems in conceptualizing care management in Medicare, requiring separate and independent policy strategies.
Developing Policies to Protect Beneficiary Access.
The Focus and Scope of Care Management. An overarching concern, particularly for beneficiary access, is how policy defines the focus and scope of care management. The question of focus is the question of whether the purpose of care management is primarily to meet beneficiary needs for care planning and coordination or, rather, to monitor and control utilization of Medicare services. It is reasonable to expect that care management will generally fulfill both of these programmatic objectives. However, service delivery and cost control may also be competing objectives, in specific cases or as a matter of practice over time. An obvious strategy for protecting beneficiaries is to develop policy that explicitly stresses a beneficiary-focused approach.
Similarly, the scope of care management activities, as defined in policy, has important implications for those beneficiaries who need care planning and coordination. For instance, narrowly defined care management activities could be limited to planning and coordinating Medicare services. Such activities might be helpful in many circumstances. However, some beneficiaries might have additional needs that a broader scope of care coordination could address. Under a broader definition, the care manager could also be made responsible for making appropriate referrals to non-Medicare programs, and procuring other resources available in the community. This type of assistance could well be more than a matter of comfort and convenience for beneficiaries, particularly if care management were to lead to reduction or discontinuation of Medicare services. Even the appropriate withdrawal of Medicare services might result in real hardships for some beneficiaries. In addition to possible personal and social hardships, the effects might be more directly health-related, putting the beneficiary at risk of acute illness in the future. Through policy, Medicare could minimize these risks and hardships by providing for care managers who could identify and coordinate a comprehensive array of Medicare and non-Medicare services.
Medicare policy might also specifically address beneficiary access to care management itself. In certain cases, existing policy provides for the services of a hospital discharge planner or attending physician who is already involved in assessing beneficiary needs at a critical time. However, beneficiaries at home with unstable conditions may also need care planning and coordination services at periodic intervals, whether or not they are already receiving Medicare services. To assure their access to care, Medicare policy could provide some mechanism through which a beneficiary with significant or complicated care needs could request an assessment and other care management services as appropriate.
Independence of Care Managers. The degrees of clinical and financial independence in the care management process are important considerations for beneficiary protection, whether the care manager is solely responsible or is leading an interdisciplinary team. A care manager who is not independent from the hospital, home health agency, or skilled nursing facility may have a compromised ability to make assessments and care arrangements fully in the beneficiary's interest. To minimize this risk, care managers could be prohibited from having organizational or financial ties to other providers in the continuum of care.
At the same time, Medicare policies must also clarify the care manager's role in terms of the program's cost-controlling objectives. Although care planning and coordination may lead to more efficient care delivery, the care manager must not be expected to "ration" post-acute care. In light of the BBA reforms affecting the post-acute care benefits, this is a real and critical concern. If Medicare compensates care managers based on expectations of reduced utilization, then there is increased potential for inappropriate denial or restriction of Medicare covered services. At the program level, monitoring and oversight should not focus on costs without also reviewing concerns related to beneficiary access.
Promoting Coordinated Care in Fee-For-Service Medicare.
A second policy challenge for developing care management in Medicare is to alter professional practice patterns so that all of the necessary disciplines are committed to coordinated care for beneficiaries in the original fee-for-service program. While policy plays a role, it is not clear that policy by itself will change the professional orientations that sometimes impede the most effective care planning and coordination. For example, while research findings suggest that physician involvement in care management is critical, it also appears that physicians have not assumed an active role in that process.18 At the same time, Medicare policy gives the physician sole authority to order services and legal responsibility for certifying that the services are necessary. The policy dictates a bureaucratic role for physicians that is not well matched to the realities of professional practices.
One policy option is simply to increase the incentives for physicians to perform more care management for their patients who need it. In 1995, Medicare began offering additional reimbursement for physician supervision of home health care plans. While this reform has not substantially changed the level of physician involvement in coordinating beneficiary care, it is possible that additional financial incentives would have more impact. The impact of increased financial incentives on total program costs, accounting for the potential efficiencies of care management, is not known.
For care management defined narrowly, increasing physician involvement is a promising strategy by itself. Existing policy has already assigned to the physician the clinical role of assessing and reassessing needs, and ordering care as appropriate. However, such a strategy is not by itself sufficient to provide the entire range of care planning and coordination services that a beneficiary may need as a user of post-acute or long-term home health services. These additional services, as already discussed, might include non-medical needs assessments or assistance with obtaining non-Medicare services. Care management thus more broadly defined may require physicians to work closely with other health care professionals, such as discharge planners, nurses, therapists, or social workers.
Apart from the question of adequate financial incentives, prevailing medical practice norms may also be important factors in implementing care management policies. Care management strategies for older people generally emphasize a team approach where medical expertise is joined with other relevant disciplines such as nursing, social work, pharmacy and the various therapies.19 Yet there are indications that many physicians who care for older people lack interest in, training for, or experience with interdisciplinary approaches to care management.20 Thus the Medicare program must have policies that effectively lead physicians to new practices in this area. This may be one of the most difficult of the policy challenges because the program has limited influence over professional practice, besides offering financial incentives.
On the other hand, the progress of recent trends in geriatric medical practice may be encouraging. Organized medicine has begun to promote interdisciplinary care management practices and techniques, especially for physicians who serve older patients. More recent medical school graduates and physicians who have worked in integrated care environments have the benefit of training experiences that may make them more amenable to a team approach than their mentors of previous generations. If such shifts in practice norms become established, Medicare beneficiaries may eventually have access to an adequate supply of physicians who embrace interdisciplinary care management. In the meantime, questions related to physician involvement warrant serious consideration for future research and pilot projects.
Conclusion
The original Medicare fee-for-service program and its beneficiaries could benefit from efforts to improve the management of post-acute care and long-term home health care. Any new policy must be carefully framed to avoid care management that harms Medicare beneficiaries. Specifically, policy approaches that are narrow in focus and scope, or overemphasize the objective of cost-control, may leave beneficiaries vulnerable to care rationing in the guise of planning and coordination. On the other hand, a broader, beneficiary-centered approach would preserve, and could even expand, access to the full range of needed services available in the continuum of care.
Explicit policies that adequately define a beneficiary-centered approach are not necessarily sufficient to accomplish this objective. Effective strategies must also be developed to promote interdisciplinary collaboration among providers entrusted with planning and coordinating beneficiary care.
AMA, "Medical Management of the Home Care Patient, Guidelines for Physicians," 2d. Ed., 1998.
_____, "Report 4 of the Council on Medical Service (I-97) Physician Involvement and Oversight in the Home Health Services," 1997.
Cassel, Christine K., Richard W. Besdine and Lydia C. Siegel, "Restructuring Medicare for the Next Century: What Will Beneficiaries Really Need?" Health Affairs, January/February 1999.
Feder, Judith and Jeanne Lambrew, "Why Medicare Matters to People Who Need Long-Term Care," Health Care Financing Review, Winter 1996.
Finch, Michael, Rosalie A. Kane, Robert Kane, Jon Christianson and Bryan Dowd, "Design of the Second Generation S/HMO Demonstration: An Analysis of Multiple Incentives," Final Report to the Health Care Financing Administration, July 1991.
Leutz, Walter, Ruby Abrahams, Stuart Altman, John Capitman, Leonard Gruenberg, Denise Hallfors and Grant Ritter, "Design of Second-Generation Social Health Maintenance Organization Sites," Final Report to the Health Care Financing Administration," April 1993.
Schore, Jennifer, Randall Brown, Valerie Cheh and Barbara Schneider, "Costs and Consequences of Case Management for Medicare Beneficiaries," Final Report to the Health Care Financing Administration, April 1997 (Ref. #500-92-0011(02)).
Medicare Payment Advisory Commission, "Context for a Changing Medicare Program," Report to Congress, June 1998.
_____, "Medicare Payment Policy," Report to Congress, March 1999.
Office of the Inspector General, Department of Health and Human Services, "Hospital Stays for Medicare Beneficiaries Who Are Discharged to Home Health Agencies," August 1998.
_____, "The Physician's Role in Home Health Care," June 1995.
1 Medicare Payment Advisory Commission (MedPAC), "Context for a Changing Medicare Program," Report to Congress, June 1998, p. 91.
2 MedPAC, June 1998, p. 93, Table 6-4.
3 MedPAC, June 1998, p. 107. Trends in home health utilization are described in depth throughout Chapter 7 of the MedPAC report. The use of the Medicare home health benefit for long-term care services is also discussed by Judith Feder and Jeanne Lambrew in "Why Medicare Matters to People Who Need Long-Term Care," Health Care Financing Review, Winter 1996.
4 Welch, H. Gilbert, M.D., M.P.H et al, "The Use of Medicare Home Health Services," New England Journal of Medicine, August 1, 1996, p. 326.
5 MedPAC, June 1998, pp.109-111.
6 Cassel, Christine K., et al., "Restructuring Medicare for the Next Century: What Will Beneficiaries Really Need?" Health Affairs, January/February 1999, pp. 121-123.
7 In 1998, the Inspector General of the Department of Health and Human Services issued a "Fraud Alert" cautioning physicians of their potential liability for certifying home health care without the necessary foundation in sound medical judgment. This message to the physician community may increase physicians' personal involvement in the future.
8 Schore, Jennifer, et al., "Costs and Consequences of Case Management for Medicare Beneficiaries," Final Report to the Health Care Financing Administration, April 30, 1997, pp. 14-19.
9 Schore, et al., pp. 189-192.
10 Schore, et al., pp. 192-194.
11 Schore, et al., pp. 194-196.
12 Schore, et al., pp. 201-209.
13 Yordi, Cathleen L., "Case Management in the Social Health Maintenance Organization Demonstrations," Health Care Financing Review, 1988 Annual Supplement, p. 86.
15 Finch, Michael, et al., "Design of the Second Generation S/HMO Demonstration: An Analysis of Multiple Incentives," Final Report to the Health Care Financing Administration, July 1991, p. 92.
16 Leutz, Walter, et al., "Design of Second-Generation Social Health Maintenance Organization Sites," Final Report to the Health Care Financing Administration," April 1993, p. ii, pp. 196ff.
18 Schore, et al.; Office of Inspector General, Department of Health and Human Services, "The Physician's Role in Home Health Care," June 1995; Leutz, et al., pp.207-209; American Medical Association, "Physician Involvement and Oversight in the Home Health Services," Report 4 of the Council on Medical Service (I-97). See above, footnote 7.
19 Cassel, et al.; Leutz et al. (chapter 10).
20 Leutz, et al; Office of Inspector General.
The author wishes to acknowledge the helpful comments of Randall S. Brown, Mathematica Policy Research Inc.; Enid Kassner, JoAnn Lamphere and Gerry Smolka, AARP Public Policy Institute; and Maryanne Keenan, AARP Legislation and Public Policy.
Written by Lisa A. Foley, AARP Public Policy Institute
June 1999
©1999 AARP
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Pub ID: IB38