Home Care and Hospice: Evolving Policy

Home Care and Hospice

Evolving Policy

Jeannee Parker Martin

“Retain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time have the discipline to confront the most brutal facts of your current reality.”

—Jim Collins

There has never been a more exciting time in the United States to discuss policy and politics in home care; the Centers for Medicare and Medicaid Services (CMS), the Medicare Payment Advisory Commission (MedPAC), policymakers, and home care advocates all are involved. Each brings insight and influence to foster a common understanding of how home care can serve as a bridge in the health care delivery system and as a focal point for chronic and transitional care management. To challenge existing practices and to help formulate future health policy, these stakeholders examined the benefits—cost, quality, and access—and heard stories from hundreds of home care beneficiaries and providers. Home care nurses from 50 states were invited to tell their stories at a forum sponsored by Congressmen Jim McGovern (D-MA) and Walter Jones (R-NC), co-chairs of the House Home Health Working Group, underscoring the importance of home care (NAHC Report, 2009, May 13). President Barack Obama’s grandmother received hospice care just days before his 2008 election causing some policymakers to focus on end-of-life care. Consumers invited congressional leaders into their homes to see first-hand how home care is provided. The National Association for Home Care & Hospice (NAHC), a key national home care association, launched a campaign, HelpUsChooseHome.com, to support findings that 9 out of 10 Americans prefer home care over institutional care (National Association for Home Care, 2009). The National Hospice and Palliative Care Organization (NHPCO), the largest hospice association, established a 501(c)(4) subsidiary corporation to lobby policymakers more directly.

These efforts paid off. On March 21, 2010, the Patient Protection and Affordable Care Act (H.R. 3590) was passed followed immediately by the Health Care and Education Affordability Reconciliation Act (H.R. 4872), signed into law days later by President Obama (Patient Protection and Affordable Care Act, 2010). Home care reductions were nearly 50% less than anticipated as a result of lobbying efforts.

Collaboration across health care sectors is crucial to the successful implementation of health care reform. Home care will serve as the bridge as patients transition from one care setting to another and will be core to the health care delivery system. Sutter Health, a $9 billion health system in California, already sees the benefit of home care in controlling costs by coordinating and managing chronically ill patients, according to Marcia Reissig, RN, MS, CHCE, and CEO of Sutter VNA & Hospice. According to Ms. Reissig, Sutter Health system executives increasingly acknowledge and indeed, embrace, the role of home care in reducing costs and improving access and quality for patients across its delivery system (Reissig, 2010).

The Home Care Industry

The home care industry is composed of five segments: home health, hospice, home medical equipment (HME), home infusion pharmacy (HIP), and private duty. Collectively these home care services make up the care delivery system surrounding and bridging other health care segments—hospitals, long-term care services, and physicians. It is not just an adjunct; home care significantly reduces care delivery costs and in some instances substitutes for institutional care. Avalere Health LLC found that patients who received home care early were associated with a $1.71 billion reduction in Medicare posthospitalization spending in 2005-2006 for diabetes, COPD, and CHF (Aquilar et al., 2009). These savings demonstrate an opportunity to incorporate home care at the core of policy decisions and Value Based Purchasing (VBP), a pay-for-performance initiative that ties Medicare payment to quality measures (CMS Office of Public Affairs, 2009) and is included in health reform provisions for all health care sectors.

Key Influencers

Home care has not always been a major focus of health policy discussions. Historically, this low-cost solution and its incumbent spending reductions have been overlooked by policymakers who are largely influenced by hospital and physician groups, supporting associations, and lobbyists. Former Senator Claude Pepper (D-FL), who served in both houses of Congress between 1936 and 1989, was a home care champion; former Senators Robert Dole (R-KS) and John Heinz (R-PA) pushed for the Medicare Hospice Benefit; few other legislators have had as strong an influence. By the early 2000s, the focus on home care by policymakers began to shift. Institutions dedicated to health care research—Avelere Health LLC, Brown University, California Healthcare Foundation, Dartmouth Institute for Health Policy and Clinical Practice, The Robert Wood Johnson Foundation, and others—released studies underscoring the economic and quality benefits of home care (Sutherland et al., 2009; Gozalo et al., 2002; Martin & English, 2008; Cole, 2006). MedPAC, in its capacity to analyze costs, dedicated a major section on home health and a chapter on hospice in its 2009 recommendations to Congress, an indication that home care’s lower cost structure was drawing attention (MedPAC, 2009a). These studies suggest that more Americans will need home care, that chronically and terminally ill patients can be managed at home with significant savings to Medicare, and that rehospitalizations can be prevented with earlier home care interventions. The findings made home care a focal point of health care reform discussions.

Major home care institutions engaged in extensive lobbying efforts with policymakers. Nurses, as chief executives of many home care organizations, lobbied members of Congress, took congressional representatives on home visits, and spearheaded campaigns to influence decision-makers. In 2009, the most influential home care trade associations, NAHC, NHPCO, and VNAA, had a predominance of nurses as trustees and committee chairs. As members of trade associations and as executives of home care organizations, nurses have enormous influence on decision-making—a power that has been underutilized in the past and is increasingly recognized.

Components of Home Care

Home care is governed by state and federal mandates. Certain states require that all home care segments be licensed; others have licensure for some but not all segments. Payment is generally dictated by Medicare, Medicaid, and private insurance companies (HMOs, PPOs, and indemnity programs). Accrediting organizations, such as The Joint Commission, the Accreditation Commission for Health Care, and the Community Health Accreditation Program, provide enhanced standards that complement state licensure and federal payment regulations.

Home Health

Perhaps the most commonly known and most widely used segment, home health care services are provided to older adults, and to a lesser degree to children and other adults with chronic and debilitating diseases and immediate posthospitalization. In 2007, more than 3.1 million people received home health services (MedPAC, 2009b). Referred to as “skilled, intermittent services,” its primary focus is postacute rehabilitation. Medicare, Medicaid, and private insurers pay care for patients with varying limitations, the most common being homebound status, requiring medically necessary nursing or therapy services. VBP, enhanced program integrity, hospital readmission measures, and independence at home demonstrations are provisions in health care reform that offer home health opportunities to strengthen its bridge to chronic care and transitional care management.


Hospice and palliative care is in demand for care to adults and children with advanced and terminal illnesses. In 2008, more than 1.4 million people received hospice care. Hospice is provided in any setting including the home, inpatient, or institutional setting, and is most often considered during the last six months of life. Hospice’s hallmark is its interdisciplinary approach to care delivery for myriad issues facing patients and caregivers. Physicians, nurses, social workers, therapists, counselors, aides, and volunteers together coordinate care delivery. Medicare, Medicaid, and private insurers pay for hospice, and generally follow the framework outlined in the Medicare conditions for coverage and participation (CMS, 2008a). Its most common limitation is too-late referrals to hospice, with 35.4% of patients receiving care for less than seven days (NHPCO, 2009). VBP, quality reporting, payment structure revision, and concurrent care demonstrations are provisions in health care reform impacting hospices.

Home Medical Equipment

Home medical equipment (HME; also known as durable medical equipment, DME) includes mobility devices; oxygen equipment; and incontinence, orthotic, and nutrition products. HME providers deliver equipment to the home or institutional residence and related retail stores. HME is paid out-of-pocket by patients, Medicare, or private insurers. To mitigate rising costs and concerns with quality and access, a controversial competitive bidding process was implemented in 2009 for DME, prosthetic, orthotics and supplies (DMEPOS). Under health care reform, the competitive bidding pricing timetable is accelerated and a controversial provision requires a face-to-face exam for all medical equipment items and services. The impact of these and other provisions (i.e., productivity adjustments, urban payment reduction, lower annual update) will be evaluated in the future based on policy goals focused on access, quality, and lower costs.

Home Infusion Pharmacy

Home infusion pharmacy involves administration of medications using intravenous, subcutaneous, and other routes by nurses in the home. Commonly administered therapies, including antibiotics, chemotherapy, pain management, and parenteral nutrition, are covered under Medicare Part D, and products, supplies, and nursing services are paid for under Medicare Part A, private insurers, and, to a lesser extent, by Medicaid. Efforts to close the gap between covered pharmaceuticals and products, supplies, and services is ongoing (NHIA, 2010).

Private Duty

Private duty companies provide a range of services from medical and nursing care to bill paying and transportation. Their goal is to provide whatever is needed to keep an aged, ill, or disabled individual independent at home (PDHCA, 2009). Some states require licensure if nursing or therapy services are provided. Services are most frequently paid out-of-pocket, although some managed care organizations pay for services. Medicaid waiver programs in some states pay for long-term chronic care management at home, such as ventilator patient care.

Rapid Growth

Formalized home care services began in 1965 with the enactment of Medicare, although services have been available under the rubric of Visiting Nurse Associations for more than 115 years. Today, demand for home care is high. More than 45% of Americans have at least 1 chronic disease, and many home care patients have 5 to 6 chronic conditions. Nearly 2.5% of the U.S. population, 7.2 million people, receives home care services. This number is expected to increase rapidly by 2019 as the population over 65 increases. This is demonstrated dramatically by the growth in chronically disabled and severely mentally impaired war veterans. There have been more than 31,000 casualties in Iraq, many returning home with head injuries sustained during battle (Operation Iraqi Freedom, 2009). Improved helmets and combat techniques spare lives but not serious injuries. Likewise, in the frail elderly, many receive life-prolonging treatments but are left chronically impaired and in need of home care services.

Impact of Population Changes

From Medicare’s inception, the U.S. population increased by 53%. By 2025, the U.S. population is estimated to be 357,452,000, of which 18% will be over 65 and 2.1% will be over 85. These numbers are staggering—more than 64 million over 65 years and 7.5 million over 85 years (U.S. Census Bureau, 2000). Chronic conditions will be prevalent and treatments to prolong life more accessible. Home care providers are experienced in managing chronically ill patients, making it a key solution to help control costs, quality, and access as demand increases.

Competition for Talent

Population growth has caused all health care segments to expand resulting in a demand for talent. Hospitals, long-term care, and home care providers all fight for the same nurses, aides, therapists, and social workers—as the supply decreases. Home care has nearly 1 million workers, approximately 79% clinical staff and 21% management and office support; this staff demand will escalate with home care growth. Advanced practice nurses will be critical to mitigating staff shortages by increasing capacity to manage chronically ill patients at home with more sophisticated clinical and technological interventions. This imbalance of patients to staff will require policymakers to look closely at who will care for patients and consider balancing compensation across all sectors to help assure an even distribution of talent.


Since Medicare payment began, private insurers and Medicaid have generally followed Medicare’s lead. Reimbursement focused only on home health until 1982, when hospice legislation passed. In 1986, states were given the option to include hospice under Medicaid. Other reimbursement distinctions have divided the industry. Until 1993, hospital-based agencies were reimbursed at a higher rate than freestanding agencies. (U.S. GAO, 1992). In a response to rapidly rising home health costs, the Balanced Budget Act of 1997 further impacted home health providers, authorizing the Interim Payment System, a temporary payment system that began the shift toward the Home Health Prospective Payment System (PPS), effective in 2000. Competitive bidding was implemented in 2009 for HME. Hospice providers had smaller more incremental changes between 1984 and 2009. Under provisions of health reform, all segments will be impacted by Medicare savings strategies.

Quality and Outcomes Management

With the implementation of PPS Outcome and Assessment Information Set (OASIS) in 2000 and improvements implemented in 2010 (OASIS-C), quality and outcomes measures are in place for home health and results are available to consumers in Home Health Compare reports (U.S. DHHS, 2009). This outcomes data has improved the capacity to understand the impact of home health on certain disease conditions and related Medicare reimbursement changes and accountability for outcomes management.

No other home care segment has a similar quality measurement system that so closely aligns with outcomes. Hospices must comply with Quality Assessment and Performance Improvement (QAPI), but this more rudimentary approach is limited as a true outcomes measurement system (CMS, 2008b). More sophisticated data analysis will be expected with health care reform provisions, including payment, VBP, and concurrent care demonstrations.

Consumer satisfaction and preferences for home care also caught the attention of policy analysts, influencing decisions to include home care in CAHPS, the Consumer Assessment of Healthcare Providers and Systems (Harris Interactive, 2008). If a home health provider does not participate, Medicare imposes 2% penalties on the provider’s Medicare payments.

Non-Profits versus for-Profits

There are few indicators suggesting that a home care provider’s tax status impacts quality of care or the amount or type of care provided. For hospices, longer lengths of stay have been attributed to some for-profits, but no generalizable research exists demonstrating a negative impact on patient care quality. Yet, the focus on reimbursement and outcomes measures resulted from the increase in for-profits. In 2009, approximately 53% of home health and 46.2% of hospice providers were for-profit (CMS, 2009). Profit margins exceeding 40% by some providers enhanced the concern and focus by MedPAC, policymakers, and researchers. Further research is needed to inform policymakers and to assure alignment of payment adjustments without regard for tax status.

Reimbursement Reform

The focus on home care in health care reform discussions was driven largely by overall growth in: (1) the numbers of Medicare providers (home health 9800, hospice 3200), (2) related net income margins or profitability (more than 40% profit margins in some instances), (3) utilization (Medicare expenditures, patient numbers, lengths of stay), and (4) concerns about fraud and abuse. In deliberations, Congress was in large part influenced by trade associations, special interest groups and studies conducted on their behalf, insurance companies, and hospital utilization and readmission patterns.

The Role of Associations

In any policy discussion, unified and disparate voices influence the discussion. In one attempt to nurture a common voice, five associations and two interest groups came together to design a common hospice agenda. Informally called The Medicare Hospice Benefit Working Group, the seven members included: NHPCO, NAHC, VNAA, Hospice and Palliative Care Nurses Association (HPNA), American Association of Hospice and Palliative Care Physicians (AAHPM), National Alliance for Hospice Access (NAHA), and National Hospice Work Group (NHWG). This “gang of seven”—each with its own strong executive and agenda—was unable to frame a common hospice reform proposal to MedPAC, causing their efforts to collapse. Their fragmentation distracted health care reform discussions by mixing messages and prioritizing different payment issues. Several of these same associations were, however, able to coordinate influential providers—both non-profits and for-profits—into alliances advocating on their behalf: the Alliance for Home Health Quality and Innovation by NAHC and the Alliance for Care at the End of Life by NHPCO. Each entity wanted to assure high-quality care and access and lower costs. Armed with provider data and research, they demonstrated Medicare savings, quality outcomes, and consumer satisfaction. Their efforts paid off resulting in nearly 50% less-than-anticipated payment reductions for home care providers.

The Role of Insurance Companies

When asked which health care segments have the most political power, a panel of home care analysts indicated that first insurers, then hospitals, then physicians, followed last by home care (HCap, 2009). To every $1 spent by home care advocates others spent $10 or more. Yet, due to its ability to manage complex, chronically, and terminally ill patients and reduce hospital admissions, home care continues to be a key focus of health reform.

The Role of Hospital Utilization and Readmissions

Since the announcement of readmission penalties on hospitals’ Medicare reimbursement, home care providers have implemented aggressive measures in collaboration with hospitals to move patients from the acute to home setting more quickly. Chronic care management models are well-positioned to help align incentives across the continuum of care delivery. Two distinct programs demonstrate substantial cost savings and improvements in patient outcomes and satisfaction: Sutter Health’s Advanced Illness Management Program (AIM) and University of Pennsylvania’s Transitional Care Model (TCM). Sutter’s AIM program, managed from its system-wide hospice provider, focused initially on transitioning hospice patients but gradually has taken on a system-wide focus of chronic care management (Reissig & Gornet, 2009). Likewise, the TCM is a care management intervention that is associated with significant improvements in health outcomes and reductions in care delivery costs among at-risk, chronically ill older adults (Naylor, 2009).

The Future Outlook: Home Care Leads the Health Policy Discussion

To borrow from Jim Collins who so aptly describes in Good to Great companies who succeed, we must confront the brutal facts of our current reality to succeed in changing our health care delivery system (Collins, 2001). Not only is home care the logical beginning, it is the logical end, enveloping all other elements of health care delivery. Ongoing and emerging trends—consumer desire for at home care, demographics, reimbursement reform, the fight for talent, chronic and transitional care management, technology acceleration, and end-of-life care—point to home care as the solution for sound U.S. health care policy in controlling costs, quality, and access. If home care is the solution, then how will it influence policymakers and what role will nurses play?

Technology Acceleration

With increasing population demand for health care and a shortage of staff, technology can accelerate home care delivery. Widely used examples include: remote patient monitoring (RPM), point of care technology, online learning, telephony, and electronic data rooms. These and other innovations (e.g., Web-based cameras, electronic medical records, electronic pharmacy distribution, drop-ship supplies, robotics, and smart home monitoring) are key to home care’s future utilization, quality, cost, and talent management. Such technology innovations will lead to cost savings: (1) more rapid communications and interventions resulting in improved patient outcomes and reduced hospitalizations and emergency department visits; (2) improvement in quality through more rapid communications and interventions; (3) improvement in talent management through more consistent education and training; and (4) improvement in utilization patterns by replacing some in-person visits with electronic interventions.

The Nurses’ Role

Home care is a resilient and growing segment of the health care industry and is a critical solution to decrease rising costs, improve consumer satisfaction, and reduce hospitalizations. Nurses, at the helm of key associations, home care organizations, and special interest groups, play a central role in policy discussions by using their deep-seated understanding of the home care environment and of the patient’s socioeconomic, disease, and psychosocial needs. Nurses will continue to play a central role across home care’s spectrum of services: providing direct care, assuring administrative oversight, conducting research, and advocating on behalf of patients to assure access to care at home, when the home setting is the most appropriate place to receive care.

For a list of related websites, please refer to your Evolve Resources at http://evolve.elsevier.com/Mason/policypolitics/


1. Aquilar, C., Ahlstrom, A., Karaca Z., Dietz, K., & Lukens E. (2009). Medicare spending and rehospitalization for chronically ill Medicare beneficiaries: Home health use compared to other post-acute settings. Avalere Health, LLC, released May 11, 2009.

2. Centers for Medicare & Medicaid Services (CMS). In: www.cms.hhs.gov/center/hospice.asp; 2008a.

3. Centers for Medicare & Medicaid Services (CMS). (2008b). 42 CFR Part 418.58, Hospice conditions of participation: Quality assessment and performance improvement.

4. Centers for Medicare & Medicaid Services (CMS). (2009). Center for Information Systems, Health Standards and Quality Bureau.

5. Centers for Medicare & Medicaid Services (CMS). Office of Public Affairs. (2009, August 17). Press release: Medicare demonstrations show paying for quality health care pays off.

6. Cole, C. S. (2006, December). Home health and community based services. The Robert Wood Johnson Foundation.

7. Collins J. Good to great: Why some companies make the leap and others don’t. New York: HarperCollins; 2001.

8. Gozalo P, Miller S, Mor V. Hospice in nursing homes: Factors influencing hospitalization and choice of hospice. Academy for Health Services Research and Health Policy. 2002;19:5.

9. Harris Interactive. (2008, August 19). Republican and Democratic voters view home care as a solution to rising Medicare spending, Harris Survey Finds, American Association for HomeCare press release.

10. Healthcare and Capital (HCap) Conference. (2009, November 17). 2010 Healthcare outlook: Reimbursement cuts, reform and regulatory changes. Jon Glaudemans, Avalere Health, Andrew Bressler, Bank of America Securities, Mark Francis, Houlihan Lokey, Bruce Fried, Sonnenschein Nath & Rosenthal. Mandarin Oriental Hotel, Washington, D.C..

11. Martin, J. P., & English, D. (2008, September). Issues brief: Collaborative care: Improving the hospice–nursing home relationship. California HealthCare Foundation.

12. Medicare Payment Advisory Commission (MedPAC) (2009a, March). Report to the Congress: Medicare payment policy, 190. Also see MedPAC transcripts 2007-2009 at http://medpac.gov/meetings.cfm.

13. Medicare Payment Advisory Commission (MedPAC) (2009b, March). Report to the Congress: Medicare payment policy, 185-200; 347-373. Also see MedPAC transcripts 2007-2009 at http://medpac.gov/meetings.cfm.

14. NAHC Report. (2009, May 13). In Celebration of National Nurses Week: Nurses from all 50 states to speak out on the need for home care.

15. National Association for Home Care (NAHC). In: www.helpuschoosehome.com; 2009.

16. National Home Infusion Association (NHIA). In: www.nhia.org/resource/medicare_ptd; 2010.

17. National Hospice and Palliative Care Organization (NHPCO). NHPCO Facts and figures: Hospice care in America. In: www.nhpco.org; 2009.

18. Naylor MD. Roundtable on delivery system reform. In: www.nursing.upenn.edu/news/Documents/Mary_Naylor_statement_4-17-09f.pdf; 2009.

19. Operation Iraqi Freedom. In: www.defenselink.mil/news/casualty.pdf; 2009.

20. Private Duty Home Care Association (PDHCA). An affiliate of the National Association for Home Care & Hospice. In: www.pdhca.org; 2009.

21. Reissig, M. (2010, March 23). Marcia Reissig, RN, MS, CHCE, and CEO of Sutter VNA & Hospice. E-mail communication to J. P. Martin.

22. Reissig, M., & Gornet, B. (2009). Sutter VNA & Hospice AIM Program. Presentation to the National Hospice Work Group. July 9, 2009. Napa, CA.

23. Sutherland JM, Fisher ES, Skinner JS. Getting past denial—The high cost of health care in the United States. New England Journal of Medicine. 2009;361(13):1227–1230.

24. U.S. Census Bureau. Population Estimates Program, Population Division, U.S Census Bureau. In: www.census.gov/popest/archives/1990s/popclockest.txt; 2000.

25. U.S. Department of Health and Human Services. (U.S. DHHS). Home Health Compare. In: www.medicare.gov/HHCompare; 2009.

26. U.S. General Accounting Office (U.S. GAO). (1992). Human Resources Division, Report B-245370, January 31, 1992, 5.

Only gold members can continue reading. Log In or Register to continue

Stay updated, free articles. Join our Telegram channel

Mar 18, 2017 | Posted by in NURSING | Comments Off on Home Care and Hospice: Evolving Policy

Full access? Get Clinical Tree

Get Clinical Tree app for offline access