When state policymakers are considering a new benefit to their state’s Medicaid program, they often ask “how much does it cost?” A new actuarial analysis, written by CBIZ Optumas with contribution from Torrie Fields of TF Analytics under a subcontract with NASHP, answers this question for offering a palliative care benefit to Medicaid enrollees. The actuarial analysis, Palliative Care in Medicaid Costing Out the Benefit: Actuarial Analysis of Medicaid Experience, found that — along with improved quality of life for people with serious illness — Medicaid palliative care benefits can also yield cost savings.
Given that the paper contains dense actuarial analyses, this Q&A summarizes the key takeaways for state policymakers and others.
What is palliative care, and how is it covered by Medicaid?
Palliative care is specialized medical care that can provide relief from the stress and symptoms of serious illness through services such as pain and symptom management, counseling, social services, advanced care planning, and care management. Its goal is to help people at any stage of illness maintain quality of life and avoid unnecessary and often unwanted treatment. Unlike hospice, palliative care is not determined by the prognosis of the patient and can be offered alongside curative treatment.
No state Medicaid program offers a comprehensive palliative care benefit to beneficiaries, though many states provide a limited set of services under the umbrella of palliative care. California was the first state to require coverage of community palliative care through Medicaid managed care organizations, and Hawaii recently submitted a state plan amendment to the Centers for Medicare & Medicaid Services (CMS) to cover a community-based palliative care benefit in its Medicaid program. Other states are also expressing interest in a stand-alone Medicaid benefit for palliative care, which the actuarial analysis explores in detail.
What did the analysis find?
A comprehensive palliative care Medicaid benefit is expected to be, at minimum, overall cost neutral to the state. However, effective administration of a Medicaid palliative care benefit for the highest service utilizers could produce cost avoidance savings ranging between $231 and $1,165 per member per month, with potential return on investment ranging between $0.80 and $2.60 for every $1 spent on palliative care. As Medicaid members with serious illness use increasingly high levels of costly inpatient and emergency department services as they approach end-of-life, palliative care can serve to both reduce those costs and improve quality of life for those with serious illness and their families.
| Lower Bound — 26% Reduction | Upper Bound — 46% Reduction | |||
|---|---|---|---|---|
| Potential Savings PMPM | Medicaid-Only ROI | Potential Savings PMPM | Medicaid-Only ROI | |
| State 1 | $378.27 | 0.8 | $1,041.73 | 2.2 |
| State 2 | $231.10 | 0.5 | $775.38 | 1.5 |
| State 3 | $460.32 | 1.0 | $1,165.10 | 2.6 |
What were the steps to determining the cost effectiveness of a palliative care benefit?
To determine the cost of a Medicaid palliative care benefit, the actuary team first identified the population of Medicaid beneficiaries who would utilize such a benefit. They calculated the prevalence of serious illness, including cancer, cardiovascular disease, chronic obstructive pulmonary disease, kidney failure, advanced liver disease, and neurological disorders, in three states’ Medicaid populations, using 2018 to 2019 Medicaid claims data.
Next, the actuary team sought to determine the cost of the established serious illness population. They identified the individuals within the serious illness population who utilized hospice services and reviewed the cost of these members to the state before they began hospice.
The actuary team then calculated the approximate cost of a palliative care benefit. Based on the required services and palliative care team in California’s SB 1004 Medi-Cal Palliative Care Policy and expected monthly number of visits, duration, and staff allotment for each service, the actuaries estimated an average monthly benefit cost.
Using the previously identified cost of the serious illness population, the actuary team could compare the actual cost incurred to the estimated cost of the palliative care benefit to determine potential savings of a palliative care benefit in the three studied states.
How can states learn more about access to and coverage of palliative care?
NASHP’s Palliative Care Resource Center includes valuable information for states looking to increase awareness of and access to palliative care for those with serious illness. The Resource Center features maps to track palliative care policy, examples of states working to expand palliative care, guides to palliative care education and policy development, and more.
Seven Steps for Building a Community-Based Palliative Care Benefit within Medicaid
State officials interested in exploring a Medicaid palliative care benefit are encouraged to apply to NASHP’s upcoming State Policy Institute to Improve Care for People with Serious Illness. This institute is an exciting opportunity for states to work with experts to develop and strengthen palliative care policy. Applications are due by February 24, 2023!
To learn more about this actuarial analysis, watch Elrycc Berkman, Senior Manager at CBIZ Optumas, explain the paper’s findings at NASHP’s recent webinar on Medicaid palliative care benefits. The webinar also highlights the Serious Illness Institute, including its benefits to states and application requirements.
Acknowledgement
NASHP’s state palliative care resources are created with generous funding and guidance from The John A. Hartford Foundation.
