Q&A: Actuarial Analysis of a Medicaid Palliative Care Benefit

National Academy for State Health Policy | by Ella Taggart

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.

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