Proponents of emerging forms of advanced illness care are banking on new payment models, such as accountable care organizations, to bolster their efforts and provide reliable reimbursement.Currently, CMS hospice eligibility rules require that patients have a life expectancy of less than six months, and patients must also forgo curative treatments, according to the criteria.

But many patients who suffer from advanced-stage diseases like heart failure and multiple sclerosis have more than six months of life left, are still interested in pursuing life-extending treatments and want to avoid the revolving door of acute hospitalizations that often characterizes end-stage illness.

Some programs, known as advanced illness management or home-based palliative care, are attempting to improve quality and control ballooning costs for these frequent-flier patients, with services such as 24-hour on-call nursing support, in-home treatments, palliative care and education about the benefits of hospice care. One of them is preparing to franchise its model across the U.S.

Hospice of Michigan, a Detroit-based not-for-profit group, developed a subsidiary known as @HOMe Support for patients who are seriously ill but not yet ready for hospice care. The program provides intensive telephone and in-person services aimed at reducing unnecessary tests and procedures, easing caregiver burden and curbing emergency-room visits. It also relies on a fully integrated electronic health record, proprietary predictive modeling and analytics to gather outcomes data.In 2007, armed with preliminary data about the potential cost savings of @HOMe Support, Hospice of Michigan partnered with Blue Care Network and Health Alliance Plan, two Michigan-based insurers, to pilot-test the model.

The results were promising, said Dottie Deremo, Hospice of Michigan’s president and CEO. A 2011 costs analysis, funded by Blue Cross and Blue Shield of Michigan, revealed an overall 30% cost savings, even as home-care spending rose considerably.

Encouraged by the data, Hospice of Michigan contacted leaders at Detroit Medical Center, part of the CMS’ Medicare Pioneer ACO program.

“We approached them with a proposal to do advanced illness management for the Michigan Pioneer ACO,” Deremo said. “We competed against four other vendors and we got the contract.”

According to the terms of the deal, Hospice of Michigan is paid on a 100% risk basis, contingent on savings and whether the group hits quality targets. As with earlier analysis, Deremo says the @HOMe Support model is consistently showing 30% to 36% cost savings.

“There’s no funding mechanism to provide this kind of care to really sick patients in their last two years of life, outside of an ACO or an agreement with an insurer,” said Dr. Gregory Berger, executive medical director for the Michigan Pioneer ACO and Detroit Medical Center’s managed-care programs. “Because we had the ACO, we had an opportunity to be creative with our offerings to Medicare patients.”

Just over a year into the program, Berger says the arrangement with Hospice of Michigan is going well. “It’s working for us,” he said. “There is money for them to fund their program, along with some margin, and we are saving money, too.”

Hospice of Michigan is one of many providers trying out new models of care for seriously ill patients. Sutter Health, a 24-hospital system based in Sacramento, Calif., has an approach called the Advanced Illness Management, or AIM, program, which coordinates care for patients with late-stage chronic illness and helps patients and families make informed choices about treatments and procedures.

Outcomes data released in early 2011 showed an average savings of $2,000 per enrolled patient a month, a 75% reduction in days spent in the intensive-care unit and a 50% drop in hospitalizations.

And in March, Sutter Health’s AIM program received a $13 million grant from the Center for Medicare & Medicaid Innovation to expand the program to five more areas across Northern California. With those funds, Sutter Health estimates its program will save more than $29 million over the next three years, according to a January article in the Cleveland Clinic Journal of Medicine, whose co-authors included two leaders of the AIM program.

The article’s authors also argued for greater expansion of new payment models, which they say would enable nonintegrated systems to implement AIM-like programs.

“If ACOs and bundled payments were to be implemented overnight, the person-centered, cost saving advantages of AIM would be obvious,” they wrote. “However, until shared risk/shared savings models replace fee-for-service reimbursement, new payment policies will be needed on an interim basis to cover the costs of currently nonreimbursed care management services.”

Models such as AIM and @HOMe Support can also boost hospice rates once patients become eligible because they are receiving coordinated care and are aware of their treatment options, said Jon Broyles, research director for the Coalition to Transform Advanced Care, a multidisciplinary group that promotes a systems-based approach to advanced illness care.

“These kinds of models meet patients where they are and craft treatment plans around their goals and values,” he said. “In order to have that kind of coordination, I do think you need shared accountability.”

Dr. Julie Bynum, a geriatrician and an associate professor at the Dartmouth Institute for Health Policy and Clinical Practice, Hanover, N.H., agreed that new payment models will help to foster such programs, but she also contends that change requires a fundamental culture shift among healthcare workers.

“In healthcare, we have trouble with gradation—either someone is in hospice or they’re not,” Bynum said. “We’re not allowing ourselves to approach someone as if they might die unless they are actively dying. That means patients end up in the ICU, and then they get a few days of hospice at the end of their lives.”

Educating the healthcare workforce to the benefits of home-based advanced illness management could go a long way, she said. Also, regions that rely heavily on hospitals to care for patients at all stages of life are the same ones that tend to use hospital-based services for end-of-life care. Targeting those areas for advanced illness programs could make the biggest impact, Bynum said.

Galvanized by the success of its model and its work with the Michigan Pioneer ACO, Hospice of Michigan is expanding its @HOMe Support program, partnering with several more as-yet-unnamed ACOs, and offering franchise partnerships to 42 groups in 30 states, Deremo said.

Under the franchise model, partners will be required to adhere tightly to the @HOMe Support model’s requirements. Hospice of Michigan will provide nurse telesupport services and training, and will also gather and analyze cost and quality data from each location.

“Our goal is to do prospective research in multiple states,” Deremo said, adding that she’s hopeful such research will sway the CMS and private insurers to pay for advanced illness management services. “They need these savings.”