Needed Changes in the Medicare Hospice Benefit

When Medicare began covering hospice in the early 1980s, first as a demonstration and then as a normal benefit, this helped transform the hospice movement from a loose group of activists into a viable industry. There is a good chance you would have never heard the word hospice if Medicare had not decided to cover the multi-disciplinary approach to caring for persons who are 'dying' (an expected life span of 6 months or less). Hospice typically focuses on palliation of symptoms and helping patients achieve goals within the confines of their illness. To elect hospice benefits, a Medicare beneficiary must 'unelect' so-called curative care. Most persons receiving hospice care financed by Medicare do so at home, though inpatient hospice facilities are also covered. Atul Gawande has beautifully described many of the problems with how our health care system and culture views and treats persons who are extremely ill and dying.

This post covers a few problems/policy areas/decisions focused on the Medicare hospice benefit that need to be addressed. Doing so will certainly not deal with all of the problems with our nation's approach to treating serious illness, and end of life care, but they are some steps that need to be taken. These problems/issues have been around a while, but there seems to be renewed attention placed on the issues relating how our health care system views deaths and treats patients who are very ill. These issues influence the Medicare program more than any other part of the health care system, simply because over 8 in 10 persons who die each year are Medicare beneficiaries (in spite of the fact that only 13% of the population is age 65 or over). So, if you are talking about end of life care, you are talking about Medicare.

Here are several key policy issues that need to be addressed in the Medicare hospice benefit.

Stays that are too short. One in four Medicare decedents who choose hospice use the service for 5 days or less. The median is around two weeks. Myself and colleagues at Duke have shown that hospice reduces Medicare expenditures in the last year of life (modestly: by $2,200 as compared to similar persons who died but did not choose hospice, or 6-7%) with maximum reductions occurring with a length of use around 7 or 8 weeks. This means that about 7 in 10 Medicare hospice decedents would have reduced Medicare expenditures in their last year of life if they had used hospice for longer than they actually did.

It should be noted that the common occurrence of short stays exits within a per diem payment structure for the Medicare hospice benefit that should incentivize longer periods of use for hospice providers since they get paid more for each day they provide care.

The broad cultural issues described by Gawande are likely at the heart of the fact that many persons use hospice either not at all, or for very short periods only prior to death. There may be some technical issues and policy issues, but to extend the length of hospice use will probably take a broad cultural conversation that focuses on patient preferences, costs and benefits of care.

Stays that are too long. Around 6-7% of hospice decedents use the benefit for longer than 180 days, the presumptive period of eligibility. To be eligible for hospice, two physicians must certify they believe your lifespan is likely to be 6 months or less; if that is incorrect and you live longer, you can receive hospice care for longer than 180 days. It is important to note the cost savings we have noted for hospice were found in spite of the 6-7% of users that might be described as 'long users' (more than 180 days).

Long hospice stays have generated a great deal of policy attention because of worries that they represent inappropriate or fraudulent use of the benefit. Figure 2e-2 (page 150) of the MEDPAC report shows that the length of long stays (90th percentile) have risen over time, while the short ones have remained steady. Of course, fraudulent care (billing for fake patients, or for days after a patient has died) is a crime. Inappropriate care is a more hazy issue. As I have noted with my colleague Amy Abernethy in discussing the difficulty of translating the fact that we spend lots of money at the end of life and some of it is likely non productive to reductions in EOL spending is hard because the last year of life is only defined upon the death of an individual. So, determining appropriateness can be hard, especially as the use of hospice expands far beyond Cancer to other diseases such as heart failure, dementia, etc. There have been competing forces at work: expanding hospice beyond cancer, and then worrying about the long length of use that some non-cancer diagnoses seem to be associated with.

Changing the payment structure for the Medicare hospice benefit? The Medicare Payment Advisory Commission (MEDPAC) has long been interested in the growth of hospice as measured by the proportion of decedents choosing such care, and the rapid increase in the last decade in the number of hospice providers nationally. The increase in use of hospice is linked with improved benefit and quality of life and especially family satisfaction. However, the expanding use of the program also seems to give rise to worries about cost increases, in spite of some research showing the opposite. For profit hospice providers have accounted for most of the increase in hospice providers over the past decade, and this has increased worries among some that inappropriate use of hospice was being driven by the profit motive of providers and not the benefit of patients. In several briefings I have seen in Washington and elsewhere, this fact is front in center in the minds of many, especially in the Congress and MEDPAC. The March 2010 MEDPAC report highlights many of the concerns they have with the current hospice benefit (section 2E, pp. 141-161), and identifies ways in which the benefit might be altered.

Current hospice policy caps the number of inpatient days of hospice one can receive, and provides for an aggregate (mean) amount per patient that a given hospice may receive from Medicare. This cap is applied across all hospice patients for a given hospice, so the epidemiology of many short periods of use and a few long ones has meant that historically, it was rare for a hospice to bump up against the cap. However, MEDPAC notes this is increasing and likely to continue to do so.

These concerns lead MEDPAC to recommend in 2009 (reiterated in 2010, page 146-47 of March 2010 MEDPAC report) that the Medicare hospice benefit change its payment policy to adopt a u-shaped per diem payment, with higher payment levels for the first few days of a period of hospice use as well as higher payments for the last few days. The thinking is that the cost of providing care is highest at intake and as symptoms are likely to intensify very near death, with a lower cost profile while a patient is stable in hospice.

What would the effect of such a payment change be?
*many say that it would incentivize hospice providers to get patients into such care earlier. However, I am not convinced that it is unwillingness of providers that produces common short lengths of hospice use, but instead it is cultural factors and patient preferences that cause many patients to shift into hospice care only a few days before death.
*Others have criticized the proposed payment change have said that it could unwittingly incentivize hospice providers to seek out short stays only....if you had many patients with only a 5 day length of hospice use, then you would only be billing for the highest payment days of a course of hospice care. Some have been quietly terming this proposed change as 'turning bad apples (hospices that seek very long stays) into bad oranges (hospices that only seek very short stays if the payment method is altered).

I think that this move to a u-shaped per diem payment change makes sense simply because the cost profile of delivering the needed care is likely shaped in this manner, with higher costs early and late in a hospice stay. For many hospice providers, I suspect opposition is a case of the devil you know is preferred to uncertainty, and a general wariness of any change to the benefit that is a major impediment to change.

Beneficiaries must unelect curative care to access hospice. Medicare beneficiaries have had to unelect 'curative' care to use hospice services since the beginning of the benefit in the early 1980s. The phrase 'curative' really makes no sense; if we could cure something we would do so. This really meant unelect all of the expensive, normal course care for someone who was very ill. This bright line between curative care and hospice care has had several effects.

*First, persons can move in and out of hospice. A recent study I did with colleagues at Duke documented that about 15% of those beginning hospice stopped doing so before they died....some changed their mind, others got better in a surprising way, and still others moved in and out of the benefit, meaning they later re-entered hospice and died while using hospice. It is likely that the bright line curative v. hospice distinction leads to suboptimal care, notably in the area of patients not receiving sufficient palliative care. A recent study by Aetna of their commercial insurance business (not Medicare) showed that opening up hospice services to persons in the last year of life actually reduced costs, and improved satisfaction of patients. The Patient Protection and Affordable Care Act (PPACA) allows for demonstrations of concurrent care (allowing persons to access hospice/palliative services without unelecting curative care). Ending this need to unelect curative care is viewed by most looking at the hospice benefit and something that should be changed, and hopefully the concurrent care demonstrations in PPACA will be able to provide evidence to this end in a timely manner.

Barriers to hospice for people living in Nursing Homes. Just over 4 in 10 Medicare decedents use hospice before death; this fraction is a bit smaller for residents of nursing homes, which is surprising based on the likely need profile of NH residents. Note page 144 of the MEDPAC report noted above, it shows that 35% of dual eligible Medicare decedents used hospice while nearly 42% of non dual eligibles did. You would expect a strong majority of patients living in a NH to have needs that could be addressed by hospice. Haiden Huskamp and colleagues at Harvard have been focused on this issue for some time and have proposed the outlines of what an improved hospice benefit would look like for NH residents who are Medicare beneficiaries. In short, there are numerous regulatory and turf battles that crop up if a Medicare beneficiary is living in a NH, and these all result in far fewer patients utilizing this benefit than could likely benefit from it. The perverse incentives are particularly acute if a person is a dual-eligible (for Medicare and Medicaid) and living in a NH. The further I delve into this issue, the more I come away thinking that federalizing the NH/long term care portion of the Medicaid population would actually move toward removing some barriers to both receipt of hospice/palliative care in NHs, and also removing the incentive of NH to send very ill patients to the hospital, since Medicare will way (this is an especially strong incentive if a person in spent down to Medicaid).

What research is needed? There is a great deal of policy making that needs to be done, and much of it is likely just applying what we now know about hospice and seeking to make the Medicare hospice benefit work better. However, MEDPAC notes concern that there is not enough evidence of the quality of hospice care (many studies have focused on family satisfaction after the death of their loved one). And I note that most persons who study hospice seem to either study costs/economics of hospice OR the study the quality/benefits of same, with a key measure of benefit being family satisfaction. The implementation of PPACA is bringing on new pressures to justify care and to show benefit, even in the area of hospice that has been widely accepted to be beneficial and useful to patients and their family members. MEDPAC and others are saying that the case needs to be made more clearly about the benefits of hospice care in the current Medicare benefit, and likely about palliative care to set the stage for expanded financing of palliative care.

We do need to see the effects of the Medicare hospice benefit on the cost AND quality in the same patient population and studies. In particular, we need to see the relationship between quality of length of hospice use. With the 25th percentile being 5 days, then 1 in 4 Medicare decedents using hospice are almost certainly not reaping the full benefit from hospice. And with maximum cost savings due to hospice occurring with length of hospice use of around 7 to 8 weeks, around 7 in 10 beneficiaries could save Medicare money by using hospice longer. What we don't really know is how much benefit to patients there are from increasing hospice uses from 4 or 5 days to 40 or 50 days? If the benefit gains over this range are great, then the incentives for all parties would seem to be to redouble efforts to expand the use of hospice and increase length of use. And to be wary of policy efforts that focus only on the long ends of the tail, because they may inadvertently serve to shorten overall length of hospice use. I suspect they are great, but we need to nail that down definitively.

Update: Society of Actuaries RFP on end of life issues. Proposals due sept. 7.