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Saving Money While Providing Benefit In Medicare: A Standard Applied Only To Hospice



May 16th, 2013

Medicare is caught between two countervailing impulses: the desire of beneficiaries (and providers and the adult children of beneficiaries) to have a benefit package that covers more, rather than less, and the desire to restrain program spending due to its impact on the federal budget. This tension is heightened by the transition of the Baby Boomers from paying taxes into Medicare to receiving benefits.

The default is that Medicare covers acute care therapies, tests, and procedures if there is a patient that wants to receive them and a provider who is willing to deliver them, whether there is evidence of any benefit to the patient or not. As I tell students in my Introduction to Health Policy Course, while Medicare sets payment rates (and is therefore like Marlon Brando in The Godfather: “I have an offer you can’t refuse”), when it comes to what is covered in the acute care setting, it is more like my Grandmother serving lunch (“whatever you would like, honey.”)

There are exceptions. Recently, the Medicare Evidence Development and Coverage Advisory Committee decided not to approve the payment of PET scans to aid in the diagnosis of Alzheimer’s disease. However, such a move is rare, and both provider and patient groups are protesting this decision.

The ACA has created some opportunities to increase the use of research to shed light on the relative effectiveness of alternative therapies to guide care. For example, the Patient-Centered Outcomes Research Institute (PCORI) is charged with funding effectiveness and outcomes research to inform medical decision making from the patient perspective. Moving from evidence base to a changed health system functioning that is premised on improved patient/provider communication is difficult, a fact readily admitted by PCORI. The Independent Payment Advisory Board (IPAB), for all the political bluster about its role in addressing costs, is legally barred from doing anything other than changing the amount Medicare pays for care, and then only if medical inflation outpaces a stated benchmark.

The strong default in the Medicare program has always been to cover care regardless of the cost or evidence of patient benefit.

Hospice: A Different Standard

The hospice benefit stands astride this general history. Both its temporary inclusion in the Medicare benefit package via the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, and its permanent inclusion in 1985, were premised on the idea that hospice would save Medicare money while improving the lives of patients. I don’t believe this standard has been applied to any other part of Medicare. Typically we are left to wonder if the provision of care will provide some marginal benefit to patients at a given cost, with no clear benchmark against which to compare the costs and benefits of a given treatment to determine if it is ‘worth it.’

Hospice is an interdisciplinary approach to caring for persons believed to be within 6 months of death and can plausibly reduce Medicare expenditures by avoiding expensive hospitalizations in the last days and weeks of life. At its best, hospice typically replaces that default with the patients’ desire for a less medicalized death in the patients’ home, while maximizing quality of life. A recent paper published in Health Affairs confirmed past work showing that hospice reduces Medicare spending as compared to what it would have been during the most common periods of usage observed in Medicare. And hospice has been shown to improve patient and family member quality of life. Hospice has passed the market test; around half of all Medicare decedents used at least 1 day prior to death in 2010.

However, the underlying hospice regulations need to be updated, as they are essentially unchanged since 1982. The epidemiology of hospice is no longer Cancer-centric, and the past decade has seen rapid growth of patients suffering from chronic diseases such as congestive heart failure (CHF), COPD/emphysema and Dementia. Part of modernizing the benefit should include a look at the costs and benefits of treatment alternatives that patients may choose instead of hospice.

Consider the case of left ventricle assist devices (LVAD) as destination therapy (not a bridge to heart transplant) for congestive heart failure (CHF).  The mean hospitalization cost to implant an LVAD is $210,187, and the increased cost as compared to medical monitoring therapy of CHF is $802,700 per quality-adjusted life year. No questions are asked about appropriateness if a patient and a physician decide that an LVAD is the correct course of treatment for CHF in spite of these large costs. However, questions are being asked about the appropriateness of long hospice stays, which disproportionately occur among patients with CHF, due to the uncertain nature of the disease course.

The increase in both the prevalence and length of long hospice stays, mixed with the fact that they are more likely to occur in for-profit hospice providers, has led to a worry that some hospice use is inappropriate or fraudulent. Unfortunately, the legitimate questions being asked about long hospice stays has crowded out policy discussion of short stays – namely, that patients do not receive all the benefits that they might, and further, that hospice is still commonly used only after trying everything else. Late referrals limit both the quality enhancing and cost saving ability of hospice.

All Therapies, Not Just Hospice, Should Be Subject To Questions About Benefits And Costs

There are many legitimate questions to be asked about the Medicare hospice benefit, hopefully as part of a modernization of it. How can we ensure that long stays are not inappropriate? Can we encourage earlier referral to hospice and thereby improve quality and reduce costs? Can a concurrent benefit approach that removes the requirement to unelect “curative” care to begin hospice be devised? What would such a change do to cost? To quality? Are disease-specific payment and quality assessment rules needed? And many other important questions.

These questions deserve thoughtful, evidence-based answers, some of which we at Duke are attempting to answer with a grant from the HCFO Initiative of the Robert Wood Johnson Foundation. But all of the therapies available to chronically ill Medicare beneficiaries with life limiting illnesses should be subjected to similar scrutiny, not just hospice. Does it extend life? Does it improve quality of life? How much does it cost? Is it worth it?

The problem is not that some question the value of hospice under certain circumstances in which it is currently being used in the Medicare program. The problem is that hospice appears to be the only part of the Medicare benefit subjected to such scrutiny.

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