Approaching Death Improving Care at the End of Life (1997) / Chapter Skim
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6 Financial and Economic Issues in End-Of-Life Care
6 Financial and Economic Issues in End-Of-Life Care
Pages 154-187
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From page 154... ...
These figures prompted debate about whether such spending was excessive and whether advance directives, hospice care, and futility guidelines could be promoted to control costs as well as strengthen patient autonomy and improve care (Tecker and Schneiderman, 1992; Lundberg, 1992; Singer and Lowy, 1992; Fries et al., 1993; Murphy and Finucane, 1993~. Analyses have cast doubt on expectations that these strategies might make a major contribution to containing health care costs (see, e.g., Emanuel and Emanuel, 1994; Teno, Lynn, Connors et al., 1997~.
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From page 155... ...
of health care expenses with 14 percent, 10 percent, 20 percent, and 3 percent of expenses covered by Medicaid, private insurance, beneficiary out-of-pocket spending, and other sources respectively (Gornick et al., 1996~.1 1 Coverage percentages range from zero for outpatient prescription drugs and 6 percent for nursing home care to 87 percent for inpatient hospital care. Disabled beneficiaries have more of their expenses covered by Medicaid and "other sources" (25 percent and 11 percent)
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From page 156... ...
Some dying patients qualify for the Medicare hospice benefit, which covers some prescription drugs and some nonmedical services (e.g., light housekeeping assistance, respite care)
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From page 157... ...
attracted widespread interest when it reported that the 5.9 percent of elderly Medicare beneficiaries who were in their last year of life in 1978 accounted for 27.9 percent of total Medicare spending. Other analyses suggest similar patterns through the 1980s and also dating back to 1960, before the adoption of Medicare (Lubitz and Prihoda, 1984; Scitovsky, 1984; Riley et al., 1986; Gornick et al., 1993; Lubitz and Riley, 1993~.
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From page 158... ...
Expenses for hospital care were substantially lower, but payments for nursing home and home health were substantially higher for older decedents. For those aged 65 or over, total expenses did not vary by impairment status, but those who were totally impaired had substantially lower expenses for hospital care and higher expenses for nursing home care.
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From page 159... ...
Rather, it is accounted for by population growth, general inflation in the economy, and additional medical inflation, although the contribution of each component has fluctuated widely (Levis et al., 1996~. An analysis covering data for 1976, 1980, 1985, and 1988 (excluding Medicare beneficiaries enrolled in health maintenance organizations tHMOs]
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From page 160... ...
(Newhouse et al.1993~. What information exists is largely limited to traditional fee-for-service arrangements and may not apply to managed care, which covers a small but increasing proportion of Medicare beneficiaries.
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From page 161... ...
Insurers have also devised responses to another problem biased risk selection that may have consequences for seriously ill people. Biased risk selection arises when insurance is voluntary or when people can choose among health plans with different features.
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From page 162... ...
Many health plans insist that special personnel review hospital admissions, medical procedures, and certain other services. They may also require that a designated primary care physician authorize referrals to specialists.
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From page 163... ...
Thus, the following discussion first considers hospitals, then nursing homes, hospice, and home care. The emphasis here is on the traditional, fee-for-service Medicare program and the possible effects of its financing provisions on care at the end of life.
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From page 164... ...
One particular concern has been that prospective payment might encourage hospitals to control costs by cutting quality and limiting beneficial care, including palliative services. Early analyses suggested that Medicare beneficiaries were indeed being discharged "quicker and sicker" and in more unstable condition, but no effects on 30-day or 6-month mortality could be readily identified (ProPAC, 1989; Kahn et al., 1990; Kosecoff et al., 1990; Rubenstein et al., 1990~.
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From page 165... ...
The test will help determine whether a new DRG code is needed to pay hospitals for palliative services to terminally ill patients and whether it is feasible. One question is whether it is possible to identify a homogeneous set of palliative resources irrespective of diagnosis so that they can be reimbursed and monitored for quality of care.
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From page 166... ...
For physicians treating Medicare beneficiaries who are perceived to be dying, the most relevant fees are likely to be those for "evaluation and management" services rather than for procedural services such as surgery and diagnostic tests. Codes for evaluation and management visits differ depending on several patient or other factors (e.g., whether the visit is for a new versus established patient, for an initial versus subsequent visit, and for an office or other site of care)
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From page 167... ...
for nursing home care is provided by Medicaid, a joint federal-state program for which nursing home patients may qualify after spending down their own financial resources. The program pays some costs for nearly 7 in 10 nursing home residents (AHCA,1995~.
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From page 168... ...
The Medicare hospice benefit was adopted following years of steep increases in Medicare spending. Not surprisingly, the benefit, features of 10Cancer is the most frequent diagnosis, accounting for 60 to 80 percent of all hospice patients (Christakis and Escarce, 1996; Strahan, 1996)
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From page 169... ...
Claims that hospice can reduce spending for end-of-life care are examined in a later section of this chapter. To qualify for Medicare hospice benefits, patients must be certified as having a life expectancy of six months or less if the illness runs its natural course.
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From page 170... ...
of an HMO or other health plan and then holding the hospice financially responsible for services to terminally ill health plan members. Capitation of hospice care has been characterized as a "high-risk" mechanism because of (1)
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From page 171... ...
-r -- - A -- -- -- -- ~ -- -- ~r -- ~ Home Care Services Because the Medicare hospice benefit is limited to those with a prognosis of six months or less, it is not applicable to many patients with serious illnesses but an uncertain prognosis. For these individuals, coverage for home health services can help them secure important supportive services such as medical social services and home health aide services.
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From page 172... ...
One of the largest studies of home health care conclucleci that "home care was useci mostly by those not at risk for entering a nursing home, costs increased,.
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From page 173... ...
One study of elderly patients treated for selected chronic illnesses suggested that "limiting reimbursement for effective drugs puts frail, lowincome, elderly patients at increased risk of institutionalization in nursing homes and may increase Medicaid costs" (Soumerai et al., 1991, p.1,072~. No studies appear to have specifically examined the effects of limited outpatient prescription drug policies on patients at the end of life, but it seems reasonable to expect that these policies also put this group in jeopardy as well.
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From page 174... ...
Savings in the last six months of life may drop to 10 percent to 17 percent and 0 percent to 10 percent in the last year. Because not all terminally ill patients are candidates for hospice care for the reasons described in earlier chapters, such savings cannot be readily extrapolated to all patients.
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From page 175... ...
Advance Directives Advance directives specifically and advance care planning more generally are not health care financing mechanisms per se, and the arguments in their favor have primarily to do with patient and family control over endof-life decisionmaking and with thoughtful consideration of peoples' goals at the end of life (see Chapters 3 and 7~. Nonetheless, the potential of advance directives to reduce costs has also attracted attention.
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From page 176... ...
Overall, continued efforts to encourage various forms of advance care planning and goal setting make sense at the margin, notwithstanding the social and cultural obstacles. One caveat: should people suspect that they were being pressured to sign advance directives and that such directives might be used inappropriately to limit care, then the result might be both higher costs and more use of advanced technologies that patients or families would forego in an environment of greater trust.
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From page 177... ...
. Nonetheless, with the support of clinicians and others, people might be helped to understand a choice similar to that involved in electing hospice carebetween an option that allowed for aggressive, curative or life-extending care for conditions with a poor prognosis and an option that provided for palliative services appropriate to the person's disease stage and prognosis.
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From page 178... ...
Although research examining patients who die is very limited, the results are consistent with other research that raises concerns about hospital discharge and home care policies and practices as they affect the frail elderly, the chronically ill, and other vulnerable groups. The point is not that managed care organizations cannot provide good care for terminally ill patients but that financial incentives may tempt some to avoid enrolling the ill ~oco~ole or to behave in ways that compromise the ~7 1 1 J 1 1 - ~ ~ 1 · 1 1 - ~ 1 · ·11 ~ 1 · 11 quality ot care tor those With llte-threatenlng illnesses.
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From page 179... ...
are particularly important for chronically ill Medicare beneficiaries who "may be especially vulnerable to reductions in access or quality resulting from cost cutting actions by plans" (Faricy et al., 1996, p.
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From page 180... ...
Based on their analyses of data on a large group of seriously ill hospitalized patients, Teno and colleagues found that guidelines limiting treatment for patients with only a 1 percent or less chance of surviving 2 months would have saved about 13 percent of hospital charges for these patients (Teno, Murphy et al., 1994~. They emphasized, however, that most of these savings came from 12 patients, 6 of whom were under age 51 and probably would not be very likely targets for aggressive care ..
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From page 181... ...
Rationing of potentially beneficial services already exists at least implicitly in forms such as patient cost sharing, administrative mechanisms that limit access to services or providers, and various provider payment mechanisms. Although implicit rationing mechanisms have prompted vary .
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From page 182... ...
around often inappropriate cure-oriented services provided in hospitals" (Temkin-Greener, 1992, p.
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From page 183... ...
treatment for diabetes and comfort care such as pain management and hospice care) (Cotton, 1992~.
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From page 184... ...
The committee found reason to be concerned about the possible effect of several features of both the traditional Medicare program and its managed care alternatives. The committee believes it is important to know more about the patterns and the impact on dying patients and their families of early hospital discharge, including the impact on total costs, extent of readmissions, smoothness of transition to home care (with or without hospice benefits)
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From page 185... ...
ADDENDUM Medicare coverage and payment provisions are complicated by the division of the program into two parts involving different services, payment methods, and beneficiary cost sharing provisions (HCFA, 1995~. Medicare Part A covers mostly inpatient hospital care with limited coverage for nursing home, home health agency, and hospice care.
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From page 186... ...
Inpatient care: Short-term inpatient care is covered if it is necessary to manage symptoms or provide respite for home caregivers. Home care: A variety of medical and nonmedical services are available to patients at home (and sometimes in nursing homes or other institutional settings including nursing visits, physical therapy, physician visits, medical social services, services from home health aides, counseling services (including spiritual and bereavement counseling for family members)
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From page 187... ...
Cap on inpatient care: For a hospice, payments are reduced if total inpatient care days exceed 20 percent of the total number of hospice care days for all Medicare patients. Overall cap: For a hospice, total payments are limited to an amount equal to the number of Medicare patients multiplied by a statutory cap amount ($13,974 in FY 19971.
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