A recent report by the Kaiser Family Foundation (KFF) estimates around 25% of all Medicare spending for beneficiaries ages 65 and over is for services during the last year of life, making Medicare the largest end-of-life payer. In 2014, 2.6 million people died in the U.S.; eight out of 10 of them were on Medicare. The KFF analysis does not include Medicare Advantage beneficiaries, as there was no similar data available.
The results of the KFF’s analysis should come as no surprise since people who are nearing death tend to require a lot of services for serious conditions and/or chronic illnesses. Diseases most prevalent among decedents in 2014 were hypertension, ischemic heart disease, chronic kidney disease, congestive heart failure, Alzheimer’s disease or other types of dementia, diabetes and cancer.
Does age matter?
The KFF report says in 2014, average per capita spending for decedents under the age of 65 was higher than that for beneficiaries ages 65 and older. And costs for older seniors in the 65 and up group who died in 2014 were lower than for younger seniors in that same age group.
“These results suggest that providers, patients, and their families may be inclined to be more aggressive in treating younger seniors compared to older seniors, perhaps because there is a greater expectation for positive outcomes among those with a longer life expectancy, even those who are seriously ill,” the report says.
Could more advance directives curb spending?
Scott Siemer, health care strategist in Kurt Salmon’s Health Care practice, says 40% of patients today do not have an advance directive. “In 1991, Congress passed the Patient Self Determination Act, mandating that hospitals and skilled nursing facilities ask patients about advance directives,” he says. “However, physicians were not compensated or incentivized to provide patients with this type of end-of-life counseling.” That changed with the CMS Physician Fee Schedule final rule that was published in October of 2015. “As of January 2016, physicians and registered nurses will now receive a small payment to provide end-of-life and advance directive counseling,” Siemer says.
In an article for Healthcare Industry Management Consultants, Matt O’Dell and Mindy McGrath say LaCross, WI, has the lowest end-of-life costs in the U.S. Ninety-six percent of its residents have advance directives. The authors say the majority of the public do not know what an advance directive is and that payers could benefit from public outreach.
O’Dell and McGrath go on to say major health plans and/or their foundations should form a consortium to fund a national campaign to educate the public on four aspects of advance directives:
- What an advance directive is;
- How to complete an advance directive and make sure it’s legal;
- The implications of care selections; and
- How to cancel or change an advance directive.
How does hospice fit in?
According to Siemer, 47% of people who die in the U.S. are under hospice care. “This is up from 23% 10 years ago, he says. “The industry is looking to push this number closer to 65-70% over the next few years.”
In an article for Hospitals and Health Networks, Ian Morrison says the hospice and palliative care movements are gaining momentum and health plans are taking notice. “Managed care organizations operating in the dual-eligible Medicare advantage and Medicaid programs will be seeking partners with hospice and palliative care as managed care for the elderly population continues to grow,” he says.
Siemer says patients who are under hospice care typically have a better quality of life and have higher pain management, comfort and family satisfaction survey scores. “In addition, when under hospice care, per patient spending is, on average, 30% less than non-hospice patient spending,” he says. “Having advance directive conversations with patients upfront--in order to determined desired patient outcomes, including whether hospice care is right for them--can help reduce overall healthcare spending. This is especially critical as more Baby Boomers continue to age.”