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July 1, 2021

Carving in Hospice to Medicare Advantage—Potential Unintended Consequences

Author Affiliations
  • 1School of Medicine, Oregon Health & Science University, Portland
JAMA Health Forum. 2021;2(7):e212269. doi:10.1001/jamahealthforum.2021.2269

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Frédéric Bastiat, “What Is Seen and What Is Not Seen,” 1850

Since the creation of the Medicare hospice benefit in 1982, Medicare Advantage has grown rapidly. In 2011, only about 1 in 5 Medicare decedents aged 66 years or older were cared for under a Medicare Advantage plan. In 2018, 1 in 3 Medicare decedents were enrolled in a Medicare Advantage plan at the time of death. In 10 states, Medicare Advantage provides medical care to between 38.3% and 52.3% of Medicare decedents. Among that top 10, Michigan experienced the largest growth in decedents who were on Medicare Advantage at the time of death, increasing from 19.8% to 38.3% (ie, 93.4% growth). In the top 3 states (Hawaii, Rhode Island, and Oregon), about half of decedents were enrolled in a Medicare Advantage plan when they died. If these trends continue, Medicare Advantage will become the predominant provider of care for seriously ill persons at the end of life in the US.

Since the hospice benefit’s creation, Medicare Advantage has not covered hospice care of its enrollees, and such care remains excluded from Medicare Advantage plans. This carve-out resulted from the lack of data regarding how best to calculate payment. Concerns over the carve-out include not only administrative complexity but also issues related to coordination and continuity of care. The Medicare Payment Advisory Commission in 2014 recommended an innovation: carving hospice back into Medicare Advantage to improve coordination of care, as well as offering access to palliative care services other than hospice. This innovation is being tested by a Centers for Medicare & Medicaid Services demonstration program, the Value-Based Insurance Design (VBID) Model Hospice Benefit, and the results of this important demonstration will guide policy. If the approach is successful, the challenge is to anticipate the potential unintended consequences, both those “that can be seen” and those “that must be foreseen.”

In the novel Cat’s Cradle, Kurt Vonnegut wrote, “In this world, you get what you pay for.” Changing the financial incentives from the hospice carve-out, in which costs of hospice terminal care are the responsibility of traditional Medicare and not the Medicare Advantage program, to hospice “carve-in,” in which Medicare Advantage is responsible for the all the costs of hospice care, has the potential for unintended and unwanted consequences. Such consequences should be anticipated as a possibility, based on the experience of the now-canceled Liverpool Care Pathway for the Dying Patient in the UK.1 The initiative aimed to provide actively dying persons in hospitals with improved end-of-life care based on the principles and practices of hospice. However, the Liverpool Care Pathway was eliminated from UK hospitals in 2013 based on an independent review led by Baroness Julia Neuberger; the review was conducted after a national public scandal erupted with the discovery that some patients placed on the pathway were not appropriate candidates for end-of-life care because they had reversible conditions, such as medication adverse effects, rather than terminal conditions.

With the history of the Liverpool Care Pathway experience in mind, one should anticipate that payment policy changes that carve in a hospice benefit with Medicare Advantage plans now responsible for reimbursing hospice care might also lead to unintended consequences, and thus monitoring for unwanted effects should be in place. In this case, there may be consequences that are the converse of those encountered with the Liverpool Care Pathway—namely, not providing appropriate patients with access to hospice services because palliative care by a physician, nurse practitioner, or physician assistant is cheaper than the daily per diem of the Medicare hospice benefit. The request for applications for the hospice component of the VBID model proposes monitoring hospice referrals.

Thus, the influence of financial incentives on shared decision-making is an unintended consequences that must be “foreseen,” but there are other challenges. For example, financial incentives may have potential explicit effects on decision-making—such as coercion or the patient and/or family feeling pressured to make a decision—that require careful thought. A recent evaluation of the Medicare Care Choices Model2 illustrates the complexity of this issue. This program was designed to improve access to hospice care. Decision-making and potential coercion were monitored as part of a postdeath survey that asked the bereaved primary caregiver about communication, access to treatment or terminal care, and feeling pressured to transition from the program (which allowed concurrent curative and palliative care) to the full hospice benefit. Among program participants who transitioned to hospice, 6.1% reported that the decision to transition was not free of pressure. This rate was similar to that among bereaved family members in control hospices.

Although this finding by itself may raise concern, sometimes clinicians must advocate for a decision that is in the best interest of the patient. For the patient or family requesting futile care or a family member making a choice that is not in the patient’s best interest, a clinician making a strong case as to why a treatment choice is not the best course could be misinterpreted as pressuring them into a decision. On the other hand, a high proportion of persons reporting feeling pressured in the context of poor communication, treatment options not being provided, and having questions about key aspects of their medical care not allowed or not fully answered would be highly concerning. Implicit effects of financial incentives are difficult to measure. More research is needed, but as changes in payment policy are rolled out nationally, it is vital to ensure that decisions on end-of-life care are not solely based on financial incentives but also on the values and goals of frail and seriously ill persons.

Innovation to improve payment models is essential to avoid the fragmentation of care induced by piecemeal payment models. Concerns remain about overtreatment, poor communication, and inadequate symptom palliation. However, changing economic incentives can produce both explicit and implicit effects on medical decision-making and patient outcomes. There is a paucity of research on consumer perceptions of the quality of care in Medicare Advantage. One recent study found that the quality of end-of-life care delivered through Medicare Advantage is suboptimal compared with care provided through traditional Medicare.3 Going forward, the Centers for Medicare & Medicaid Services needs to monitor for potential unintended consequences of changing economic incentives that can be seen—as in the Liverpool Care Pathway—as well as those consequence that, as Bastiat might have cautioned, must be “foreseen.”

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Article Information

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Teno JM. JAMA Health Forum.

Corresponding Author: Joan M. Teno, MD, MS, School of Medicine, Oregon Health & Science University, 3181 SW Sam Jackson Park Rd, Portland, OR 97239 (teno@ohsu.edu).

Conflict of Interest Disclosures: Dr Teno was contracted by Abt Associates to work on Evaluation of the Medicare Care Choices Model and is currently an expert consultant advising the team evaluating the VBID Model Hospice Benefit. This JAMA Forum post is independent of that work.

Disclaimer: This post represents the opinions of the author; it does not represent the views or policies of the US Department of Health and Human Services, nor does the mention of trade names, commercial products, or organizations imply endorsement by the US government.

Currow  DC, Abernethy  AP.  Lessons from the Liverpool Care Pathway—evidence is key.   Lancet. 2014;383(9913):192-193. doi:10.1016/S0140-6736(13)62039-5PubMedGoogle ScholarCrossref
Abt Associates. Evaluation of the Medicare Care Choices Model: annual report 3. Published October 2020. Accessed June 29, 2021. https://innovation.cms.gov/data-and-reports/2020/mccm-thirdannrpt
Ankuda  CK, Kelley  AS, Morrison  RS, Freedman  VA, Teno  JM.  Family and friend perceptions of quality of end-of-life care in Medicare Advantage vs traditional Medicare.   JAMA Netw Open. 2020;3(10):e2020345. doi:10.1001/jamanetworkopen.2020.20345PubMedGoogle Scholar
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    1 Comment for this article
    Liverpool Care Pathway Experience
    Dr. Sandeep Sharma | Fortis Hospital, Mohali, India
    In the novel Cat's Cradle, Kurt Vonnegut expressed, "In this world, you get what you pay for." Changing the monetary motivations from the hospice cut out -- in which expenses of hospice terminal care are the obligation of customary Medicare and not the Medicare Advantage program -- to hospice "cut in," in which Medicare Advantage is answerable for every one of the expenses of hospice care, has the potential for accidental and undesirable results. Such results ought to be expected in light of the experience of the now-dropped Liverpool Care Pathway for the Dying Patient in the UK (1). The program planned to furnish end-of-life care to patients based on the standards and practices of hospice. It was discontinued in the UK in 2013 after the revelation that patients put on the pathway were not suitable contenders for end-of-life care since they had reversible instead of terminal conditions.

    With the historical backdrop of the Liverpool Care Pathway experience in mind, one ought to expect that installment strategy changes that cut in a hospice benefit with Medicare Advantage designs now liable for repaying hospice care may likewise prompt potentially negative side-effects, so observing for undesirable impacts ought to be set up. For this situation there might be ramifications that are the opposite of those experienced with the Liverpool Care Pathway—in particular, not giving proper patients admittance to hospice administrations since palliative consideration by a doctor, nurture specialist, or doctor partner is less expensive than the day-by-day outlay of the Medicare hospice advantage. The solicitation for applications for the hospice part of the value-based insurance design (VBID) model points toward observing hospice references.