High Cost, High Risk: How Managed Care Can Overcome the Challenges of End-of-Life Care

As the number of older Americans continues to grow, so does the opportunity to improve end-of-life care to not only better reflect patient preferences but also lower costs.

Experts agree that as the industry moves toward value-based care, there’s significant potential for health care providers and payers to reduce costs and improve the quality of end-of-life care in the United States; however, significant challenges will need to be addressed before substantial progress can be made.

“Health care providers and payers not only have an obligation to improve the quality of end-of-life care but they are well-positioned to lead efforts to change traditional provider behaviors to achieve patient-centered end-of-life care,” says Leonard D. Schaeffer, Judge Robert Maclay Widney Chair and Professor at the University of Southern California.

Schaeffer served as a member of an Institute of Medicine (IOM) committee that created a report focusing on strategies to improve accessibility and quality of end-of-life care titled, “Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life.”

End-of-life care has become a pressing problem for the health care industry in part due to the rapidly increasing number of older Americans. While there were just over 40 million adults age 65 or older in the United States in 2010, that number is expected to grow to nearly 55 million by 2020, according to the US Department of Health & Human Services Administration for Community Living. By 2040, they estimate more than 80 million adults will be age 65 or older.

One report from the Kaiser Family Foundation noted that of the approximately 2.5 million people who die each year in the United States, about three-quarters of those are age 65 or older. As a result, Medicare is the largest insurer providing coverage for patients in their last year of life.

“The potential for cost savings and improving people’s lives is tremendous in this population because most of this population is in Medicare and most of those people right now are in fee-for-service still, so they are totally unmanaged,” says Glenn A. Melnick, PhD, Blue Cross of California chair in health care finance and director of the Center for Health Financing, Policy and Management at the Sol Price School of Public Policy at the University of Southern California.

Small Population, Big Impact

While those who are closest to death may not represent a large percentage of the population, these patients often do represent a large portion of the overall health care costs and resources. As Dr Melnick says, these patients are often “high-cost, high-risk” patients who are more likely to have difficulty accessing medical care, have more emergency room visits and hospital admissions, and may lack a solid social support system. 

Dr Melnick says while data has shown that just 5% of the population is responsible for nearly half of all health care spending, the challenge is that by the time the sickest patients begin costing the most money it’s often too late to successfully alter the cost curve. He says early intervention to identify those patients who are medium-risk but have the potential to become high-risk could be one strategy to reduce overall costs and improve care.

“If we can identify them sooner then we have a chance of changing their spending trajectory,” he says. 

To date, the managed care industry has had a difficult time doing that. 

So, just what can health care providers and payers do to try to improve the overall quality of end-of-life care?

Schaeffer says the first step should be for health systems and payers to begin paying providers to have discussions and document end-of-life preferences and patient values.

“We must, literally, pay providers to have the conversation and to have it as often as necessary,” he says.

Once patient preferences have been discussed, the next step is to deliver care that is consistent with those preferences and values. To achieve this, the IOM report says the health system needs to shift to providing more integrated patient-centered care. 

“Integrated care includes medical treatment, palliative care, and social services that address patients’ social, psychological, and spiritual needs,” Schaeffer says. “The vision for achieving such integration of medical and social services includes establishing interdisciplinary, physician-led teams that include nurses, social workers, psychologists, and spiritual advisors.” 

While Schaeffer says saving money is not the goal of integrating care, it can be a byproduct by reducing hospitalizations and emergency room visits.

“One of the most interesting findings in the IOM report is that when you give patients what they want at the end of their lives, they have a better quality of life and costs are usually lower,” he says.

Along those same lines, Dr Melnick says where a patient dies can impact the experience for families as well as the overall costs. 

“The other big thing I think is trying to reduce the number and percent of people who die in the hospital,” he says. “That’s really expensive and is not necessarily the preferred place for the patient and their family.” 

Experts also say that shifting away from fee-for-service payment structures, especially in Medicare, toward more value-based payment systems can improve quality.

The success of this strategy can be seen in a recent study that examined the efforts of HealthCare Partners Affiliates Medical Group, a Southern California-based organization that serves a large population under a global capitation payment arrangement. 

HealthCare Partners created a program called House Calls, to better serve high-risk, high-cost hospitalized patients by providing home-based medical and behavioral health or psychological wellness care to help patients transition back home. The program, which also provided palliative care management and support for homebound patients or others who had limited access to regular care, was available to those patients in the HealthCare Partners’ Medicare Advantage program or commercially insured health maintenance organizations. 

Dr Melnick, who served as the lead author in a study examining the program, says the program was able to successfully train staff and saw positive outcomes. 

According to the study, each geographic area served by the program saw a reduction in operating costs per patient as well as reductions in monthly per patient health care spending and hospital utilization compared with patient figures before enrollment.

But while some successes have been found, Dr Melnick says the managed care industry as a whole is still experimenting to determine what programs and managed care structures work best to improve quality and lower costs.

“Modest” Step Forward

One recent effort to improve end-of-life care has been new payment reforms made in August of 2015 to the Medicare hospice benefit. Under the new payment structure, a higher rate is paid during the first 60 days of a stay, followed by a lower rate for the other days. It also reimburses for nurse or social worker visits during the last week of life when skilled care is often needed.

The aim of the reform is to discourage very long hospice stays, but some experts have said the reform doesn’t address all of the issues it should and fails to address current eligibility standards, the exclusion of hospice from Medicare Advantage and other integrated payment systems, and issues with nursing home residents.

“We think these are a pretty modest step toward trying to address some of the issues with the Medicare hospice benefit today,” says Haiden A. Huskamp, PhD, professor of health care policy at Harvard Medical School. 

Dr Huskamp says that although hospice is currently excluded from Medicare Advantage plans, she doesn’t believe it’s necessarily a good thing to carve the hospice benefit out because it doesn’t provide an incentive for Medicare Advantage plans to better integrate care for individuals with advanced illnesses.

However, if the industry was to get rid of the hospice carve out and try to better integrate palliative and end-of-life care, Dr Huskamp says it would be essential to have good quality metrics and a good process in place to ensure the quality patients receive is high.

There are also eligibility concerns with the current benefit as patients are not eligible to receive services unless they have a 6-month prognosis or less. However, Dr Huskamp says by linking the eligibility to a specific prognosis rather than clinical need, patients may not be getting the services they need when they need them.

She says the time is right for the health care industry to find a way to integrate services and make sure that the services that people need most at the end of their life are available when they need them, while still ensuring hospice benefits are used properly.

“I think we have evidence that hospice and palliative care can both improve patient outcomes and improve quality of life and, in some cases, result in lower spending, not in all cases, but in some cases,” she says. 

Whether it’s improving the hospice benefit, fostering care integration, or improving communication between physicians and their patients about end-of-life preferences, experts agree that there still is work to be done. 

“The IOM report calls for systemic change to the delivery of end-of-life care,” Schaeffer says. “Among the most important challenges is changing provider behaviors to deliver care that reflects patient values and preferences.”