Carrying the World on Your Shoulders

Is Easier Than Meaningfully Improving Medicare

The NEJM has just published an article that calls into question the value of Medicare’s 20 year journey with pay-for-performance (P4P) programs.

To quote the article: “Returns have been disappointing with only moderate documented

improvements in our health outcomes, despite substantial administrative burden and costly

demands on clinicians time. We believe the health care system’s overreliance on P4P to drive

quality is problematic…all three core elements of this approach - measurement, scoring, and

financial incentives - have inherent shortcomings that cannot be resolved with incremental

refinement."

These programs include Hospital Value-Based care, the Merit-Based Incentive Payments System (MIPS), and the Medicare Advantage star ratings. The article also notes "Achieving meaningful quality improvement at scale will require rethinking the paradigm…The cost and the limitations of the measurement - scoring - pay paradigm that have shaped U.S. policy for generations are becoming increasingly apparent.”

Thank you the NEJM for this bold and accurate commentary on Medicare. These same

concerns also apply to the Medicare payment model. It is exceedingly complex, costly, and

rewards the wrong behavior. Just look at the fraud and costs of U.S. healthcare, which is a natural result of relying too much on coding instead of common sense.

Medicare must acknowledge these flaws and make fundamental, not incremental, change.

Hospice Policy Submittal to CMS and MedPAC

Aligning Hospice Payment and Benefit Design with Patient Need

Executive Summary

This proposal advances three integrated reforms: (1) replace the six-month prognostic eligibility requirement with diagnosis of terminal illness; (2) integrate hospice fully into the Medicare benefit; and (3) transition reimbursement to a guardrailed, reasonable cost-based model. These reforms are supported by extensive evidence that hospice reduces Medicare spending while improving care, but also recognizes that the current payment model creates negative structural incentives tied to time, classification, patient selection and benefit design.

Core Policy Rationale

Medicare payment systems shape clinical behavior. Fee-for-service systems incentivize volume and coding intensity. Hospice was designed to avoid these distortions, yet its per diem structure substitutes new proxy variables—length of stay, level-of-care classification, and patient trajectory. These proxies create predictable financial incentives that influence provider behavior, even in the absence of coding-based reimbursement.

The central policy insight is that eliminating coding does not eliminate incentives. Incentives shift to whatever variables define payment. In hospice, those variables are time, classification, selection and insurance benefit design.

As a result, even a simplified system can produce distortion if the underlying payment model is misaligned with patient need.

Evidence Base

MedPAC analyses consistently demonstrate that hospice reduces total Medicare spending in the final months of life, largely by reducing hospitalizations and ICU utilization. CMS data show that hospice patients experience fewer acute care transitions and improved care coordination. Peer-reviewed studies (e.g., Teno et al., JAMA) show lower aggregate spending and improved patient and family satisfaction in end-of-life care.

Structural Limitations of Current Model

1. Per diem payment rewards longer lengths of stay regardless of intensity

2. Level-of-care categories (e.g., continuous care) create classification-based revenue variation

3. Diagnosis and eligibility framing influence enrollment patterns

4. Negative financial incentives and coverage benefit flaws reduce the effective use of hospice.

Solutions to These Limitations 

1. Replace Prognostic Certification by eliminating the six-month prognosis requirement and replace it with physician-documented diagnosis of terminal illness. Prognostication is inherently unreliable and delays appropriate care access.

2. Integrate Hospice into Medicare by eliminating hospice as a separate carve-out and integrate it into the core Medicare benefit to allow continuity between curative and palliative care.

3. Implement Reasonable Cost-Based Reimbursement by replacing per diem payments with reimbursement based on reasonable costs, with safeguards including cost benchmarks, audits, and defined allowable expenses. This eliminates incentives tied to time, classification, and patient selection.

Why Cost-Based Reimbursement is Appropriate for Hospice

Hospice differs fundamentally from hospital care. It is lower cost, less variable, and not driven by discretionary high-cost technologies. Care is labor-based and predictable, making it feasible to define reasonable cost benchmarks. Therefore, the risks of cost inflation associated with historical hospital cost-based reimbursement are materially reduced in hospice. This payment model would also dramatically reduce payment fraud in hospice and the invasion of private equity into this care space.

Expected Outcomes

1. Improved access to palliative care

2. Elimination of financial incentives for patient selection

3. Alignment of payment with actual care needs

4.  Preservation of Medicare cost savings

5. Reduction in administrative burden and fraud in the hospice space

Implementation Pathway

Time is of the essence to start bending the Medicare cost curve. All these suggestions have been tested - most through the CMS CMMI demonstration program with demonstrated quality and cost benefits. Consequently, I would offer this option to Hospices and Health Systems immediately without further testing. 

Conclusion

Hospice demonstrates that simpler payment systems and simple benefit revisions  can improve care and reduce costs, but also shows that proxy-based payment models inevitably shape behavior. This proposal advances the next stage of reform: aligning reimbursement directly with patient need through a disciplined cost-based approach and simple benefit design changes.

Advice on dying

This past week, I had the privilege of speaking to pre-med students, graduate students, and faculty in the medical sciences at the University of Notre Dame. My topic was “How We Die in America: Fear, Faith, and the Moral Limits of Medicine."

Over the last several generations, dying in America has changed dramatically. What was once primarily a spiritual and family-centered event has evolved into a medical technology event.

This lecture focused on dying in America and healthcare's role in shaping that experience.

We do not speak easily about death. It enters the room uninvited and unsettles our confidence. It exposes the depth of what is and is not in our control. It reminds us that we are not self-creating beings, but creatures - finite, dependent, and vulnerable. 

Yet if there is one thing that binds every human life together, it is this: we will die. The deeper question is not whether we will die, but how. We all need to learn how to die. My advice is that learning about dying enhances living.

You can view my presentation by clicking here.