The case for managing your end-of-life care

Halloween might be over, but here's a spooky headline: It's Never Too Soon to Start End-of-Life Conversations.

In this article, Dr. Pelzman makes the case for patients to proactively manage their end-of-life care. This is a crucial issue that's near and dear to my heart (as evidenced by my book, The Journey's End). While I encourage you to read the full article, here are a few outstanding snippets:

First, as Dr. Pelzman says, "There are things that matter, and then there are things that really matter." End-of-life (EOL) conversations “really matter.” Unfortunately, modern medicine avoids them and instead focuses on things that are easier to measure, like symptoms and test results. Of course, few of us are comfortable discussing death, and fee-for-service medicine (along with the coding system) doesn't allow for meaningful EOL conversations.

Second, Dr. Pelzman muses that maybe someday "the issues of a dignified death, of maximizing the use of hospice and palliative care, of helping our loved ones get the peace they desire, will no longer raise such societal ire and create so much resistance." He adds that many families have been torn apart by these decisions during the last days of life, and that none of us want to see that happen." Amen!

Again, I encourage you to read the full article--and if you're curious for more, there's always my book.

How Medicare Advantage plans impact traditional Medicare

AARP prepared a Special Bulletin this month to inform readers about Medicare’s open enrollment options during this year's open enrollment period, which runs from October to December. Overall, the articles were well-written and did a superb job of explaining the choices for members.

My interest in the Bulletin is to highlight an important point somewhat buried in all the information: Medicare Advantage Plans, as currently constructed, are crushing the traditional Medicare program and costing taxpayers billions more than traditional Medicare. Those increased costs to taxpayers are for the most part going into the profits of private insurers like United, Humana and Evalence to name of few. The Medicare program is struggling financially and yet it is giving away billions in profits to private insurers.

Let’s begin with the facts. Traditional Medicare has been on a steady decline in favor of Medicare Advantage (MA), which is private insurance, since 2008. Today, MA covers more than 50 percent of Medicare recipients. In other words, Medicare has in effect outsourced more than half of the program to private insurance companies. The primary reason consumers are selecting MA is because these plans cost less and cover more services. How is MA able to achieve these results?

• The first reason is that MA offers patients a restricted network of providers to save money.

• The second reason is that MA uses their volume of patients to pay the providers less for their services.

• The third reason is that MA plans wisely focus on primary care as the key to offering better care at lower prices. They are investing billions into acquiring their own primary care practices.

• The fourth reason is that MA uses more restrictive access to expensive services by requiring pre-certification before services are allowed.

• The fifth reason is that MA plans to aggressively market their product to consumers.

These practices save significant dollars for MA plans which go mostly into the private insurers' profits. However, my greatest concern is that Medicare pays the MA plans billions more per year than the cost of traditional Medicare. Substantial research by the Commonwealth Fund (and others) documents “MA plans cost the government and taxpayers more than traditional Medicare on a per beneficiary basis. In 2022, that additional cost was 4 percent [but it has been as high as] 17 percent.” (Medicare Advantage Policy Primer May 3, 2022).

Based on the increasing and massive profits from MA plans, it appears that their cost savings and increased payment go heavily into these private insurers' profits.

So why does Medicare pay these MA plans so much? The answer is the manipulation of coding. According to the Commonwealth Fund, “the government pays MA a set rate per person, per year under what is called a risk contract.” That payment amount is adjusted to reflect risk and uses coding to determine the risk level. Unfortunately, coding is easily susceptible to manipulation and MA plans have mastered that manipulation to their benefit, according to published studies. In fact, the Congressional Budget Office (CBO) recommended that the benchmark payments to these plans be reduced by 10 percent in December 2022. This CBO strategy has been criticized by some, arguing that private insurers will merely raise premiums, which would disproportionately impact lower-income individuals on Medicare.

The facts also indicate that costs for traditional Medicare are going up at a rate of 8 percent per year while MA plans are experiencing increases of only 4 percent per year. So MA plans are spending less on beneficiaries and being paid more for that less expensive care by the government. It is important to acknowledge that MA plans are better at managing healthcare expenses than traditional Medicare, primarily because of the five strategies discussed above. Unfortunately, those savings go into private insurers' profits-not to lower costs for taxpayers.

The trajectory of these facts only compounds the financial disaster for taxpayers due to the Medicare population dramatically increasing over the next seven years. Reforming Medicare is painful but not reforming it will be more painful.

The solutions to these problems go well beyond this article, which is why I wrote the book The Journey’s End. This book offers pragmatic solutions to these challenges.

Hospice Reform: 5 Practical Options

The word “hospice” often conjures up negative feelings in patients, families and physicians. Simply put, hospice has a marketing problem—it is associated with death, defeat and, worst of all, giving up hope. However, hospice is not about giving up hope. It is about making the most of the time we have left.

President Carter’s recent publicity and experience with Hospice is helpful, but Hospice's marketing problem goes deeper. Medicare regulations actually discourage the use of hospice but there are practical options to reform them:

1. The first regulatory barrier is the requirement that physicians certify a patient will die in six months. This barrier has no scientific basis behind it - there is no evidence that physicians can accurately predict a patient’s death six months in advance. This requirement has a chilling effect on physicians discussing hospice care with patients. What physician wants to tell a patient they believe the patient will die in six months? The answer is none. As a result, the typical hospice stay is a mere 18 days, because the physician has delayed enrollment until the patient is at death’s door. There is a simple way to change the regulation on eligibility for hospice, which is to follow the criteria used by the original hospice: make any patient with a terminal diagnosis eligible for the hospice benefit.

2. The second regulatory barrier is the requirement that patients give up their regular Medicare coverage to receive hospice care. The alleged rationale is that Medicare cannot afford to give patients both of these benefits. Again, this health policy has a chilling effect on patients, families and physicians. It is viewed as giving up hope because patients give up the security of regular Medicare coverage and future treatment. The evidence, however, does not support Medicare’s stinginess. Medicare ran a multi-year pilot project where patients were allowed to keep both benefits (traditional Medicare and Hospice). What was the result? Patients appreciated this flexibility and gradually the patients only used the hospice benefit. In fact, Medicare saved money: Costs for patients in the pilot program were one-third lower than patients staying on the regular Medicare.

3. The third regulatory barrier relates to fraud and abuse laws. Medicare assumes that patients who are in hospice for more than six months are suspect and should either be discharged from the hospice benefit or go through a recertification process to continue using the benefit. When President Carter surpassed the six-month mark in hospice, I somehow doubt he went through this bureaucratic recertification process. Why should he? And more to the point, why should anyone else? The thinking behind this requirement is penny-wise and pound-foolish. A recent study by the University of Chicago documented that patients in hospice save Medicare $3.2 billion annually. In fact, the longer the hospice stay, the more Medicare saved. Why should we care about patients staying longer than six months in hospice?

4. The fourth regulatory barrier is the reimbursement formula used to pay hospice providers. Hospice was meant to be affordable and low-tech. Unfortunately, Medicare makes Hospice complex by using an excessively burdensome coding system to pay for this benefit. Coding is volume-driven and has been shown to encourage fraud. All of a sudden, the private equity and venture capitalists have discovered hospice as a profit opportunity because of the coding payment formula. Today, 70 percent of hospice providers are for-profit and doing quite well with margins of 15-20 percent. Meanwhile, non-profit hospices are declining and experiencing margins of 1-3 percent. Why the difference? The for-profits will say they are more efficient. Of course, that depends on what you mean by efficient. The for-profits focus on maximizing coding revenue, cherry-picking the high-margin patients and skipping labor costs (i.e. patient care). The evidence would support these observations. There is a simple solution to this dilemma - and it is not more fraud and abuse oversight. Pay for hospice services by using a cost reimbursement payment model - not the complex coding model. This payment model would eliminate the profit motive, eliminate fraud (because volume is no longer the basis for payment) and eliminate the cherry-picking of patients (because all patients are paid the same - according to their cost). Moreover, it would be easier and more cost-efficient to administer.

5. The fifth regulatory change would be to enhance home care benefits for hospice. Families taking care of patients at home need more support. Medicare gladly pays for ICU, transplants, renal dialysis, ventilators and feeding tubes for dying patients. These treatments are generally ineffective and exceedingly expensive. All of these costly services are avoided in hospice (as evidenced by the multibillion-dollar savings noted in the University of Chicago study). Medicare should allocate some of those savings to homecare and offer patients a lifetime benefit of 600 hours of homecare.

President Carter’s recent experience with hospice is a wonderful illustration of how beneficial hospice is for patients, families, and society. These five medicare reforms would go a long way to making hospice more accessible and patient/family friendly for all Americans. It would also save billions annually for Medicare.