As the baby boomer generation ages and approaches Medicare eligibility, new importance has been placed on the care provided to individuals at the end of life. During the final year of life, Medicare beneficiaries average nearly four major illnesses, while the average for surviving Medicare beneficiaries is only slightly more than one in a typical year.[1} The additional illnesses help to account for the sharp increase in medical spending in the last year of life. Between 1992 and 1996, average annual medical expenditures for individuals aged 65 and older during the last year of life were $7,365, but grew to $37, 581 for those in the last year of life.[2] The use of “heroic” services to extend the life of a dying patient tends to involve costly procedures, and multiple doctors, which adds to the increased costs during end-of-life care.[3] On an annual basis, this accounts for between 27 and 31 percent of elderly Medicare expenditures, although only about 5 percent of elderly Medicare beneficiaries die annually.[4]
A Michigan State University study revealed that many U.S. physicians do not receive proper training in end-of-life care.[5] They found that among 275 residency programs in Michigan, only 46 percent of them offered formal end-of-life care training and only 31 percent offered formal training in hospice care.[6] This reinforces concerns over physicians’ ability to provide appropriate end-of-life care. In addition to quality of care issues, pressure mounts to control escalating health care costs. Congress has been debating a number of budget cuts that could affect both Medicare and Medicaid, two programs that substantially contribute to the health care costs of persons near the end-of-life.
Difficult Trade-Offs
Patient and family wishes must be factored into efforts to control health care costs. In many cases, this decision involves forgoing a costly treatment that could add days, weeks, or months to a dying patient’s life. Such considerations have boosted interest in ethics consultations, where a consultant or committee representing a variety of legal, medical and ethical backgrounds, provides guidance to doctors and family members as they weigh the potential risks and outcomes of a treatment. Research has shown that hospitals that utilize ethics consultations experienced cost reductions ranging from $2,276 to $5, 573 per person.[7]
HCFO has funded work exploring alternative models of end-of-life care that examine the use of hospice care, factors affecting end-of-life care for dual eligibles, and differences in spending among Medicare fee-for-service and managed care. Donald H. Taylor, Jr., Ph.D., of Duke University is examining the use of hospice in Medicare, and how its use can reduce both Medicare and out-of-pocket family expenditures. Through a literature review and analysis, Taylor will test his hypothesis that hospice can provide effective care to terminally ill patients save Medicare money by reducing the use of curative care.
Korbin Liu, Ph.D., of The Urban institute is examining what factors affect end-of-life care for dual eligibles. By analyzing factors such as the services provided by Medicare and Medicaid and the variation by race and age in utilization, expenditures, and financing source, Liu intends to provide policymakers with a portrait of use of care patterns among dual eligibles at the end-of-life and the extent to which differences in Medicaid programs influence care.
Jon R. Gabel of the Health Research and Educational Trust is exploring the cost and utilization of services during the last two years of life for Medicare managed care and fee-for-service patients. Gabel is exploring the cost and utilization patterns associated with five major causes of death: cancer, chronic obstructive pulmonary disorder, chronic heart failure, stroke and dementia. In addition to observing these patterns, Gabel is investigating various economic and sociodemographic factors that may explain differences in end-of-life prescribing.
HCFO Funded Research:
Title: Does Hospice Save Medicare Money?
Institution: Duke University
Time: October 2003 – September 2005
Principal Investigator: Donald H. Taylor, Jr., Ph.D.
Does hospice save money for the Medicare program and does hospice have any effect on out-of-pocket expenses incurred by families of terminally ill Medicare beneficiaries? The study focuses on the Medicare hospice benefit. The researchers will conduct a literature review and empirical analyses to answer the aforementioned research questions. They hypothesize that “hospice can provide effective palliative treatment to terminally ill patients while saving money for the Medicare program by reducing expensive curative care that must be foregone to obtain hospice benefits.” The objective of this study is to inform policymakers about key issues that affect the ability of hospice to save money, including length of stay, underlying disease, and the propensity of hospice and non-hospice patients to use health care services.
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Title: The Treatment of Dying Medicare Managed Care Patients: The Role of Social and Economic Factors
Institution: Health Research and Educational Trust
Time: November 2002 – October 2004
Principal Investigator: Jon R. Gabel
What is the cost and utilization of services during the last two years of life for Medicare managed care patients and fee-for-service Medicare patients? The researchers are analyzing data from provider, beneficiary, plan benefit, prescription drug, clinic and office encounters, and laboratory and x-ray services database files for the managed care and fee-for-service populations. Patients who disenrolled from United HealthCare's Medicare managed care and returned to fee-for-service are also being studied. Major causes of death such as cancer, chronic obstructive pulmonary disease, chronic heart failure, stroke, and dementia are being analyzed for utilization and costs. The researchers are addressing: (1) What are the costs and use of services associated with end-of-life care for major causes of death? (2) For the major causes of death being studied, how do cost and treatment patterns in end-of-life care vary according to area resources and financial arrangements? (3) What are differences in the site of death of Medicare managed care patients for these three major causes of death? (4) How does continuity of care vary among managed care settings? (5) What are the economic and other factors that determine continuity of care? (6) What is the cost of prescription drug coverage for end-of-life patients? (7) What is the appropriate of prescribing and dispensing for the five study conditions? (8) What economic and sociodemographic factors explain differences across areas in end-of-life prescribing? The project is intended to guide administrators, legislators, and providers as they make decisions about end-of-life care.
Publications:
Shugarman, L.R. et al. “Differences in Medicare Expenditures During the Last Three Years of Life,” Journal of General Internal Medicine, Vol. 19, Iss. 2, February 2004, pp. 127-35.
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Title: Factors Affecting End-of-Life Care for Beneficiaries Who Are Dually Eligible for Medicare and Medicaid
Institution: The Urban Institute
Time: October 2002 – March 2005
Principal Investigator: Korbin Liu, Ph.D.
What are the factors affecting end-of-life care for the dually eligible? Using the “Multi-State Dual Eligible Data Files” developed by Mathematica, Inc. under contract with CMS, researchers at the Urban Institute are examining: (1) services provided by the Medicare and Medicaid programs, as well as variations among states; (2) the composition and proportion of expenditures on end-of-life care (e.g., hospital, physician, prescription drug, long-term care); (3) variation over time in use and expenditures of health and long-term care services; and (4) variation by race and age in utilization, expenditures and source of financing end-of-life care. The study is intended to inform policymakers and providers about use of care patterns by dual eligibles at the end-of-life as policies addressing such care are reexamined and improved.
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1. Hogan, C., et al. “Medicare Beneficiaries’ Costs of Care in the Last Year of Life,” Health Affairs, Vol. 20, Iss. 4, pp. 188-195.
2. Hoover, D. R. et al. “Medical Expenditures During the Last Year of Life: Findings from 1992-1996 Medicare Current Beneficiary Survey,” Health Services Research, Vol. 37, Iss. 6, December 2002, pp. 1625-1642.
3. Ibid
4. Ibid
5. Preidt, R. “Doctors Lack Training for End-of-Life Care,” November 23, 2005. www.forbes.com/lifestyle/health/feeds/hscout/2005/11/23/hscout529175.html
6. Ibid.
7. Gilmer T. et al. “The Costs of Non-Beneficial Treatment in the Intensive Care Setting,” Health Affairs, Vol. 24, Iss. 4, July/August 2005, pp. 961-971.
