Medicare Advantage and Hospice

I enjoyed Carl McDonald‘s presentation at the AcademyHealth National Health Policy Conference, on Monday in Washington D.C. He analyzes the health care industry for Citi and discussed earnings trajectories for publicly traded managed care organizations and insurance companies under various health reform scenarios.

One aspect of his talk reminded me of my grandfather’s advice, “be careful what you pray for, you might get it.”

McDonald was asked about about proposals to shift more Medicare beneficiaries (or even all of them) into a private insurance option and he noted that this would be great news for them. A questioner pushed back reminding him that since everyone dies and we know that health care costs rise near death, a total privatization would mean that private insurance would be responsible for paying for health care for the vast majority of the sickest, most expensive patients in the U.S., whereas today, fee for service Medicare is doing a great deal of that.

This interchange reminded me of an oddity of Medicare Advantage (the private health insurance Medicare option that nearly one-fourth of all seniors choose to be covered by).

I assume it is related to the politics/optics of a private insurance company being viewed as having an incentive to steer people into hospice in order to reduce health care outlays which could help their bottom line. Of course, under the current set up, such an incentive might be even stronger. This exclusion makes little sense in policy terms so far as I can tell, and private insurers cover hospice in commercial plans for younger persons. Were insurance companies not trusted to do this in private Medicare, or did they want no part of it? I don’t know.

The politics of end of life discussions are hot and not conducive to thoughtful, reasoned policy making. And we don’t seem to be able to have any sort of rational discussion about health care costs. Thinking all this through at the 30,000 foot level (on the plane back from the conference) I couldn’t stop thinking “why in the world would the private insurance companies want to be responsible for insuring all of the elderly”?

DT

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

2 Responses to Medicare Advantage and Hospice

  1. BillNRoc says:

    The exclusion of hospice coverage from MA plans is particularly surprising given that some insurers are extremely hospice-friendly in their under-65 commercial plans. Aetna has permitted its insureds to continue disease-oriented treatment even after they have elected hospice care, and Excellus BCBS in upstate NY has adopted a number of policies that apply palliative care best practices for its members. There have been a number of both palliative and curative pilot projects, many with better outcomes than the either-or models offer.

    Hospice providers and advocates understand that you can’t tout cost control as a reason for patients/families to choose hospice, that you have to focus on quality of living and quality of dying rationales. Given how death-averse our culture is — not to mention the sorry state of our political culture — it is remarkable that about 40% of patients dying of “natural causes” do choose hospice.

  2. Don Taylor says:

    @BillNRoc
    Here is a paper on Aetna’s innovating in concurrent care as you note (not having to give up curative care to elect hospice) in their commercial business (under 65) http://content.healthaffairs.org/content/28/5/1357.full

    The first author Randall Krakauer, who directs Aetna’s Medicare book of business is a nice guy who is quite committed to hospice and palliative care. Keeping on the meme of how hard it will be to actually address costs, if you think traditional Medicare needs a jacked up IPAB-like structure to apply some sort of ‘is it worth it standards’ private insurance companies swimming in Medicare waters will need it even more.

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