Medicare as insurance innovator: the case of hospice

I have a new paper* that is available online now at the American Journal of Hospice and Palliative Medicine.

The stylized fact is that Medicare has produced many insurance payment innovations (DRGs, prospective payment of hospitals, RBRVS), while private insurance has tended to innovate on the benefit side of the equation. The creation by Medicare of the hospice benefit in 1983 stands as a notable exception. The paper lays out the linkage between Medicare and private insurance coverage of hospice.

Interestingly, hospice is the only part of the Medicare benefit package that is carved out of the Medicare Advantage program. I am unsure of why this is the case. I believe it is likely related to the fact that hospice was created as a demonstration in Medicare as part of TEFRA 1982, as was what I think was the first private insurance option in Medicare. After both parts were later mainstreamed into Medicare, I think they were just never joined. However, it is also possible that it is related to the politics of hospice and end of life care generally. Those politics have only gotten worse (more hysteria, less reasoned discussion) in the last few years. I will be writing more about this and you have thoughts about why someone who elects hospice while in a Medicare Advantage plan reverts to FFS Medicare for hospice, let me know.

This is particularly important because of the strong sense from most hospice and palliative medicine experts that the Medicare hospice benefit needs to be updated, but that it is viewed as politically very hard to address policy focused on end of life. It is an important issue since ~8 in 10 deaths that occur in the U.S. each year occur in persons who are insured by Medicare.