Should Hospice be put into Medicare Advantage?

The bipartisan Chronic Care Working Group of the Senate Finance Committee outlines this as an option they are considering (see p. 8 h/t to Brad Flansbaum). I have blogged about the oddity of hospice being carved out of Medicare Advantage plans before (here, here, and here). Several points:

  • There is no actuarial reason to carve hospice out.
  • Putting hospice into the Medicare Advantage benefit package will almost certainly lead to hospice aggregation and driving out small providers in some areas, because hospice is now any willing provider in Part A. If we put it into Med Advantage plans, they will contract and in some markets this will have big impacts. This might be good and might be bad depending on the market (competition v quality trade-off).
  • There is now a huge business opportunity produced by this carve out that is just now being leveraged. Any palliative care company that can (1) get more Medicare Advantage patients to elect hospice and (2) do so earlier will improve Med Advantage plan profitability. If a patient goes out of Med Advantage to hospice 30 days before death versus dying in a hospital, the Med Advantage plan losses ~$1,500 in premiums, but avoids $15,000+ in claims. They likely improve patient quality/experience as well, but these profits now could at least partly be going back into the system.

My guess is that hospice goes into the Medicare Advantage benefit package within the next few years, driven finally by the rise of palliative care on a more widespread basis.

Beyond this issue, the working paper is filled with what interests a bipartisan group of staffers + members of the Senate Finance Committee (they key committee) in the area of chronic care, so this is a great place to start when thinking about what you should be studying/writing a dissertation or grant on.

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

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