Evaluating Medicare End of Life Changes Coming 1/1/2016

We have a post at Health Affairs blog on 3 changes to Medicare end of life policy that are taking place on January 1, 2016:

  • First change in how Medicare pays hospice providers in 32 years
  • Payment for Advance Care Planning
  • The Medicare Choices program (test of concurrent hospice care)

Any one of these would arguable be the biggest end of life policy change for Medicare since the creation of the hospice benefit in 1983; combined, they make for huge shift, and evaluating their impact is a top policy priority.

A Beautiful Death

That is the name of the Duke Sanford Schools newest “Ways and Means” podcast that discusses one families struggle with brain Cancer, with some extended comments from me on the subject of what Medicare does and does not cover for persons facing the end of their life.

Medicare will pay docs to discuss dying

Medicare announced today that it will pay physicians to discuss dying, and the preferences, choices and options that patients have when they face the inevitable (it is only a matter of when, and from what). Six Augusts ago, the summer congressional recess exploded into “death panels” as a way to argue against the ACA. The offending provision would have simply paid physicians to have this type of planning discussion. Five Augusts ago, a RCT of early palliative care showed that patients with stage-4 lung cancer who essentially had such “goals of care” discussions–but who could subsequently choose whatever care options they wanted–actually lived longer, had better quality of life and cost a little less as compared to those who did not have such a discussion.

The idea that Medicare wouldn’t pay for a discussion of preferences and options for patients is absurd since over 8 in 10 persons who died last year in the U.S. were insured by the program. Medicare is inherently in the dying business, and each of us will do it once. The policy announced today will allow physicians to get paid to have goals of care discussions with patients and family members (see p 246), which is important to help patients to make the most informed choice possible. This policy represents a small step toward sanity in this area.

We at Duke have a Center for Medicare and Medicaid Innovation Award on palliative care with Four Seasons, which is seeking more to develop more comprehensive payment changes to how the Medicare program pays for end of life care, but we are still early days in the project (CMMI billboard May 16).

Long Term Care Support Group

Today I talked with the Duke Fuqua School of Business Caregiver Support Group–about 12 persons who are currently caring for a loved one, most typically a spouse. All of the stories are different of course, but there is a thread that runs through them. Medicare pays for lots of physician and hospital care, without regard for whether it is needed or works. But, it pays for very little in the way of Long Term Care–help and support to enable someone to deal with disability. The folks in this room were ready to have a discussion about trading off some types of curative/high costs disease modifying care for low tech custodial Long Term Care. I have a paper coming out later this Summer that sheds more light on such conversations and trade offs…..more on that later.

Another theme running through many people’s story was that changes in setting often reduced hospital and other formal spending paid for by Medicare. However, the impact on the societal cost of care was ambiguous–it was often simple shifted to families.

Increasingly, I think one motivation for seeking cost savings in Medicare should be to reallocate some of the money spent on medical care to Long Term Care.

June 2013 MEDPAC report and hospice

Has been released today. Chapter 5 (pp. 117-42) focuses on hospice policy and lays out some information on the ‘shape’ of what a U shaped hospice payment revision might look like. Figure 5-1 shows average labor cost per day of hospice stay (roughly, the variable costs of being in the hospice business), for differing lengths of stay, and the shape and levels are remarkably similar (more intensive care provided at the beginning of an admission, and in the last few days of life).

ScreenHunter_01 Jun. 14 13.29

Moving away from the straight per diem approach that has been used to pay hospice by Medicare for 30 years in favor of one that is designed to flex/track with labor/marginal variable costs across a stay should be fairly straightforward (with the bump ups for last few days obviously retrospectively determined). However, achieving the two-part goal that is often attached to a “u shaped” hospice payment policy:

  • increasing the length of stay for short stays . Worry is patients are reaping full benefits, and cost saving opportunities are being missed.
  • decreasing the length of stays for long ones. Worry is that hospice is being either fraudulently or inappropriately used (it is morphing into a back door LTC benefit)

Neither goal, and certainly not both at the same time, is obviously achieved by a u shaped per diem payment. The two “problems” are really quite different, and policy options to address them need to carefully thought through and targeted.

update: fixed some typos

Medicare age increase/means testing

The Urban Institute and RWJ have a policy brief on Medicare options, the most interesting of which is a buy-in approach for persons between age 65 and 66 using ACA subsidies. You could call this raising the eligibility age or means testing (and conservatives could call it one thing and liberals another, which might be important). This is likely a more workable solution than a straight Medicare age increase because it imagines people in the 65-66 age band in the Medicare risk pool instead of in state based exchanges. Further, it would get around the problem of gaps in coverage in states that didn’t undertake the Medicaid expansion for older persons who could. From a purely political standpoint, it would put the fingerprints of the Republican party on the ACA exchanges since that is the subsidy mechanism for the income based subsidy coverage. This could be an important part of a political deal in which the policy is much better than a straight increase of the Medicare age.

Medicare’s ‘improve or you’re out’ rehab policy

I have been meaning to write about the important court order overturning Medicare’s longstanding ‘improve or your out’ (of Medicare financed SNF and/or home health) policy for rehabilitation services. Basically, beneficiaries who had plateaued and could at best maintain function could not receive rehab services under these parts of the Medicare benefit package. Medicare has settled the court ruling with plaintiffs to expand the availability of these services, even to patients who cannot show improvement, but only maintenance of function. Several quick points:

  • While this issue has long been on the radar of elder/disability advocates, it never made it into the popular culture as a political issue. Why? I think it is related to the fact that long term care and disability are the underside of the health care system and people don’t like to think about needing rehab just to be able to maintain their ability to swallow, for example. Not an attractive thought.
  • Imagine if Medicare announced that chemotherapy X to treat Cancer Y would only be paid for if you could prove it was extending your life. The internet and the health policy meets political corner of twitter would break. We turn in horror from looking at long term care, but run toward the potential denial of a curative therapy and have a group freak out (sorta like ‘rubber-necking’ at a bad car wreck).
  • It doesn’t bother me and I even like the fact that the question of ‘can/is this person benefiting?’ from rehab services is being asked. It is a policy question as to whether such care should be required to bring about improvement, or simply to maintain function. I think the case has now been rightly decided toward expansiveness of these services. However, the same type of bright lights (does it extend life, improve function, how much does it cost?) should be asked of the entirety of the Medicare program. Not just the parts no one likes to think about.

Raising the Medicare Age

WSJ has a debate on raising the Medicare age featuring Maya Macguineas (yes) and Aaron Carroll (no).

I think Aaron is correct that it is a bad idea in policy terms (and truly dreadful if the ACA is repealed), but I also believe it is virtually inevitable that we will raise the Medicare age as part of any ‘grand bargain’ that moves ahead with the ACA and related changes. As I write in Chapter 7 of my book p. 74-5:

I do not suggest raising the Medicare age as a policy option, because it mostly shifts, and doesn’t reduce costs. Removing the youngest and therefore healthiest sliver of the Medicare program will not revolutionize the cost of the program, but would shift some costs from the federal budget onto beneficiaries or to another aspect of the federal government (income based premium support, for example). In fact, recent analysis suggests that doing this will increase overall health care spending, because all such a policy does is to move persons out of the largest risk pool (Medicare) into a smaller one.

As a stand-alone policy, there is no doubt that raising the Medicare eligibility age this is a bad one. And doing so assumes the implementation of exchanges under the ACA. However, I am open to raising the Medicare age in a manner that equalizes it with the Social Security retirement age as part of a broader political deal that either brings about federally-guaranteed universal catastrophic coverage or an agreement to move ahead with implementation of the ACA that makes reform the responsibility of both parties. For many Conservatives, a move such as this one is a strong signal of seriousness in addressing long range health care cost problems. As I say, I don’t think they are correct, but there is a policy logic of increasing the age along with Social Security increases given that they have been linked for so long. In the end, I would potentially agree to this, so long as what is gained in return is consequential enough.

For me, it depends on what else is in the deal.

The Subsidy of Marriage by Social Security

(cross posted at Same Facts)

Josh Barro notes that marriage cannot be an entirely state issue because of the way in which it impacts things like Social Security and Medicare eligibility. Below is the majority of a post I wrote in September, 2011 on the subsidy of marriage provided by Social Security…..

Gene Steurle and Stephanie Rennane have a nice policy brief put out by the National Institute for Health Care Management on the lifetime contributions and benefits of Social Security and Medicare. This is mostly familiar stuff, with lifetime Medicare benefits consistently being several times larger than contributions to the pay-as-you-go program, and Social Security lifetime contributions and benefits being more similar for singles and two-earner couples. However, one thing jumped out from this figure (circled):

The profound subsidy of marriage that is inherent in how Social Security determines benefits for spouses who do not pay Social Security taxes in earlier life. As Steurle notes:

While a single woman who worked a full career at the average wage can expect to receive Social Security benefits roughly in line with her payroll contributions, a married woman who never worked but whose husband paid the same taxes as the single woman can expect to receive about $180,000 in spousal and survivor benefits. Unlike private pensions, these additional benefits are essentially free but only to those who are married, regardless of need, contributions or any child rearing.

The subsidy would be the same if the gender roles were switched.

Determining what type of contracts (marriage, civil union, etc.) provide the benefit described here–allowing one member of a couple to obtain eligibility for Medicare and a Social Security pension even if they have no market wages that were subject to payroll taxes over their younger years– and whether all American citizens have access to this subsidy, is a key public policy detail that will have to be worked out if marriage equality is to have its fullest meaning.

Medicare’s funding future: income v. payroll taxes

The 2012 Medicare Trustees report is out (h/t @sarahkliff), and one graph jumped out at me: the historical and projected financing components of Medicare (payroll taxes, income taxes, premiums, and the much smaller items of taxes on benefits for higher income persons and state contributions for Part D).

Historically, payroll taxes have been the primary funding mechanism, but the further in the future we go, income taxes become increasingly important (general revenue transfers) for financing Medicare. As the report says on p. 25

The Trustees expect growth in SMI Part B and Part D premiums and general fund transfers to continue to outpace GDP growth and HI payroll tax growth in the future. This phenomenon occurs primarily because, under current law, SMI revenue increases at the same rate as expenditures, whereas HI revenue does not. Accordingly, as the HI sources of revenue become increasingly inadequate to cover HI costs, SMI revenues would represent a growing share of total Medicare revenues.

There are obviously many moving parts to such a projection, and there is great policy uncertainty about what we might do in the future. With that proviso I note two points:

  • Shifting more Medicare financing burden to income taxes is an increase in the use of a more progressive form of taxation (income taxes given current system) to fund Medicare
  • Payroll taxes and history of beneficiaries having paid payroll taxes have been a key part of the popularity of Medicare, and reinforced the (incorrect) notion that beneficiaries had pre-funded their Medicare costs (it is a pay as you go system). If income taxes are used to pay a larger portion of Medicare in the future, it may help to end the perception that beneficiaries already paid for the cost of their care. This post shows that payroll taxes by beneficiaries do not cover the cost of their care; they weren’t designed to do so, but the perception lingers to powerful effect that makes addressing the cost side of the program very hard