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"Perverse Incentives" Add Costs to Dying Patients

Mary K. Caffrey
Published: Monday, Dec 29, 2014
Amy Berman, RN, BS

Amy Berman, RN, BS

Sweeping changes to the way America delivers care at the end of life would better serve patients and their families, while achieving the goals sought in the Affordable Care Act (ACA) of better health, cost savings, and especially patient satisfaction, according to the Institute of Medicine report, Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life, released September 17, 2014.

The 507-page report outlines how end-of-life care falls short at almost every point in the process, but it particularly faults the “perverse incentives” that waste money and do harm: patients land in the hospital instead of receiving at-home care, ambulance drivers take patients to the emergency department just to get paid, and the sickest patients, such as those receiving chemotherapy, are kept out of hospice when they would benefit the most.

In sum, the report recommends:
  • Compensation and reimbursement at all levels, especially in government- funded care, must shift from rewarding care in hospitals to providing pain management or other palliative services, including care at home.
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  • Professional medical societies must set standards for better end-of-life care, and payers must support them in reimbursement schedules.
  • Clinicians must get better education about end-of-life care, and accrediting bodies must place increased focus on this area. Managed care organizations have long called for these changes, and some commercial insurers have made them, too. However, the Medicare reimbursement system is at fault in many areas cited in the report; notably, it does not allow compensation for doctors to have conversations with patients about advanced care planning. Medicare is considering such a change, more than 4 years after an effort to include such a provision in the ACA brought accusations that the Obama administration was promoting “death panels.
A foreword to the report takes harsh aim at those who promoted such talk for political gain, saying it set back the nation’s ability to make dying less traumatic and expensive for patients and their families. “The controversy on this topic and the political desire to avoid it do not alter the fact that every person will face the end of life one day, and many have had hard experience with the final days of a parent, a spouse, a child, a sibling, another relative, or a dear friend,” the report states. “At a time when public leaders hesitate to speak on a subject that is profoundly consequential for the health and well-being of all Americans, it is incumbent on others to examine the facts dispassionately, assess what can be done to make those final days better, and promote a reasoned and respectful public discourse on the subject,” it continues.

Meanwhile, data in the report show that a portion of patients at the end of life account for some of the highest medical spending. Of the estimated 18.2 million persons each year who are in the top 5% for healthcare costs, 11%, or 2 million, are in the final year of life. Of the 2.5 million deaths in the United States each year, 80% were among those who incurred healthcare costs that put them in the top 5% of healthcare spenders. Some of the highest spending takes place in the realm of cancer care, where discussions about palliative care can be especially beneficial. In November 2013, The American Journal of Managed Care welcomed keynote speaker Amy Berman, RN, to its conference, Patient- Centered Oncology Care, where she discussed how a less invasive, palliative approach to treating her breast cancer has given her a good quality of life. Unfortunately, she said, that’s not how things usually happen. “We have a system that is perfectly designed for someone to show up in the emergency department, where we don’t want them to show up,” Berman said.

Fixing a Broken System

Beyond the overall recommendations, Chapter 5, “Policies and Payment Systems to Support High-Quality End-of-Life Care,” targets specific ways to change reimbursement structures such that it would benefit patients and provide meaningful, low-cost solutions for overburdened families. The report paints a portrait of a reimbursement system both grossly and dangerously out of touch with modern life and demographic reality: the reimbursement system is designed to pay for high-tech solutions but won’t help an adult daughter, who is trying to remain employed, with the cost of making sure her elderly mother is fed and bathed every day.


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