Providing Care at the End of Life, Do Medicare Rules Impede Good Care?

Medicare spends more than a quarter of its annual budget on care for those in their last year of life and covers more than 80 percent of decedents. Studies have documented poor quality of care, gaps in care, and patient and family dissatisfaction with care received by dying patients. Nineteen percent of Medicare decedents, nearly 360,000 beneficiaries, used the Medicare hospice benefit in 1998. In recent years we have heard providers report anecdotes about cases in which Medicare coverage and reimbursement rules may have impeded the delivery of high-quality end-of-life care to terminally ill Medicare beneficiaries. Among these anecdotes are that (1) skilled nursing facilities (SNFS) are transferring dying patients to hospitals in part so that the SNF does not incur the costs of the intensive treatments that the patients might need, (2) hospitals are discharging dying patients in response to diagnosis-related group (DRG) payment incentives; (3) patients are being dissuaded from electing hospice if they need particularly high-cost palliative care; (4) hospices and home health agencies are avoiding patients without caregivers in the home or with high levels of need for home care; and (5) physicians are not referring patients (particularly noncancer patients) to hospice because they fear that they will be charged with fraud if the referred patients do not die within six months. No information has been systematically gathered about the extent to which Medicare coverage and reimbursement methods have affected care or how widespread these issues may be. In this study the authors assess problems faced by several types of providers delivering end-of- life services under fee-for-service (FFS) Medicare. The authors identify important ways in which Medicare benefit design and financing rules both facilitate and create barriers to effective end-of-life care.