The Current and Potential Role of Palliative Care for the Medicare Population

By Amy S. Kelley and Diane E. Meier

Palliative care is a relatively new interdisciplinary specialty focused on improving quality of life for persons with serious illness and their families. Palliative care teams, composed of physicians, nurses, social workers, and chaplains, provide an added layer of support to seriously ill patients of any age, their caregivers, and their healthcare providers, regardless of prognosis. Palliative care teams assess and treat symptoms; support decision making; help match medical treatments to informed patient and family goals; and, identify and coordinate resources and services to ensure a seamless care plan across a spectrum of settings (i.e., hospital, nursing home, home).

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Palliative Care and Its History within the Medicare Program

In the United States, palliative care is provided both within and outside hospice programs. Codified as the Medicare Hospice Benefit in 1982, hospice is designed to provide comprehensive, interdisciplinary, team-based palliative care, mostly in a place the patient calls home, for dying patients with a predictably short prognosis of fewer than six months. Hospice care is appropriate when patients and their families decide to forgo curative or disease-directed therapies in order to focus solely on maximizing comfort and quality of life.

In contrast, palliative care outside hospice is offered independent of the patient’s prognosis and simultaneously with life-prolonging and curative therapies for persons living with serious illness. Ideally, palliative care is initiated at the time of diagnosis of a serious illness and continues concurrently with disease-modifying treatments. Palliative care may be primary, secondary, or tertiary. Primary palliative care should be part of what all clinicians provide (such as pain and symptom management, advance care planning). Specialists provide secondary palliative care for unusually complex or difficult problems. Tertiary palliative care includes research and teaching in addition to specialist-level palliative care expertise.

Modern palliative care in the United States has developed in response to important statutory limitations of hospice. Under the Medicare Hospice Benefit, and private insurer hospice benefits modeled after Medicare, services are restricted to persons with an expected prognosis of fewer than six months and those willing to forgo disease-directed treatment. Most hospices are unable to cover expensive palliative treatments (e.g., radiation therapy for painful metastatic disease) under the average Medicare per diem rate of $156 per patient, per day.

Historically, these restrictions left countless patients to suffer with the stress and symptoms of serious illness and its treatment without expert palliative care. In response, palliative care programs initially were established in teaching hospitals, with teams, commonly known as interdisciplinary consultation teams, composed of physicians, nurses, social workers, and chaplains. Over the past decade, palliative care programs have spread rapidly, and now almost 90 percent of 300-plus bed and nearly two-thirds of all hospitals with more than fifty beds report having palliative care teams (see Figure 1, below) (National Palliative Care Registry, 2014).

Figure 1

Palliative care services also have expanded to clinic-based practices and community home-visit programs. The proportion of seriously ill Medicare beneficiaries receiving palliative care services outside of hospice is unknown. Although more than 40 percent of Medicare beneficiaries are enrolled in hospice at the time of death (Teno et al., 2013), hospice length of stay often is short, with a median of fewer than three weeks and more than a quarter of patients enroll within the last three days of life. Additionally, intensive care unit admissions and burdensome healthcare transitions in the last month of life have increased during this time period (Teno et al., 2013), suggesting that hospice use tends to follow a series of high-cost, acute-care episodes in the months before death. These data demonstrate the hospice program’s limited ability to meet the care needs of the seriously ill Medicare population with long or indeterminate prognoses and underscore the importance of access to palliative care outside the hospice benefit.

It is challenging to expand Medicare reimbursement for palliative care services outside of hospice, particularly in outpatient settings. Hospitals under DRG reimbursement have recognized the value and business case for palliative care, as described below. Similarly, the Medicare hospice benefit, required by statute to include the full interdisciplinary team, is reimbursed per diem for the package of hospice services, making interdisciplinary team support feasible. Under Medicare fee-for-service in the outpatient setting, only palliative care prescriber (M.D. and A.P.R.N., or Advanced Practice Registered Nurse) services are billable, offering no reimbursement for other members of the interdisciplinary team, such as social workers and chaplains. 

The case of Mr. G

Mr. G is an 89-year-old man with mild dementia, spinal stenosis, and osteoarthritis. He presents to the emergency department with severe back pain and is admitted to the hospital for the second time in six weeks. The hospital team consults the hospital’s palliative care team for assistance with managing symptoms and planning transitions prior to Mr. G being discharged from the hospital. The team’s assessment reveals inadequate pain relief from Mr. G’s acetaminophen, as well as significant constipation. Mrs. G is overwhelmed and, while the couple has modest financial resources and a firm desire to keep Mr. G in their home, they have no at-home support. Mr. G has not seen his primary care doctor in eight months because it is too difficult to travel to her office. The palliative care team works with Mr. G and the hospitalist to start an effective pain and bowel regimen; they recommend home health services, including an occupational therapy home-safety and fall-risk evaluation, and nursing visits to confirm the pain and bowel regimens’ effectiveness; and, they offer a referral to a palliative care house calls service, which makes home visits and provides round-the-clock phone coverage.

The community palliative care provider follows up with Mr. G at home for the next fifteen months. He needs occasional medication adjustments, and a volunteer from Mr. G’s church visits twice a week so that Mrs. G can have respite. Mr. G’s dementia is progressing, and he is losing weight and having difficulty swallowing. The home palliative care physician assesses his prognosis to be fewer than six months, and recommends home hospice care. Mrs. G continues to care for Mr. G at home with the support of the hospice interdisciplinary team and a private aide who helps her several hours daily. During Mr. G’s last weeks, he requires 24-hour assistance. His niece comes to stay and the hospice nurse visits every other day. He dies peacefully at home with his wife and niece at his bedside.

Palliative Care and the Value Equation

Healthcare spending is highly concentrated: In 2013, the United States spent $2.9 trillion on healthcare, and projections suggest that by 2040, one out of every three dollars spent in the United States will be spent on healthcare (Centers for Medicare & Medicaid Services, 2014). Healthcare spending is highly concentrated among a small seriously ill population; whereby 5 percent of patients account for 50 percent of total healthcare costs (The Lewin Group, 2010). This population is characterized by chronic conditions and functional limitations, particularly among those older than age 65. Notably, most (89 percent) high-cost patients are not in the last year of life (Aldridge and Kelley, 2014).

Despite the intensity of spending, quality of care for this group often is low, marked by poor communication, high burden of pain and other symptoms, low satisfaction, and treatments that run counter to what patients prefer (Institute of Medicine [IOM], 2014, 2011; Teno et al., 2004). Data consistently demonstrate palliative care improves care for the seriously ill, while reducing healthcare costs through treatment and prevention of symptom and caregiver crises, thereby averting the need for costly emergencies, 911 calls, emergency room visits, and hospitalizations. Expanding palliative care offers an unrivaled opportunity to increase the value (i.e., better quality leads to lower costs) of healthcare.

Effect of palliative care on quality: Data on the impact of palliative care teams on quality are substantial and supported by randomized controlled trials and rigorous prospective observational studies (Bakitas et al., 2009; Temel et al., 2010; Smith et al., 2014; Rabow et al., 2013). Protocols employ validated symptom assessment instruments and guideline-driven therapy for symptoms and treatment-related side effects. In sum, palliative care for seriously ill patients, as compared to usual care, has been shown to reduce symptom distress, both for individual symptoms (pain, breathlessness, nausea, constipation, depression) and composite scores (Bakitas et al., 2009; Temel et al., 2010); enhance quality of life (Bakitas et al., 2009; Temel et al., 2010); reduce the desire for a hastened death (Chochinov, 2002); and, decrease spiritual distress (Steinhauser et al., 2000). In addition, all studies that have compared patients receiving palliative care to usual care have shown equivalent survival rates and, in fact, palliative care and hospice interventions among selected groups show improved survival (Temel et al., 2010; Connor et al., 2007).

Direct and indirect evidence suggests that palliative care and hospice enhance family outcomes. Studies have demonstrated improved satisfaction and quality of life, decreased depression and anxiety, better bereavement adjustment, and improved survival among spouses (Kane et al., 1985; Wright et al., 2008; Wright et al., 2010; Teno et al., 2004). This is particularly important among Medicare beneficiaries whose spouses also are most likely enrolled in Medicare.

Indirect evidence supports possible mechanisms for these benefits. For example, families of patients receiving palliative care consultation reported greater attention to their emotional and spiritual needs and enhanced self-efficacy, as compared to usual care (Gelfman, Meier, and Morrison, 2008); and those who could recall a discussion of goals of care—a key component of palliative care—experienced improved patient and caregiver quality of life, lower risk of major depression, and fewer feelings of regret (Wright et al., 2008; Wright et al., 2010). Furthermore, palliative care, and discussion of care goals in particular, is associated with lower rates of death in an intensive care unit and decreased use of other forms of high-intensity medical intervention (Morrison et al., 2008), which have been linked to post-traumatic stress disorder and prolonged grief disorder among bereaved families (Wright et al., 2008; Wright et al., 2010).

Effect of palliative care on costs and utilization: A major contributor to the rapid growth of palliative care—particularly in hospitals—has been the increasing body of research demonstrating that palliative care lowers costs by preventing symptom crises and matching treatments to patient goals, thereby reducing misuse. To date, fifteen studies have examined the effect of inpatient palliative care on hospital costs (Smith et al., 2014). All found an association of palliative care with reduced costs, with savings estimates ranging from $174 to $464 per capita, per day, depending upon the patient population (e.g., Medicaid versus Medicare beneficiary), hospital type (e.g., VA versus non-VA), and geographic location (Smith et al., 2014; Morrison et al., 2008).

A smaller group of studies also has demonstrated reduced costs associated with outpatient palliative care across the course of illness (Rabow et al., 2013). For example, a randomized controlled trial (RCT) of outpatient palliative care, in addition to usual care among patients newly diagnosed with stage IV non-small cell lung cancer, found that those in the palliative care intervention group had better quality of life, improved survival (a gain of almost three months), and lower rates of emergency department visits and hospital admissions within the last thirty days of life. They also were less likely to receive parenteral chemotherapy within the past fourteen days, and were more likely to be referred to hospice four days or longer prior to death—measures indicative of higher quality and lower costs (Temel et al., 2010). Similarly, a RCT of a home-based palliative care program demonstrated improved satisfaction, fewer hospital and emergency department visits, and lower costs (mean reduction of $7,552 per capita, in 2002 dollars) (Brumley et al., 2007). Finally, a RCT of palliative care consultation in a primary care clinic setting resulted in fewer primary care and urgent care visits, yet no difference in use of the emergency department and hospital (Rabow et al., 2013).

Overall cost-effectiveness of palliative care: While quality clearly is of greatest concern to individual patients and clinicians, the importance of palliative care’s impact on costs cannot be ignored. As described above, several studies have examined quality and use concurrently. These studies and others have either demonstrated undeniably the intervention’s positive impact on value (Brumley et al., 2007; Temel et al., 2010; Kelley et al., 2013), or have been inconclusive, due to limitations in sample size (Bakitas et al., 2009; Smith et al., 2014; Rabow et al., 2013; Gomes et al., 2013).

The Growth of Palliative Care

Fiscal pressures and expansion of Medicare Advantage private insurers: Because of palliative care’s ability to reduce costs, private insurers are taking notice. Medicare and Medicaid increasingly are privatized, with some states already exceeding 40 percent penetration of Medicare Advantage plans. The Congressional Budget Office estimates that an additional 38 percent, totaling 22 million beneficiaries, will enroll in Medicare Advantage plans by 2020 (Kaiser Family Foundation, 2014). Without the political rhetoric surrounding the care of the sickest and costliest patients, these managed care plans are rapidly building and expanding palliative care programs with an eye toward cost-savings. Yet without administrative oversight or even rigorously collected claims data available for research, it is difficult to know to what extent these programs continue to improve care quality versus lead to under-treatment. Clear standards for these palliative care services within managed care are not published. And the target population is extremely vulnerable, often too sick or overly stressed to advocate effectively for their own care needs.

The diffusion of innovation: Over time, key innovations are taken up and implemented until they become so routine we can no longer imagine an alternative. This process, which takes the shape of an S-curve, begins with the slow development of the innovation and its uptake by early adopters, those who are willing to challenge the status quo because they are convinced of the innovation’s value. Once recognized and taken up by opinion leaders, the change diffuses quickly, the steep segment of the curve. This steep-segment stage is the current status of the palliative care field. Within the past decade, palliative care programs have spread rapidly to all hospital types, such that now almost 90 percent of hospitals with more than 300 beds, and two-thirds of all hospitals, report having palliative care teams. The Joint Commission has formalized an advanced certification process for hospital palliative care programs. Public awareness campaigns, including that of the American Cancer Society and the Center to Advance Palliative Care, have led to rising public, professional, and policy-maker awareness of palliative care. Training programs for new and mid-career physicians and nurses have expanded. And the palliative care research evidence base has exploded. Palliative care programs are now present at every single one of the top twenty NIH-funded medical schools, 97 percent of the Council of Teaching Hospitals member organizations, and 87 percent of the National Cancer Institute’s designated comprehensive cancer centers. This rapid growth has resulted in a tripling of the number of patients served over the past decade.


Palliative care has become an integral component of high-quality care for seriously ill older adults, both within the Medicare Hospice Benefit and, increasingly, outside of hospice as part of concurrent, comprehensive care plans. Access to palliative care services has expanded dramatically over the past few decades in response to patient and family needs and a recognition that palliative care’s effect on quality results in lower costs, maximizing the value of healthcare services. The recent and ongoing expansion of Medicare Advantage and managed Medicaid under private insurers creates opportunity for growth of palliative care programs but also poses risk, due to lack of quality standards, oversight, and accountability. As palliative care becomes a core component of medical services for the seriously ill, regulatory bodies and payers—with Medicare taking the lead—must keep pace to ensure the highest quality of care for our most vulnerable patients.

Amy S. Kelley, M.D., M.S.H.S., is assistant professor of Geriatrics and Palliative Medicine at the Icahn School of Medicine at Mount Sinai Hospital in New York City. Diane E. Meier, M.D., is director, Center to Advance Palliative Care, Icahn School of Medicine at Mount Sinai Hospital.

Editor’s Notes:

The entire Summer 2015 issue of Generations is available on AgeBlog thanks to the generous support of The Benjamin Rose Institute on Aging, Compassion & Choices and Robert Wood Johnson Foundation President's Grant Fund of the Princeton Area Community Foundation. Click here to read more.

This article is taken from the Summer 2015 issue of ASA’s quarterly journal, Generations, an issue devoted to the topic, “Medicare at 50.” ASA members receive Generations as a membership benefit; non-members may purchase subscriptions or single copies of issues at our online storeFull digital access to current and back issues of Generations is also available to ASA members and Generations subscribers at Ingenta Connect. For details, click here.


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