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Published August 9, 2018

The Kaiser Foundation Annual Report on Medicare and What it Means for Advance Care Planning

Driven by the baby boomer generation, there has been a 36% increase in the number of Medicare beneficiaries over the last decade.  In 2007, there were 44 million enrolled for Medicare Services; today, there are almost 60 million.  This only represents a portion of baby boomers — an estimated 10,000 people turn 65 every day. It won’t be until 2030 that all the baby boomers have reached retirement age and will be eligible for Medicare.

The Henry J. Kaiser Family Foundation’s (Kaiser Family Foundation) annual report on Medicare, which was released in June, examines the spending and financing trends and patterns of the nation’s enormous (and growing) federal health insurance program.

Key facts highlighted in the report:

  • Medicare spending is projected to rise to 18 percent by 2018, up from 15% in 2017.
  • The Medicare Hospital Insurance (Part A) trust fund is projected to be depleted in 2026, three years earlier than the projection made in 2017.
  • Medicare benefit payments for 2017 totaled $702 billion, up from $425 billion in 2007.
  • As enrollment in Medicare Advantage plans increased, payments to these plans for Part A and Part B benefits as a share of total Medicare benefit spending nearly doubled from 2007 to 2017 – from 18 percent ($78 billion) to 30 percent ($210 billion).
  • The increase in Medicare average annual spending has slowed in the past decade, from 7.3% in 2001 to 2010 to 5% from 2011 to 2017. One of the contributing factors is the influx of younger, healthier beneficiaries as the first of the baby boom generation aged into the program.
  • Increasing Medicare enrollment, use of services and intensity of care along with rising health care costs are projected to drive Medicare per capita spending growth at an average annual rate of 4.6 percent over the next 10 years.

So, what are the implications for advance care planning?  This report reveals the growing need for higher-quality, cost-efficient care for baby boomers as they age into Medicare.  Advance care planning services are an essential part of meeting this need.

A vulnerable population

The majority of older people will face advanced illness at some point. Quality of life often then becomes the focus of care over burdensome treatments that have marginal benefit.  Most Medicare expenditures stem from meeting the health needs of older adults coping with multiple chronic conditions, and they are often poorly managed.

The 2014 consensus report from the Institute of Medicine (now the National Academy of Medicine) about end-of-life care in America, noted that advance care planning was needed to guide the selection of medical treatment to ensure that care is aligned with the values and wishes of patients.

Reducing unnecessary and unwanted care may also decrease the cost of care. Advance care planning is associated with a reduction in overall costs resulting from a decrease in inpatient utilization, according to a recent study in the Journal of Palliative Medicine.

Medicare has a significant role in end-of-life care  

The overall cost of end-of-life care is high, and Medicare is the largest insurer of healthcare provided during the last year of life.  CMS recognizes the need to encourage advance care planning for its beneficiaries not only to manage costs, but also so patients can receive the care they want or need as they approach the end of their lives.

In 2016, the Kaiser Family Foundation published a Fact Sheet about the role of Medicare in end-of-life care.  Here are some key takeaways:

  • Medicare covers a comprehensive set of healthcare services for end-of-life care for both curative and palliative purposes.
  • Medicare covers advance care planning provided by physicians or other health providers in medical offices and facility settings. Providers can bill Medicare separately and be reimbursed for advance care planning during annual wellness visits and beneficiaries do not incur an additional cost for this service during that visit.
  • As part of the Patient Self-Determination Act, Medicare requires hospitals, skilled nursing facilities, home health agencies, hospice programs and HMOs to ask patients upon admission if they have an advance directive. However, Medicare patients are not required to have an advance directive before receiving care.
  • Medicare offers a comprehensive hospice benefit for terminally ill beneficiaries, which includes nursing care, counseling, palliative medications, and up to five days of respite care for family caregivers.
  • In addition to palliative care for terminal illness, Medicare also covers palliative care services for symptom relief in individuals with multiple serious illnesses.

With an aging population that is increasingly vulnerable to illness and receiving care they may not desire, now is the time to initiate advance care planning with your patients approaching or eligible for Medicare benefits.  Learn ways to jump-start your advance care planning initiative here.

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