Palliative care is an evolving field. Though long-established as a medical specialty, these health care services have yet to reach their full potential due to reimbursement pressures, poor awareness and staffing headwinds.
However, in recent years palliative care has been gaining ground, as more payers, providers and patients begin to realize what these services can do for them in terms of reducing costs and improving outcomes.
Therefore, we can expect continued demand for palliative care, the slow evolution of payment models that could support further growth and more partnerships among providers across the continuum designed to boost utilization and slash expenditures.
In 2024, demand will continue to rise, driven by a number of factors.
For starters, we have the continued expansion of the chronically ill senior population. By 2050, adults 65 and older in the United States will comprise an estimated 88 million, representing 22.1% of the country’s total population, according to a 2015 report by the U.S. Census Bureau.
The vast majority of these will have multiple chronic conditions and, within our current system, will likely be high utilizers of hospital- and facility-based services. Also, predominantly, these seniors will prefer to age in place in their homes rather than a facility, which palliative care can help them achieve.
Their desire to remain at home dovetails with the drive among payers and providers to reduce health care expenditures by reducing avoidable hospitalizations, readmissions and emergency department visits.
Palliative care in general can reduce health care costs by more than $4,000 per patient, according to a July 2017 study in Health Affairs. It can also reduce the frequency of 911 calls, emergency department visits, and unnecessary hospitalizations.
Nevertheless, close to 60% of patients who would benefit from palliative care do not receive those services, according to a report from the New England Journal of Medicine Catalyst Insights Council.
Greater recognition of palliative care’s cost-saving and outcome-improving potential will also continue to boost demand, as will a higher degree of familiarity with these services among the general public. Countering this however, is the need for greater education for all stakeholders on the nature of these services and how they are distinct from hospice.
We’ll likely also see more palliative care programs emerge across the continuum, as more hospices, health systems and primary care companies begin to invest more heavily in these services. A solid proportion of these emerging programs will be community-based, though we can also anticipate further growth among inpatient settings, including emergency departments and intensive care units.
Staffing, reimbursement headwinds
Increasingly, palliative care is a service that everyone wants to do, but no one wants to pay for.
Fee-for-service Medicare, for example, only covers physician and licensed independent practitioner services and does not cover the full range of interdisciplinary palliative care.
Today, many palliative programs are supported by philanthropic donations or treated as a loss leader that can feed referrals to other services like hospice care. Some value-based programs, such as Medicare Advantage, offer coverage of palliative care, but this is often limited to certain markets and a range of disparate care models, some more robust than others.
A number of industry groups and lawmakers have pushed for the establishment of a dedicated palliative care benefit within Medicare. But whatever the future holds, such a benefit is unlikely to come to fruition during 2024. So even as demand rises, providers will have to get creative in how they make ends meet when it comes to their palliative care programs.
Another barrier is the ongoing shortage of trained palliative care professionals — including physicians, nurse practitioners and physician assistants, nurses, social workers, chaplains and community health workers. This shortage can limit the capacity to provide comprehensive care to those in need and will continue to be an obstacle that providers have to find their way around.
Movement towards value-based payment
As of now, the proliferation of value-based reimbursement systems is not quite a light at the end of the tunnel when it comes to payment. But they do represent a glimmer of hope.
Currently, providers’ best bets for more robust payment are Medicare Advantage and Accountable Care Organization (ACO) relationships, as well as a growing number of disease-specific model demonstrations that incorporate elements of palliative care. Examples include the Kidney Care Choices Model, the Guiding an Improved Dementia Experience (GUIDE) Model and the Enhancing Oncology Model.
The Center for Medicare & Medicaid Innovation’s value-based insurance design model demonstration, currently set to end in 2030, is also piquing greater interest in the palliative care arena, boosting growth potential in the years to come.
A rising number of states are also incorporating palliative care coverage into their Medicaid programs, opening up yet another new, but limited, avenue to revenue.
The emergence of these payment systems represent an opportunity for providers, but many will have to adapt to new ways of doing business, including greater reliance on performance data, different billing methodologies, efficiency and cost control.
The U.S. Centers for Medicare & Medicaid Services (CMS) has signaled its intention to align every Medicare beneficiary with a value-based payment system by 2030. This, combined with the other factors discussed here, will make those types of models an engine for gradual palliative care growth.
Consequently, these value-based payment systems represent the most significant movement towards effective palliative care reimbursement, rather than any reforms that may or may not occur to the fee-for-service model.
Partnerships will abound
Despite the headwinds, palliative care providers do not necessarily have to go it alone as they build out their programs. Partnerships and joint ventures are becoming an important means to spur growth while diluting the potential risk across two or more platforms.
Traditionally, the palliative care market has been dominated by hospices on the community-based side, and by health systems in the inpatient arena. But increasingly, those providers are working together to bridge gaps in care and cover all the bases in terms of care settings.
More legacy palliative care providers are collaborating with primary care organizations, hospitals, ACOs, home health agencies and others in the continuum to expand the range of community-based services those organizations can offer.
These partnerships give palliative providers access to those other organizations’ patient populations, which helps to grow their businesses. They also give those other providers greater access to community-based palliative care expertise, as well as training and education for their in-house clinicians.
The “poster child” for these types of arrangements is Tennessee-based Contessa Health, a subsidiary of Amedisys Inc. (NASDAQ: AMED). The company has prioritized the establishment of numerous community-based partnerships with hospital systems, many of which integrate palliative care.
For example, the company in 2022 formed a joint venture with Mount Sinai Health System. Dubbed Mount Sinai at Home, the program offers community-based palliative care across the New York-based home health agency’s service region.
We will likely see further expansion of these types of partnerships by Contessa and other for-profit and nonprofit provider organizations that offer shared services, shared risk and cost savings, among other benefits.