Data show palliative care saves Medicaid money, improves care

Medicaid patients facing serious or life-threatening illnesses incurred $6,900 less in hospital costs if they received palliative care, compared with a similar group of patients who received usual care, according to a new study1. Palliative care recipients also spent less time in intensive care units (ICUs), and were more likely to receive hospice referrals.

Based on these findings, the researchers estimate that the Medicaid hospital spending in New York state could be reduced by $84 million annually, if every hospital with 150 or more beds had a fully operational palliative care consultation team.

"Over the past ten years, we have seen the rapid growth and development of palliative care teams in hospitals. They are focused on improving the quality of life for persons with serious illness and their families," says R. Sean Morrison, MD, one of the study's authors and a professor of geriatrics and palliative medicine at Mount Sinai School of Medicine in New York City.

Given the fact that palliative care teams are focused on the most complex, seriously ill patients, which are the 10% of the population that accounts for 50% to 60% of total Medicaid costs, the researchers wondered if this would result in cost savings to hospitals, says Dr. Morrison. They decided to focus on Medicaid beneficiaries because of the rapid growth in Medicaid spending, he explains, and because Medicaid covers a vulnerable patient population.

"If you can improve quality and lower costs for Medicaid patients, this would have significant benefits for other populations served by those hospitals," says Dr. Morrison.

The researchers selected four New York hospitals with mature palliative care programs, and found significant reductions in overall hospital costs, ICU expenditures, and ICU deaths, and increases in referrals to hospices.

These findings, combined with other studies that have looked at cost savings of palliative care, show that care of this population can be improved in a cost-effective manner, says Dr. Morrison.

Better quality, less cost

"Palliative care programs essentially shift care of complex, seriously ill patients back into the community, which is where most patients want to be and where they tend to be much safer," says Diane E. Meier, MD, FACP, director of the Center to Advance Palliative Care at the Mount Sinai School of Medicine in New York City. "They make sure they get the services and support they need to remain at home."

The quality of care improves and costs are reduced, says Dr. Meier, because the hospital is by far the most expensive and high-risk setting for patients with serious illness. "Most of the reason they end up in hospitals is because there is simply no alternative safety net in the community," she explains.

Most admissions to the hospital occur through the ED, she says, and patients often turn to the ED because there is nowhere else for them to get care. "Our health care system is overbalanced on the hospital side, and underbalanced on the community side," says Dr. Meier.

Palliative care teams mobilize existing resources in the community to meet the needs of these typically very complex patients, she says, and the needs of family caregivers who are often exhausted and overwhelmed themselves.

"The result of that, not surprisingly, is that many crises are averted. Patients do not end up having to go back to the hospital," says Dr. Meier.