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Faculty Published in the Journal of Health Economics: Impact of Medicare Payment for Advance Care Planning

Jing Li
Dr. Jing Li, Associate Professor of Health Economics at the CHOICE Institute

Dr. Jing Li, Associate Professor of Health Economics at the CHOICE Institute, has led a study recently published in the Journal of Health Economics on the first national impact evaluation of Medicare payment of advance care planning.

Medicare started paying for advance care planning (ACP) in 2016, which are conversations between clinicians and patients on goals of care. The study asks the following question: what is the impact of this policy on end-of-life care and spending?

The study uses an instrumental variables design and national Medicare carrier claims to infer the causal effect of paying for ACP on care and spending near end of life, leveraging the quasi-random attribution of patients to providers during non-deferrable emergency department visits.

The key findings are (all among critically ill Medicare patients):

  1. billed ACP services substantially increase hospice spending and care within a year;
  2. one-year mortality increases as a result of enrolling in hospice earlier;
  3. among decedents, in-hospice death and spending falls.

The findings suggest that ACP billing prompts earlier utilization of hospice which is potentially better aligned with patient preferences. It is also highly cost-saving among decedents. Under certain assumptions, the amount of savings per patient is estimated to be around $30,000 (compared to the $150 cost of one hour of ACP services), with total savings between $255 Million and $1.7 Billion among the study population alone.