Paying for Advance Care Planning in Medicare: Impacts on Care and Spending Near End of Life

Abstract

Spending at end of life (EOL) accounts for a large and growing share of healthcare expenditures in the US, and often reflects aggressive care with questionable value for dying patients. Using a novel instrumental variables approach, we conduct the first study on the causal effect of Medicare reimbursement for advance care planning (ACP)—the process of discussing and recording patient preferences for goals of care—on outcomes near EOL for critically ill Medicare patients. We find that billed ACP services substantially increase hospice spending within a year, with corresponding increase in one-year mortality. However, among those who die, death is significantly less likely to occur in the hospital, and total and inpatient spending within the last 30 days of life fall significantly. The impacts of ACP services on EOL outcomes are magnified among patients with cognitive impairment and those with lower socioeconomic status. Our findings suggest that paying for ACP services can be promising in improving patients’ quality of life at EOL while lowering EOL spending, especially for patients most vulnerable to receiving aggressive EOL care.

The full study can be viewed at SSRN.

Chen, A., & Li, J. (2024). Paying for Advance Care Planning in Medicare: Impacts on Care and Spending near End of Life. Available at SSRN 4725359.