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Hospice and palliative care growth tied to value-based insurance

On Behalf of | Oct 11, 2022 | Healthcare Business

As the elderly population grows in Texas and around the country, more people will require end-of-life care. Hospice services and palliative care increasingly help people at this stage. Hospice services care for people prior to death, usually outside of hospitals. Palliative care focuses on pain reduction as people live with chronic diseases. To pay for these services, the insurance industry is focusing on the benefits of the value-based reimbursement model. The health insurance industry anticipates that this payment approach will support growth in these sectors.

Medicare Advantage testing the model

The Center for Medicare & Medicaid Innovation is in the middle of a four-year test program of the Value-Based Insurance Design (VBID) system with Medicare Advantage partners. At the midway point in the trial run, insurance payers have recognized that VBID shows the significant value of hospice services due to their ability to reduce care in hospital facilities. Fewer hospitalizations reduce costs for insurers.

Strong growth projections

As of 2021, hospice care showed a huge presence in the home-based care market by making up 20% of the sector. Bank of America Global Research predicts a growth rate of 7% to 8% every year. By 2030, hospice spending should rise to $64.7 billion.

Similarly, palliative care could rise to $78.50 billion as soon as 2023. This would represent a substantial jump from spending in 2018 of $49.42 billion. With demand for these services surging, health care industry leaders will need to adopt payment models capable of funding rapid growth.

Lower costs and better outcomes

Although insurers have yet to settle on what they will pay for hospice or palliative care, the industry views value-based models as a way to reduce costs and improve care. Hospitalization does not always help people with chronic conditions as much as home-based palliative care that manages chronic disease that cannot be effectively treated. As it stands, Medicare currently pays for palliative care in a fee-for-service model, but this system does not cover everything available for patients.