A new funding system for end-of-life care would save millions of pounds and focus on individual patient needs, according to a Government-ordered review.
A national payment structure would cut variation around the country in what the state pays for and what it does not, and support far more people to be cared for in their own homes.
At the moment, the amount primary care trusts (PCTs) in England spend on end-of-life care varies widely, from £186 per patient in one area to £6,213 in another. Access to services, including round-the-clock nursing care, also depends on where people live.
Far more people die in hospital than wish to, and experts estimate that more than 90,000 people are not having their palliative care needs met. The Palliative Care Funding Review, ordered by Health Secretary Andrew Lansley last summer, proposes a "fair and transparent" funding system where the money is linked to the individual patient.
Under the scheme, people would receive an initial assessment of their needs, which would then be combined with other factors such as their age and capabilities. This "needs classification system" would have 25 separate classes (13 for adults and 12 for children), each with its own pot of funding.
The funding would take account of things such as personal care needs, including help with washing and eating, the provision of 24/7 nursing care to support people at home and a co-ordinator to help patients work out their state entitlements as well as access to local charitable services. At present, some end-of-life care providers are paid regardless of how much work they do, offering poor value for money across the service, the review said.
Meanwhile, 97% of hospices do not receive all the funding they need for the NHS services they provide, and some patients are victims of "rationing" towards the end of the NHS financial year.
These latest proposals would guarantee funding regardless of where patients live and whether they are in a care home, hospital or in their own home. Experts behind the report say the move could reduce deaths in hospital by up to 60,000 a year by 2021, translating into savings of £180 million annually.
Professor Sir Alan Craft, adviser to the review, said: "The Government must act on the recommendations contained in the review because evidence shows us that incentivising the provision of palliative care leads to better outcomes for patients, supports choice and is the most cost effective way of using NHS resources. We need to remove the barriers within the current system to enable this to happen."
Paul Burstow, care services minister, told BBC Radio 4's Today programme: "There may well be a number of costs to managing a transition from where we are now, which is a model that does not deliver good experiences and good quality care. I think that we have to do much better. We have some excellent palliative care in this country but not everyone gets it. This report does give us a very good road map to transform the service."