The review, commissioned by health secretary Andrew Lansley in July 2010, called for national standards for end-of-life care to overcome inconsistencies in the service.
As many as 457,000 people need to access palliative care services every year. Yet around 92,000 people cannot access existing services, the report found.
It recommends a new patient tariff system for palliative care for all providers across all settings to improve the currently ‘confusing’ service.
The review chairman Thomas Hughes-Hallett, chief executive of Marie Curie Cancer Care, said: 'No other country in the world has introduced such a system for both adults and children, so the step is both a bold and necessary one.
'Basing the funding model on a needs classification system would ensure that the funding follows the patient in a fair and transparent way, as the level of funding provided to a service would be determined by the complexity and level of need of the patients.'
This tariff should pay for patients’ needs to be regularly assessed, as well as a patient co-ordinator to offer support and advice.
Clinical Commissioning Groups (CCGs) should maintain an end-of-life locality register, and identify a lead provider for palliative care to coordinate palliative care services.
Services should be commissioned based on quality, not price, and on whether they meet agreed quality standards and markers.
In addition, the NHS should track outcome measures through the newly created tariff system and the NHS outcomes framework.
Patients and carers should expect the government to issue a clear statement describing what support and services they can expect to help reduce huge variations found by the review in care received.
The review said: ‘We recommend that the DoH commits funds to support the transition and implementation of the new funding system.’
Incentivising palliative care provision would create better outcomes for patients and use NHS resources more efficiently.
The review believes a better focus on palliative care will reduce deaths in hospital by up to 60,000 a year by 2021.
It contended that, using a Quality, Innovation, Productivity and Prevention (QIPP) estimate of £3,000 per hospital death, this would translate to a potential reduction in hospital costs of £180 million per annum.
Professor Sir Alan Craft, advisor 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.'
A recent survey by the DoH estimated that PCTs spent £460 million on adult palliative and end-of-life care in 2010/11. But there are large variations in spending: one PCT spent around £186 per death on specialist palliative care, while another spent £6,213.