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Hospice costs vary across patients and within a hospice stay

Research Activities, February 2009, No. 360

Hospice care can improve symptom management and quality of life for patients at the end of life. A new study found that the most important driver of average total costs per day of hospice care was the duration of the stay, with costs declining after the third day, then rising again near the end of life due to often intense round-the-clock care. Also, average per-day costs of hospice care were lower for nursing home residents than for nonresidents, probably due to overlap of nursing home and hospice services. Hospice care was also higher for patients using general inpatient care during their hospice stay.

The study of patient-level cost data from a cancer hospital-associated hospice specifically found that average per-day costs were markedly higher for stays of 1 or 2 days than for longer stays. Per-day costs may be higher for the first days of the stay, because the care team is becoming acquainted with the needs and preferences of the patient and the patient's family and developing a care plan.

The results provide support for downward adjustment of Medicare per-diem reimbursement rates for nursing home patients receiving hospice care, note Joseph P. Newhouse, Ph.D., of Harvard Medical School, and colleagues. However, any downward adjustment needs to consider the possibility that hospices may suffer a financial loss if the State Medicaid program pays less than 100 percent of the Medicaid reimbursement level for room and board instead of the full rate, leaving hospices responsible for the difference. The results also provide support for paying a higher Medicare reimbursement rate for the last days of hospice care.

Finally, the authors suggest that Medicare investigate an outlier payment system for patients with particularly high-cost palliative care needs, such as cancer patients who need medications that can cost $4,000 to $5,000 a month. They call for a study of a more representative sample of hospices before making changes to the per diem system. The study was supported in part by the Agency for Healthcare Research and Quality (HS10803).

See "Variation in patients' hospice costs," by Haiden A. Huskamp, Ph.D., Dr. Newhouse, Jessica Cafarella Norcini, R.N., B.S.N., M.S., and Nancy L. Keating, M.D., M.P.H., in the Summer 2008 Inquiry 45, pp. 232-244.

Current as of February 2009
Internet Citation: Hospice costs vary across patients and within a hospice stay: Research Activities, February 2009, No. 360. February 2009. Agency for Healthcare Research and Quality, Rockville, MD.