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Researchers examine Medicare costs and use of hospice care

Enrollment in the Medicare hospice benefit increased from 9 percent in 1992 to 23 percent in 2000. Medicare's hospice benefit provides patients with a life expectancy of 6 months or less with the option of less aggressive end-of-life medical care and for death at home by providing services that otherwise are not covered (for example, outpatient drugs, homemaker services, and bereavement counseling).

A new study supported by the Agency for Healthcare Research and Quality (HS10561) calculated that use of hospice care can be cost-saving to Medicare for people who die of cancer (60 percent of hospice patients), but it is more costly when hospice users die of other causes. A second AHRQ-supported study (HS11618) found that hospice care has entered the care mainstream, with less variation in use by elderly cancer patients. Both studies are described here.

Campbell, D.E., Lynn, J., Louis, T.A., and Shugarman, L.R. (2004, February). "Medicare program expenditures associated with hospice use." Annals of Internal Medicine 140, pp. 269-277.

When elderly people who are dying of cancer use hospice care, it is generally cost-neutral or cost-saving to Medicare, but when those dying of noncancer causes use hospice care (the fastest growing group of hospice users), such care generally adds to Medicare costs. Yet, even if hospice care costs somewhat more than conventional care, its comprehensiveness and continuity may merit these additional costs, according to the researchers. They studied Medicare program expenditures for fee-for-service beneficiaries aged 67 or older who received 36 months of continuous hospitalization and outpatient coverage before death during 1996 to 1999. Adjusted mean expenditures were 4 percent higher overall among hospice users than among nonusers, but they were 1 percent lower among cancer patients who used hospice care compared with cancer patients who did not use hospice.

Savings were highest (7 to 17 percent) among hospice users with lung cancer and other very aggressive types of cancer diagnosed in the last year of life. Expenditures for hospice users without cancer were 11 percent higher than for nonusers, ranging from 20 to 44 percent higher for patients with dementia and from 0 to 16 percent higher for those with chronic heart failure or failure of most other organ systems. Hospice-related savings decreased and relative costs increased with patient age.

This expenditure pattern probably reflects differences in service needs and certainty of prognosis. A short period of obvious decline at the end of life is typical of cancer. Long-term disability with worsening and unpredictable timing of death is typical of chronic organ system failure, and persistent decline and deficits in self-care are associated with frailty or dementia.

Lackan, N.A., Ostir, G.V., Freeman, J.L., and others (2004, February). "Decreasing variation in the use of hospice among older adults with breast, colorectal, lung, and prostate cancer." Medical Care 42(2), p. 116-122.

The decreased variation in use of hospice care by cancer patients in this study suggests that use of hospice care has gone from being an innovation to a mainstream practice. The investigators used the Medicare database to study hospice use in patients aged 67 and older diagnosed with breast, colorectal, lung, or prostate cancer from 1991 to 1996 who died between 1991 and 1999. Of the 170,135 individuals who died during this period, 30 percent were enrolled in hospice care before they died.

Hospice use varied significantly by patient characteristics and type of cancer. However, this variation decreased over time for certain subgroups. For example, hospice use was higher among Medicare managed care than Medicare fee-for-service patients, but the ratio of hospice use between the two groups decreased substantially over time. Hospice use for both urban and rural patients increased over time, but the ratio of hospice use between the two groups diminished over time. The same trend was found for comparisons across groups according to marital status, neighborhood income, and type of cancer.

This trend can be attributed to increased availability and awareness of hospice care. For instance, the number of Medicare-certified hospices in the country almost doubled over the study period from about 1,200 in 1992 to 2,200 in 1999. This increase in availability was coupled with a two-fold increase in the number of Medicare patients using hospice care before death.

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