Shift toward hospice care has increased Medicare costs

Last Updated: 2015-05-06

By Gene Emery

PROVIDENCE, R.I. (Reuters Health) - The popularity of hospice care grew between 2004 and 2009 but that didn't bring down Medicare costs for people dying in nursing homes, according to a new study of three quarters of a million U.S. nursing home residents.

"We found that although hospice use was associated with a reduction in aggressive end-of-life care, it was also associated with a net increase of $6,761 in Medicare expenditures per decedent in the last year of life," writes the research team, led by Dr. Pedro Gozalo of Brown University.

Gozalo told Reuters Health in a telephone interview that the higher costs may be due, in part, to the fact that more patients are being enrolled in hospice earlier and those patients are more likely to be suffering from dementia or other problems that make it difficult to predict how long they will live. In 2004 the mean hospice length of stay was 72 days; by 2009 it was just under 93 days.

"You need to put the money where you gain the most out of it," Gozalo said. "Most of hospice's value is at the end of life. But when you see a patient who has been in hospice for nine months or 12 months, that's not a good use of the hospice benefit. We are overspending on hospice care at the wrong time."

The study did not look at Medicare costs for people who receive hospice care in their homes, and who account for the majority of hospice cases.

Of all the money Medicare spends on healthcare, one quarter is spent in the final year of a person's life.

Hospice is supposed to discourage aggressive end-of-life treatments and, it was hoped, save money. But data from 2000 to 2012 already showed a doubling of hospice usage while the cost to Medicare quintupled. The new study, published May 6 in the New England Journal of Medicine, was an attempt to understand why, at least in nursing homes.

The data document an increase in the use of hospice, with 27.6% of patients receiving it in 2004 and 39.8% in 2009. The additional hospice use resulted in fewer hospital transfers, less intensive care and less use of feeding tubes. But patients in hospice tended to be in the program longer.

Gozalo said that as the study progressed, for-profit hospice companies aggressively moved into nursing homes, taking advantage of Medicare's per-diem payment system - currently $159 per day - for hospice. The ability to just train a few nursing home staff to do hospice care, avoiding the traditional costs of training family members, made nursing home-based hospice even more profitable.

In addition, "it's not the price, but rather how many days you can charge the price," he said. "If you sign a patient very early, you get that per diem for many more days, and that's why it ends up being more expensive," he said.

The higher costs ranged from an average of $2,180 per death for people suffering from cancer, to $8,592 for people suffering from dementia.

Dr. Amy Kelley of the Icahn School of Medicine at Mount Sinai in New York City, who has studied hospice costs but was not involved in this analysis, said the new paper comes in the wake of "huge growth in hospice in nursing home settings over the last decade."

She said the study suggests a greater need for palliative care in nursing homes, with hospice being called in closer to the end of life.

"Hospice is designed for people in their last few months. But people in nursing homes, particularly with advanced dementia, have a lot of care needs that persist much longer than six months," Kelley told Reuters Health. "They have pain and symptoms that go on for years, and they are going to be, in most cases, better served by programs that offer palliative care measures for a much longer period of time, not hospice care."

Jon Keyserling, senior vice president of health policy at the National Hospice and Palliative Care Organization said the new study, like Kelley's work, shows, "that hospice patients in the nursing home experience fewer ICU days, fewer hospital transfers and less feeding-tube use. All of these indicators may be associated with higher quality of care as well as greater alignment with patient preferences."

Dr. Scott Irwin, director of palliative care psychiatry at the University of California, San Diego, who was not connected with the study, said the lesson isn't that hospice care is costing too much.

Costs should naturally go up because more people are using hospice and using it earlier, which is a really good thing," he said.

SOURCE: http://bit.ly/1ckv3S0

N Engl J Med 2015.