Elsevier

Social Science & Medicine

Volume 65, Issue 7, October 2007, Pages 1466-1478
Social Science & Medicine

What length of hospice use maximizes reduction in medical expenditures near death in the US Medicare program?

https://doi.org/10.1016/j.socscimed.2007.05.028Get rights and content

Abstract

Hospices have been expected to reduce health expenditures since their addition to the US Medicare benefit package in the early-1980s, but the literature on their ability to do so is mixed. The contradictory findings noted in previous studies may be due to selection bias and the period of cost comparison used. Accounting for these, this study focuses on the length of hospice use that maximizes reductions in medical expenditures near death. We used a retrospective, case/control study of Medicare decedents (1993–2003, National Long Term Care Survey screening sample) to compare 1819 hospice decedents, with 3638 controls matched via their predicted likelihood of dying while using a hospice. Variables used to create matches were demographic, primary medical condition, cost of Medicare financed care prior to the last year of life, nursing home residence and Medicaid eligibility.

Hospice use reduced Medicare program expenditures during the last year of life by an average of $2309 per hospice user; expenditures after initiation of hospice were $7318 for hospice users compared to $9627 for controls (P<0.001). On average, hospice use reduced Medicare expenditures during all but 2 of hospice users’ last 72 days of life; about $10 on the 72nd day prior to death, with savings increasing to more than $750 on the day of death. Maximum cumulative expenditure reductions differed by primary condition. The maximum reduction in Medicare expenditures per user was about $7000, which occurred when a decedent had a primary condition of cancer and used a hospice for their last 58–103 days of life. For other primary conditions, the maximum savings of around $3500 occurred when a hospice was used for the last 50–108 days of life. Given the length of hospice use observed in the Medicare program, increasing the length of hospice use for 7 in 10 Medicare hospice users would increase savings.

Introduction

When hospice was imported to the Unites States from the United Kingdom in the mid 1970s it took root first in the private sector, outside the purview of public financing. However, in 1983, hospice gained public reimbursement via Part A of the US Medicare program (NHPCO, n.d.), and proponents argued hospice would provide high quality physical, emotional and spiritual care to terminally ill persons at a cost lower than conventional care for dying patients (Corr & Corr, 1983; Miller, Williams, English, et al., 2002). The Medicare hospice benefit covers care provided by a team of providers (visiting nurse, physician, social worker, chaplain, home health aide, community volunteer) as well as other supplies and pharmaceuticals not otherwise covered by the Medicare program (NHPCO Medicare benefit fact sheet (2005); Casarett, 2007). The US Medicare program is a social-insurance system that covers virtually all US citizens age 65 and over, and is a larger single payer health system than the entire Canadian health system. However, Medicare only covers around half of the total health care expenditures of elderly beneficiaries, with the balance being covered by supplementary insurance or out-of-pocket payments (Goldman & Zissimopoulos, 2003).

Coverage of hospice by Medicare hastened diffusion of hospice into the US health care system because it covered the service for the elderly population which is the most likely to die. In the twenty-four years that hospice has been covered by Medicare, it has been a major innovator in the provision of palliative care at the end-of-life, and a growing body of research suggests that hospice provides high quality care when assessed from both the patient and family perspectives (Greer & Mor, 1986; Greer, Mor, et al., 1986; Lorenz, Lynn, Morton, et al., 2004; Miller et al., 2002; Morrison & Meier, 2004). Hospice is available to Medicare beneficiaries who decide to forego curative care, and is financed by per-diem payments. The presumptive period of eligibility is 180 days, though beneficiaries can receive hospice for longer periods when death does not occur within the expected time period. Most hospice care is received in beneficiaries’ homes, but can also be received in inpatient hospices or nursing homes. The use of hospice by Medicare beneficiaries has risen dramatically, from seven percent of Medicare decedents in 1990 to approximately one-quarter by 2002 (National Hospice and Palliative Care Organization, 2003; United States General Accounting Office, 2000). In spite of the steady growth of hospice in the Medicare program, the broader US health care system generally, and the long interest in the impact of hospice on costs (Kane, Bernstein, Wales, et al., 1984; Mor & Kidder, 1985), the issue of whether hospice significantly reduces expenditures near death remains unresolved.

Many studies assessing the effect of hospice on medical expenditures have identified savings (Hughes, Cummings, Weaver, et al., 1992; Kidder, 1992; Mor & Kidder, 1985; Pyenson, Connor, Fitch, & Kinzbrunner, 2004), yet others have found no cost differences (Kane et al., 1984). A US health care literature review found that third-party payer cost savings attributable to hospice was 25–40% during the last month of life, 10–17% for the last six months, and 0–10% during the entire last year, but noted methodological problems in design of most studies addressing the effect of hospice on expenditures (Emanuel, 1996). A recent study found higher costs among hospice users (Campbell, Lynn, Louis, et al., 2004), particularly among Medicare beneficiaries aged 85 and higher, a group with lower Medicare expenditures in the last year of life as compared with younger Medicare decedents, and hence a less expensive comparison group (Levinsky, Yu, Ash, et al., 2001). These investigators (Campbell et al., 2004) used a propensity score matching approach to control for selection bias. Yet another recent paper controlled for selection bias by carefully identifying cases of incident terminal illness that would constitute the most plausible candidates for hospice and compared this subset of hospice users to non-users. These investigators identified cost savings due to hospice use (Pyenson et al., 2004). Thus, uncertainty remains about the ability of hospice to reduce medical expenditures near death, even among recent methodologically sophisticated papers that have attempted to account for selection bias.

The biggest obstacle to precisely evaluating whether hospice reduces expenditures near death is identifying the period of time over which costs of hospice users and controls are compared. The last year of life is a common focal point for such comparisons given the well-known fact that one-fourth of the total US Medicare budget is spent on patients during the last year of their lives (Hogan, Lunney, Gabel, & Lynn, 2001). And the absolute magnitude of expenditures during the last year of life is striking, with a recent study finding mean expenditures by the US Medicare program during the last year of life to be $24,600, as compared to $9400 (1999 dollars) for the same beneficiaries during the year prior to the last year of life (Shugarman et al., 2004). For these reasons, and related concerns about quality of life, there is a strong interest in reducing the high health care expenditures of decedents incurred in the last year of life. However, the last year of life is not a realistic period over which to find hospice cost savings given the median length of hospice use was 36 days in the early-1990s (Christakis & Escarce, 1996), and declined over the ensuing decade (United States General Accounting Office, 2000). Further, there is extreme variation in length of hospice use; one-fourth of persons use hospice for one week or less, while up to 12% do so for more than 180 days (Christakis & Escarce, 1996; United States General Accounting Office, 2000). Realistic cost assessments must account for a patients’ actual length of benefit use; it is impossible for hospice to reduce third party expenditures prior to hospice use.

The purpose of this paper is to build on the strengths and improve upon the limitations of previous studies of hospice cost. As will be detailed below, we offer a strategy that precisely accounts for the length of actual hospice use in determining whether hospice reduces Medicare expenditures. We do this while also reducing selection bias by matching hospice users to decedents who did not use hospice but who were otherwise similar. Our approach allows us to identify the length of hospice use that is associated with the maximum expenditure reductions possible for the Medicare program, which is important for informing future hospice policy. Though this study relies upon a US sample of Medicare beneficiaries, its strategies for addressing selection bias and time frame comparison are applicable to evaluating the effect of hospice on costs near the end of life in other countries.

Section snippets

Study design

Our study employed a case match comparison strategy in which we identified hospice users and then created a control group of persons who did not use hospice, but who were otherwise similar. Hospice users were matched (1:2) to non-hospice user decedents using a propensity score approach. That score, the predicted probability of dying while using hospice, was estimated using logistic regression as detailed below. The key outcome measure was total Medicare program expenditures for cases and

Results

Of the 11,245 full sample decedents, 1819 (16.1%) died while receiving Medicare-financed hospice care (hospice users). The likelihood of Medicare decedents being hospice users in our sample increased dramatically over the study period, with 10.2% (N=440) doing so from 1993–1996, 14.9% (N=455) from 1997–1999, and 23.8% (N=924) from 2000–2003. The median length of hospice use across the entire study period from initiation until death was 15 days (mean 50 days, S.D. 102 days). One fourth of

Discussion

We found that hospice saves the Medicare program around $2300 per beneficiary who died while using hospice. The maximum cumulative savings were $7000 which occurred when those with cancer as their primary medical condition used hospice for 58–103 days prior to death, and around $3500 when those with other primary conditions did so for 50–108 days. The major contribution of this paper is precisely accounting for the time hospice was actually used in determining the effect of hospice on Medicare

Acknowledgments

This study was financed by a grant from the Changes in Health Care Financing and Organization (HCFO) initiative of the Robert Wood Johnson Foundation, but does not necessarily reflect the views of the initiative or the Foundation.

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