New paper confirms hospice reduces Medicare costs

A new paper in Health Affairs by Amy Kelley and colleagues shows that hospice reduces Medicare costs as compared to what they would have been had hospice not been chosen by the patient over a variety of common lengths of use in the Medicare program.

The paper is in many ways a replication of the 2007 study (funded by the HCFO initiative of RWJ) that I did with colleagues at Duke that found mean savings after the point of hospice election of just over $2,300, and that the savings (hospice costs after election as compared to normal care) were maximized with a length of hospice use of between several weeks and a few months.

Kelley et al.’s paper goes beyond ours in that it controlled for functional status of persons in hospice measured at a finer level than could the work that we had done. This lead to reasonable wonders about the impact of potentially important omitted variables in our work. The work of Kelley and colleagues has confirmed and extended our general finding that hospice saves Medicare money after accounting for the fact that patients choose hospice–and therefore are systematically different from those who do not. They identify larger savings very near death than did we. It should be noted that in addition to controlling for functional status variables that were omitted in our work, the current paper also is done on more recent data years (2002-08; our paper went back into the 1990s-2005). For example, they find hospice reduced Medicare costs by $2,650 for hospice stays of 1-7 days; $5,040 for those lasting 8-14; and $6,430 for stays of 15-30 days. Given that the median length of hospice use is around 18 days in the Medicare program, over the most typical range of use, hospice should be encouraged, and policies to increase use identified. The ‘short stay’ problems should not be forgotten while trying to address problems related to very long stays.

I know of nothing else that improves quality of life of patients and routinely reduces costs that is paid for by Medicare.

A word on data. The Health and Retirement Survey (HRS) is a massive, long term data effort funded by NIH for the past 20 years. HRS enrolled panels of patients and followed them over time. Amy’s paper took advantage of the joining of self-reported data on function collected in such surveys, to Medicare claims data that documents use and cost paid by the Medicare program. Such collection and linkage and time consuming, expensive and hard. Without the foresight of NIH to invest in data, this paper would not exist. A hole remains in the hospice literature because Medicare Advantage plans do not have to make claims data available as a matter of course. This makes no sense for a nation trying to address cost, coverage and quality issues in health care. update: when Med Advantage patient elects hospice they revert to Part A. The difficulty of claims from Medicare Advantage is a general problem.

If you enter the search term hospice into the blog sidebar, you get many posts on hospice policy if you want to read more.

Note: paper is gated; working on a clean link.

Amy S. Kelley, Partha Dah, Qingling Du, Melissa D. Aldridge Carlson, R. Sean Morrisson. Hospice Enrollment Saves Money for Medicare and Improves Quality Across A Number of Different Lengths-of-Stay. Health Afffairs 2013;552-61.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

4 Responses to New paper confirms hospice reduces Medicare costs

  1. Pingback: More on hospice reduce Medicare expenditures | freeforall

  2. Pingback: WaPo story on the Medicare hospice benefit | freeforall

  3. Pingback: WaPo Story on Medicare Hospice Benefit « The Reality-Based Community

  4. Pingback: Impact of hospice on costs for patients in Nursing Homes | freeforall

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