New Research Validates That Hospice Saves Medicare Dollars

Research out of Mt. Sinai shows hospice patients have lower Medicare costs, reduced use of hospital services, and that hospice can improve care quality.

(Alexandria, Va) – New research published in the March issue of Health Affairs found that hospice enrollment saves money for Medicare and improves care quality for Medicare beneficiaries with a number of different lengths of services.

The National Hospice and Palliative Care Organization applauds this study that adds to a growing body of research demonstrating the value of hospice care both in terms of high quality and cost savings.

Led by Amy S. Kelley, MD, MSHS, from the Brookdale Department of Geriatrics and Palliative Medicine at the Icahn School of Medicine at Mt. Sinai, researchers looked at the most common hospice enrollment periods: 1 to 7 days, 8 to 14 days, 15 to 30 days, and 53 to 105 days. Within all enrollment periods studied, hospice patients had significantly lower rates of hospital and intensive care use, hospital readmissions, and in-hospital death when compared to the matched non-hospice patients.

The study reveals that savings to Medicare are present for both cancer patients and non-cancer patients. Moreover, these savings appear to grow as the period of hospice enrollment lengthens with the observed study period of one to 105 days.

Study authors suggest that investment in the Medicare Hospice Benefit translates into savings overall for the Medicare system. “If 1,000 additional beneficiaries enrolled in hospice 15 to 30 days prior to death, Medicare could save more than $6.4 million,” they note.

Furthermore, the authors write, “In addition, reductions in the use of hospital services at the end of life both contribute to these savings and potentially improve quality of care and patients’ quality of life.”

“We know that hospice care addresses so many critical issues involving quality of care at the end of life and that hospice brings dignity and compassion when they are needed most. This new study reaffirms other reasons why hospice is the best solution for caring for the dying in a way that provides patient-centered care and is cost effective for the Medicare system,” said J. Donald Schumacher, president and CEO of the National Hospice and Palliative Care Organization.

This study builds on the valuable work of the 2007 Duke University study by providing further proof that hospice care saves the federal Medicare system money.

Added Schumacher, “For many years, hospice professionals have known through firsthand experience, that the interdisciplinary care they provide to patients and family caregivers coping with life-limiting illness significantly improves quality of life and allows people to focus on living as fully as possible even as life draws to a close. Now the broader healthcare community, regulators and legislators understand more fully the many benefits of hospice care.”

NHPCO reports that more than 44 percent of dying Americans were cared for by hospice in 2011. Among these patients, 84 percent of hospice care was paid for through the Medicare hospice benefit.
“We have an example of a care delivery model that not only scores high in patient and family satisfaction, reduces hospital services, and promotes the dignity of every person cared for but also can be cost effective with regards to federal spending,” Schumacher noted.

Based on the study’s findings, the researchers questioned recent aggressive efforts, including the Office of the Inspector General’s investigation of hospices that enroll patients with late-stage diseases but unpredictable prognoses.

“Our finding suggest these efforts maybe misguided,” write the researchers. “Rather than working to reduce Medicare hospice expenditures and creating a regulatory environment that discourages continued growth in hospice enrollment, CMS should focus on ensuring that patient’s preferences are elicited earlier in the course of their disease and those who want hospice care receive timely referral.”

NHPCO has consistently supported earlier discussions of care options once a person receives a diagnosis of a serious illness.

More information about hospice and advance care planning is available from NHPCO’s Caring Connections at