Study Finds Hospice Care Saves Medicare $3.5B a Year

Alexandria, Virginia and Washington, D.C.—Medicare spending for patients who received hospice care was some $3.5 billion less than it would if they had not gotten that care, according to new research released Wednesday, March 22.

The study, funded by the National Association for Home Care & Hospice (NAHC) and the National Hospice and Palliative Care Organization (NHPCO) and conducted by the nonpartisan research organization NORC at the University of Chicago, is one of the most comprehensive analyses of enrollment and administrative claims data for Medicare patients.

There was a 16.5% increase in enrollment in the Medicare hospice benefit from 2015 and a 31% increase in spending in that time—leading the Medicare Payment Advisory Commission to recommend reductions in hospice spending in its report last week to Congress and also in its 2022 report, when it argued the hospice aggregate cap should be wage-adjusted and reduced by 20%.

That would be a mistake, said Ben Marcantonio, NHPCO’s chief operating officer and interim CEO.  
 

“Multiple studies over many years have confirmed what hospice providers know: hospice care improves the end-of-life journey for patients and families. This new NORC study shows that in addition to improving care, hospice saves tax dollars,” Marcantonio said.  
 

Key findings from the study include the following:

• In the last year of life, the total costs of care to Medicare for beneficiaries who used hospice was 3.1 percent lower than for beneficiaries who did not use hospice.
• Hospice is associated with lower Medicare end-of-life expenditures when hospice lengths of stay are 11 days or longer. In other words, earlier enrollment in hospice reduces Medicare spending even further.
• Hospice stays of six months or more result savings for Medicare. For those who spent at least six months in hospice in the last year of their lives, spending was on average 11 percent lower than the adjusted spending of beneficiaries who did not use hospice. 
• At any length of stay, hospice care benefits patients, family members, and caregivers, including increased satisfaction and quality of life, improved pain control, reduced physical and emotional distress, and reduced prolonged grief and other emotional distress.

“One of the main points of feedback we hear from families of hospice patients is ‘We only wish we had chosen hospice earlier,’ said NAHC President William A. Dombi, who called the research “groundbreaking.” “Hospice stays of less than 15 days don’t give enough time for patients and families to benefit fully from the person-centered care that hospice provides. Yet, 50% of hospice patients receive 17 days or less of hospice care.”

“Our research shows that hospice is an essential component of end-of-life care and should be prioritized in any attempts to secure the future of Medicare solvency,” said Dianne Munevar, vice president of health care strategy at NORC. “For patients and families, our research provides one more reason to have conversations about end-of-life care before it is needed and to seriously consider hospice so that when the time comes their wishes and preferences are respected.” 

In the study, NORC compared the utilization of health services and costs of care for the last 12 months of life of more than 500,000 Medicare beneficiaries who died in 2019 and had a hospice stay immediately prior to death to more than 457,000 Medicare decedents who had similar risk profiles but did not have a hospice stay. The findings were jointly published by NAHC and NHPCO.