Hospice care drives up Medicare costs

New England Journal of Medicine: Longer stays, more complex cases cause hospice costs to add up

Growth in hospice care from 2004 to 2009 reduced hospital use but nonetheless cost Medicare more than $6,700 per hospice beneficiary, according to the New England Journal of Medicine (NEJM).

In 2004, 27.6 percent of those who passed away in nursing homes elected to use hospice, NEJM noted. This rose to 39.8 percent in 2009. All told, more than 786,000 people died in nursing homes over that six-year period.

The expansion of hospice care during that time resulted in an average of $3,430 in reduced hospital and intensive care unit spending but also an additional $10,191 in additional spending on hospice care, NEJM concluded. That resulted in a total spending increase of $6,761 per hospice beneficiary.

The lead author of the report, Pedro Gozalo, a healthcare economist at Brown University, told Reuters that the average length of stay in hospice--which increased from 72 days in 2004 to nearly 93 days in 2009--helped explain the increase in costs.

In addition, hospice use increased among patients with dementia and Alzheimer's disease; this also drives up hospice care costs, Gozalo said, because the patient's condition makes it difficult to determine how long a patient will stay alive. A patient may appear frail and enter hospice care, he told Marketplace, only to "perk up" and regain stability for as many as two or three years.

Finally, Medicare's $159 per day per diem payment system for hospice care increasingly attracts for-profit care providers, who are motivated to sign up patients early and keep them in hospice care longer, Gozalo told Reuters. That's part of the reason the Office of Inspector General has called on Medicare to reform its hospice payment process, FierceHealthPayer previously reported.

For more:
- here's the NEJM report abstract
- read the Reuters article
- here's the Marketplace article

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