New Research Shows Hospice Care Reduces Medicare Costs

Posted March 29, 2023

New research shows that patients’ use of hospice care contributed to $3.5 billion in savings for Medicare in 2019, while providing multiple benefits to patients, families, and caregivers. The study, conducted by NORC at the University of Chicago, is one of the most comprehensive analyses of enrollment and administrative claims data for Medicare patients covered by Medicare Advantage and Traditional Medicare. The study was funded by the National Association for Home Care & Hospice (NAHC) and the National Hospice and Palliative Care Organization (NHPCO).

Key findings from the study include the following:

  • NORC estimates thatMedicare spending for those who received hospice care was $3.5 billion less than it would have been had they not received hospice care.
  • In the last year of life, the total costs of care to Medicare for beneficiaries who used hospice was1 percent lowerthan 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 emotional distress, and prolonged grief.
  • “One important finding of this research is that generally as hospice lengths of stay increased, so did Medicare savings. One of the main points of feedback we hear from families of hospice patients is ‘We only wish we had chosen hospice earlier.’ 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 percent of hospice patients receive 17 days or less of hospice care,” added NAHC President, William A. Dombi. “Policymakers, health systems, and healthcare payers reading this groundbreaking research should see an opportunity to support patient interests and family wellbeing, while also driving savings “..for Medicare by ensuring timely patient access to hospice care”.
  • “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,” said NHPCO COO and Interim CEO, Ben Marcantonio. “With questions about the future of the Medicare Trust Fund, policymakers and healthcare leaders are working to make changes that increase value and reduce costs, while putting patients at the center and delivering more care at home. That’s what hospice has done for more than 40 years. This research, along with American’s growing demand for hospice care, shows that any effort to save money by reducing hospice expenses will backfire. In fact, we should increase the investment in hospice, both to save money and to increase the quality of end-of-life care.”
  • “Our research shows that hospice is an essential component of end-of-life care and is relevant in any discussion about 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.”

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