Changes in Medicare costs with the growth of hospice care in nursing homes

Nursing home residents' use of hospice has substantially increased. Whether this increase in hospice use reduces end-of-life expenditures is unknown.

The expansion of hospice between 2004 and 2009 created a natural experiment, allowing us to conduct a difference-in-differences matched analysis to examine changes in Medicare expenditures in the last year of life that were associated with this expansion. We also assessed intensive care unit (ICU) use in the last 30 days of life and, for patients with advanced dementia, feeding-tube use and hospital transfers within the last 90 days of life. We compared a subset of hospice users from 2009, whose use of hospice was attributed to hospice expansion, with a matched subset of non-hospice users from 2004, who were considered likely to have used hospice had they died in 2009.

Of 786,328 nursing home decedents, 27.6% in 2004 and 39.8% in 2009 elected to use hospice. The 2004 and 2009 matched hospice and nonhospice cohorts were similar (mean age, 85 years; 35% male; 25% with cancer). The increase in hospice use was associated with significant decreases in the rates of hospital transfers (2.4 percentage-point reduction), feeding-tube use (1.2 percentage-point reduction), and ICU use (7.1 percentage-point reduction). The mean length of stay in hospice increased from 72.1 days in 2004 to 92.6 days in 2009. Between 2004 and 2009, the expansion of hospice was associated with a mean net increase in Medicare expenditures of $6,761 (95% confidence interval, 6,335 to 7,186), reflecting greater additional spending on hospice care ($10,191) than reduced spending on hospital and other care ($3,430).

The growth in hospice care for nursing home residents was associated with less aggressive care near death but at an overall increase in Medicare expenditures. (Funded by the Centers for Medicare and Medicaid Services and the National Institute on Aging.).