New Research Shows Hospice Care Reduces Medicare Costs

On March 22, 2023, the National Hospice & Palliative Care Organization (NHPCO), the National Association for Home Care and Hospice (NAHC) and NORC at the University of Chicago released results of their study on cost of hospice care. Using data from 2019, the last full year before COVID, they conducted one of the most comprehensive studies of hospice. They analyzed nearly 500,000 Medicare beneficiaries who died that year under hospice care and compared that to 457,000 Medicare decedents who had similar profiles but did not use hospice.

Key findings of the study include:

• In the last year of life, costs for those who used hospice were 3.1 percent lower than those who did not use hospice. This translates to $3.5 billion less spending of Medicare dollars.
• Earlier enrollment in hospice reduces Medicare spending. The break-even point is day 10 of hospice enrollment. On day 11 is when cost savings starts.
• Hospice stays of six months or more resulted on average 11% lower costs than those who did not use hospice.
• For any length of stay, hospice benefits patients, family, and caregivers.  Using hospice resulted in increased satisfaction and quality of life, improved pain control, reduced physical and emotional stress and reduced prolonged grief and emotional distress.

These are important findings, especially at a time when longer length of stays are being scrutinized. The OIG plans to conduct audits of hospice eligibility this year and longer length of stays will be a key factor. The study demonstrates that longer length of stays are when savings are demonstrated. The savings continued even beyond six months.

The study demonstrates the need for earlier hospice referrals as savings do not start until day 11 of hospice enrollment. NAHC president, William Dombi states “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. Policymakers, health systems and healthcare payers reading this groundbreaking research should see an opportunity to support patient interests and family well being while also driving savings for Medicare by ensuring timely patient access to hospice care.”

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