Skip to main content

Hospice Use Saves Money for Medicare, Duke Study Finds

Hospice reduced Medicare spending by an average of $2,309 per person compared to normal care.

Hospice care not only provides dying people with quality-of-life benefits, but also provides significant savings to Medicare, says a new study from Duke University.

"We found that hospice reduced Medicare spending by an average of $2,309 per person compared to normal care, which typically includes expensive hospitalizations near death," said Don Taylor, assistant professor of public policy at Duke's Sanford Institute of Public Policy and primary author of the study.

The results also show that for seven in 10 hospice users, Medicare costs would be reduced if hospice had been used for a longer period of time. The median length of hospice use was 15 days for the study period of 1993 to 2003.

"Often hospice is used for a relatively short time, but we found that patients who use the benefit for the last seven to eight weeks of life maximize cost savings to the program," Taylor said. "This length of use also allows patients and their families to fully experience the benefits of hospice, such as bereavement counseling, palliative care and respite for care-givers."

The hospice benefit was added to the Medicare program in 1983 to provide holistic care at the end of life. The use of the hospice benefit by Medicare patients has risen dramatically from 7 percent in 1990 to almost 30 percent in 2006.

With the baby boom generation moving into the Medicare program, hospice use is expected to continue rising. Medicare spending on hospice reached $6.7 billion in 2004, according to a 2006 congressional report from MEDPAC, the independent federal organization that provides analysis and advice to Congress on Medicare policy. Nearly 25 percent of Medicare spending is for expenses in the last year of life.

The study, "What length of hospice use maximizes reduction in medical expenditures near death in the US Medicare Program," was published in the October 2007 issue of the journal "Social Science & Medicine." The study used a nationally representative sample of age-eligible Medicare beneficiaries who died from 1993 to 2003, and matched hospice users to non-hospice users who were otherwise similar in terms of age, race, gender and co-morbidities. By comparing the costs of care on a day-by-day basis, researchers found that hospice use reduced costs for most days during the last three months of life.

"The hospice benefit appears to be that rare situation in health care where something that improves quality of life also saves money," Taylor said.