NCPA - National Center for Policy Analysis

Hospices Raise Medicare Costs

March 9, 2004

Patients choosing hospice care cost the federal Medicare system more than those who use only traditional medical care, according to a RAND Corporation study. This contradicts the traditionally held view that hospice care is cheaper to provide,

Researchers examined Medicare spending for nearly 250,000 people with traditional fee-for-service Medicare coverage who had been enrolled in the program for at least three years and died during 1996 to 1999. They found:

  • Expenses were 4 percent higher for the last year of life among patients who used hospice services compared with similar patients who received traditional medical care.
  • Cancer patients who chose hospice care were about 1 percent less expensive for Medicare, although the savings were as large as 17 percent for patients with aggressive tumors such as lung cancer.
  • Average costs for hospice patients who died from illnesses other than cancer that were 11 percent higher than similar patients who received standard medical care.

Researchers suggest that the one-size-fits-all hospice benefit may not be the best approach to meeting the needs of all patients as they approach the end of life.

Source: Diane Campbell et al., "Medicare Program Expenditures Associated with Hospice Use," Annals of Internal Medicine, Vol. 140, Issue 4, February 17, 2004.

For text


Browse more articles on Health Issues