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.

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