Hospice Saves Costs for Families: Evidence from 16 Years of Medicare Survey Data
Authors: Aldridge Melissa , Brody Ab , May Peter , Moreno Jaison , McKendrick Karen , Li Lihua 
Published: September 2021

Research Objective

Use of hospice is an indicator of high quality end‐of‐life care. As of 2019, more than half of all deaths in the US occurred under the care of hospice. Economic evaluations of hospice have primarily focused on cost savings to the Medicare program or managed care programs without consideration of costs to families. Families of people near end of life are vulnerable to adverse financial experiences, which may compound their physical, mental and emotional burden through bereavement. Our objective was to estimate the impact of hospice use on family out‐of‐pocket (OOP) and total healthcare expenditures.

Study Design

We conducted a pooled, cross‐sectional analysis of healthcare spending in the last 6 months of life using data from the nationally representative Medicare Current Beneficiary Survey (MCBS), 2002–2018. We measured total healthcare expenditures across all payers (Medicare, Medicaid, private insurance, HMO, family OOP, other) and by expenditure type (inpatient care, outpatient care, skilled nursing, home health, hospice, and prescription drugs). We used propensity‐score based Inverse Probability Treatment Weighting to match participants who used hospice and those who did not, stratifying the exposure group by duration of hospice use.

Population Studied

MCBS participants who died between 2002 and 2018.

Principal Findings

Of 8568 decedents, average total healthcare expenditures in the last six months of life were $42,343 (SD $44,427) and family OOP expenditures were $4827 (SD $9550). OOP spending for families was driven by nursing home care, averaging $538 in the last month of life, followed by spending for medical provider visits ($229 in the last month of life). Total healthcare expenditures were lower for those who used hospice compared to matched non‐hospice controls for the following hospice care durations: 7 days prior to death ($1417 lower expenditures for hospice users, P < 0.001); 2 weeks prior to death ($5221 lower, P < 0.001); 1 month prior to death ($6426, P < 0.001); and 3 months prior to death ($3351, P < 0.010). Family OOP expenditures were lower for those who used hospice 2 weeks prior to death ($275, P < 0.001), 1 month prior to death ($402, P < 0.001), and 3 months prior to death ($464, P = 0.072) compared with matched controls who did not use hospice. Families enrolled with hospice spent significantly less OOP on medical provider visits and inpatient care than families who did not enroll with hospice.

Conclusions

Hospice enrollment was associated with lower costs for families in the month prior to death, as well as savings for payers. The magnitude of OOP savings of hospice enrollment to families are meaningful to many Americans, particularly those with lower socioeconomic status. Savings in healthcare expenditures in total and for families were driven by inpatient care and medical provider visits.

Implications for Policy or Practice

As healthcare continues to shift from institutions to the community settings and use of home‐based care such as hospice increases, it is important to assess cost shifting to families. Our findings that hospice does not shift economic burden from Medicare to families underscores the need to promote timely access to hospice care as even those with short hospice durations experienced cost savings.

Primary Funding Source

National Institutes of Health.