Elderly/Long-term Care

Hospice care saves money for Medicare and Medicaid patients in nursing homes

When terminally ill patients forego treatments and opt instead for the comfort care hospice offers, the government saves money, according to researchers from Brown University and Florida A&M University.

The team studied 5,774 short- (fewer than 91 days) and long-stay Florida nursing home residents who were eligible for both Medicare and Medicaid; suffered from cancer, dementia, or other conditions; and died between July and December 1999. Overall, hospice enrollment in the nursing home decreased total government expenditures by 6 percent for the patients' last month of life.

When short-stay residents chose hospice care over skilled nursing care, the government saw a 22 percent savings in the residents' final month. Long-stay and short-stay hospice residents with cancer saved the government an average of $663 (9 percent) and $1,453 (13 percent), respectively. However, long-term patients with dementia who received hospice care did not save the government money, and long-term patients with diagnoses other than dementia or cancer had a 14 percent cost increase. Medicare policies do not permit residents who are eligible for both Medicare and Medicaid to receive both skilled nursing care and hospice care. Thus, when a nursing home patient elects hospice care, Medicaid picks up the daily nursing home bill, which is often significantly less than what is charged for skilled nursing care.

The authors indicate that this situation creates a disincentive for Medicaid and nursing homes to promote hospice care. This study was funded in part by the Agency for Healthcare Research and Quality (HS10549).

See "Hospice effect on government expenditures among nursing home residents," by Pedro L. Gozalo, Ph.D., M.Sc., Susan C. Miller, Ph.D., M.B.A., Orna Intrator, Ph.D., and others in the February 2008 Health Services Research 43(1), pp. 134-153.

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