Association between Hospice Spending on Patient Care and Rates of Hospitalization and Medicare Expenditures of Hospice Enrollees

Background: Care at the end of life is increasingly fragmented and is characterized by multiple hospitalizations, even among patients enrolled with hospice. Objective: To determine whether hospice spending on direct patient care (including the cost of home visits, drugs, equipment, and counseling) is associated with hospital utilization and Medicare expenditures of hospice enrollees. Design: Longitudinal, observational cohort study (2008-2010). Setting/Subjects: Medicare beneficiaries (N=101,261) enrolled in a national random sample of freestanding hospices (N=355). Measurements: We used Medicare Hospice Cost reports to estimate hospice spending on direct patient care and Medicare claim data to estimate rates of hospitalization and Medicare expenditures. Results: Hospice mean direct patient care costs were $86 per patient day, the largest component being patient visits by hospice staff (e.g., nurse, physician, and counselor visits). After case-mix adjustment, hospices spending the most on direct patient care had patients with 5.2% fewer hospital admissions, 6.3% fewer emergency department visits, 1.6% fewer intensive care unit stays, and $1,700 less in nonhospice Medicare expenditures per patient compared with hospices spending the least on direct patient care (p<0.01 for each comparison). Ninety percent of hospices with the lowest spending on direct patient care and highest rates of hospital use were for-profit hospices. Conclusions: Patients cared for by hospices with lower direct patient care costs had higher hospitalization rates and were overrepresented by for-profit hospices. Greater investment by hospices in direct patient care may help Centers for Medicare and Medicaid Services avoid high-cost hospital care for patients at the end of life.