Hospice effect on government expenditures among nursing home residents.

Objective: To examine the effect of the Medicare hospice benefit on Medicare and Medicaid expenditures by dual-eligible Medicare-Medicaid nursing home (NH) residents.

Methods: Secondary data for NH residents for 1998-1999. Methods: Retrospective cohort study of NH residents in the state of Florida who died between July and December 1999 (N=5,774). Medicare claims identified hospice enrollment, and Medicare and Medicaid claims identified expenditures by categories of care. Nursing home resident assessments were used to control for case-mix differences. Geocoding of nursing homes, hospice providers and hospitals was used to identify and characterize local health care markets. Methods: A file was constructed linking Medicare and Medicaid claims to Minimum Data Set assessments of NH residents, and NH provider (Online Survey and Certification Automated Record) and hospice provider files.

Results: Hospice enrollment results in substantial savings in government expenditures (22 percent) among all short-stay (< or =90 days) dying NH residents. For long-stay (>90 days) dying NH residents, hospice provides some savings (8 percent) among cancer residents while it is cost-neutral among dementia residents and adds some cost (10 percent) for residents with a diagnosis other than cancer or dementia. There is evidence of selection bias, particularly among residents with cancer (19 percent savings unadjusted versus 8 percent adjusted). Among short-stay NH residents, hospice greatly reduces Medicare expenditures but increases Medicaid expenditures.

Conclusions: Hospice enrollment results in lower combined Medicare/Medicaid expenditures in the last month of life, particularly among short-stay NH residents. This effect, however, varies by diagnosis and NH length of stay. In addition, for short-stay NH residents, current payment policy creates a Medicare incentive and Medicaid disincentive for promoting residents' referral to hospice.