Home Feature The finances of hospice care and the role of hospitalists

The finances of hospice care and the role of hospitalists

May 2004

Published in the May 2004 issue of Today’s Hospitalist

Because patients who enter hospice care tend to use fewer hospital services, it has long been assumed that hospice saves Medicare money. A recent study, however, sheds new light on that old assumption.?

The study, which appeared in the Feb. 17, 2004, Annals of Internal Medicine, examined Medicare enrollees in their last year of life between 1996 and 1999. Researchers found that while hospice care is more or less cost-neutral for patients who die of cancer “and even cost-effective for people with lung cancer and other very aggressive types of cancer “hospice patients who die of other causes actually use more services, increasing Medicare’s overall costs.

Because the latter group is the fastest growing group of hospice patients in the Medicare program, the study has implications for the finances of the financially troubled program.

Hospice advocates, however, are more sanguine about the results of this study. They say they never expected that a health care system as expansive and comprehensive as hospice could ever be cheaper than the alternative system, almost none of which currently is paid for by Medicare.

This is particularly true, they say, when it comes to caring for the oldest seniors. People over age 85 consistently receive many fewer Medicare-covered services than younger seniors.

“The amount Medicare spends on older people is so much lower, and the cost of hospice is the same” for old and young patients, explains Joanne Lynn, MD, a co-author of the study and director of the Washington Home Center for Palliative Care Studies. “If you are in hospice for 20 days at $120 a day, that’s the same cost whether you are 88 or 68. But the 68-year-old would be very likely to be getting a lot of Medicare-covered services, even if not in hospice, while the 88-year-old is not.”

Moreover, Dr. Lynn explains, the predictability of disease course and death dramatically affects costs “but not the benefits “of hospice. “It’s one thing for cancer, where the course is generally a little more predictable and the needs are a little more defined over time,” she says. “But for dementia, the rough period can go on for years.”

According to the study, as a group, cancer patients who received hospice care reduced Medicare’s costs by about 1 percent. When hospice patients with aggressive types of cancer who were diagnosed in the last year of life enrolled in hospice care, Medicare’s costs dropped by as much as 17 percent.

When it came to patients with terminal illnesses other than cancer, however, Medicare’s costs rose an average of 11 percent. The costs of hospice care for patients with dementia, for example, were 20 percent to 40 percent higher than for patients not enrolled in a hospice. The costs of hospice care for patients with chronic heart failure or failure of other organ systems were up to 16 percent higher than traditional services for these patients.

“I have never believed that hospice would always save money, but I don’t think you have to justify a good program solely on the basis of saving money,” Dr. Lynn says. “The question really is, ‘What is the value-added in hospice?’ Hospice regularly provides good, comprehensive coverage, often to very needy people who would otherwise be mostly abandoned by Medicare-covered services. Remember, most frail or demented people don’t get very much Medicare-covered service at the end of life.”

Most importantly, she says that the study’s results shouldn’t dissuade physicians from using hospice services. In fact, she argues that as more Medicare patients use hospice care, hospitalists are in an ideal position to help patients make the most of the hospice services that Medicare pays for.

The role of hospitalists

One of the nation’s top experts on the care of dying patients, Dr. Lynn sees hospitalists as part of the solution to the nation’s problem of less-than-ideal end-of-life care. “I think hospitalists need to see themselves as part of the chronic care system and not separate from it,” she says.

Under a better system, she says, more patients in the last months or years of their lives would be cared for primarily in the setting of hospice-like services, which concentrate on managing patients’ symptoms once they acknowledge they can’t be cured. In the current hospice program, patients must agree to forgo curative treatment for their terminal illness.

For most patients living with chronic illness that will eventually prove fatal, a cure is not among the options, so forgoing treatment is largely symbolic. Thus, the availability of the Medicare hospice benefit turns primarily on emotional issues and prognosis “and the appropriateness of the services of a particular hospice program.

Under Medicare rules, the hospice benefit, which covers a great array of services including outpatient drugs, homemaker services and family counseling, can apply after the patient’s physician certifies that the patient has less than six months to life. Currently, about 20 percent of Medicare beneficiaries die while in hospice care; the rate for seniors with cancer is about 50 percent.

Those numbers are sure to grow. Recent legislative changes make Medicare’s hospice benefit more flexible and longer lasting, and they create payments for after-hospital home care and skilled nursing facility care. These polices encourage Medicare patients to seek hospice care, particularly for patients who do not have cancer.

While the Annals study found that costs differ among different types of hospice patients, Dr. Lynn says that hospice programs show a lot of variation. And that’s where hospitalists are needed.

From program to program, she says, hospices are more dissimilar than alike. While no two hospice programs are alike, single hospice programs tend to change significantly over a period as short as five years.

“There is a lot of variation in the services these programs provide,” Dr. Lynn explains, “what they are comfortable doing and what they are good at. You can’t assume that all hospices came from the same cookie-cutter. A take-home message for hospitalists is that they really must get to know the major hospice providers in their area.”

She notes that hospices vary widely in their ability to deal with dementia, heart failure, or emphysema patients. Some are willing to handle intravenous medications, and some are only comfortable caring for cancer patients. And because of financial reasons, she says, many programs can’t afford to administer radiation therapy or costly drugs.


An example of a hospitalist’s patient who could benefit from hospice care “but who many physicians still don’t think of “Dr. Lynn says, might be a sick emphysema patient at the end of life. These patients are often discharged from the hospital with help from home care agencies. But once that patient perks up and is no longer homebound, even if he is still dying, home care must end.

Hospice, on the other hand, could be another direction for that patient as he is being discharged from the hospital. “Hospice covers the medications, it covers the oxygen, and it can get a skilled nurse out there any time day or night, so you can really cut down on the use of the emergency room,” Dr. Lynn explains.

“If a hospitalist has a large group of COPD patients who aren’t being served well,” she adds, “one of the things to do is to go talk with their hospice agencies and see if someone really wants to get good at handling these patients so that the hospitalist can confidently refer to them. Such a program would be very skilled at managing early exacerbations and supporting decisions to forgo ventilation, which is what most patients eventually come to when faced with very severe COPD.”

In many ways, hospices have more flexibility than many other health care organizations in what they can do, she says, so the programs “need to know what you want them to do.” In general, she explains, hospices tend to be responsive to community needs.

“Hospitalists need to know if their hospices are good at managing cardiac medications, oxygen and the whole panoply of services that people need in order to live well at home at the end of their lives,” Dr. Lynn says. “They need to know which hospices work in nursing homes. They really need to know whether their hospices can deliver on terminal sedation so that they could offer that to patients.”

And, when patients at the end of their lives are in hospice care, they generally are admitted to the hospital less often, but when they are, it is for something urgent that cannot be treated at home or by the hospice service, such as an unanticipated heart attack or a hip fracture.

Another important job for hospitalists interested in improving end-of-life care is advocating more for advance care planning. Hospitalists, Dr. Lynn says, are in the perfect position to insist that patients they see from nursing homes come into the hospital with well thought out advance care plans. On the flip side, they can make sure that patients with ongoing, eventually fatal, chronic illness leave the hospital with an advance care plan in place and that those plans are distributed to the patient’s other physicians, nurses and family members.

“I think it should be perfectly acceptable that, if a hospitalist sees patients coming in from a nursing home without advance care plans, that hospitalist should talk to the director of nursing or medical staff there and ask what it would take to start getting these plans made,” Dr. Lynn explains. “Hospitalists could be the major force for regional approaches to these issues, so that everybody in a region would use roughly the same form and it would come to be expected. We have to start seeing failing to do that as an error.”

Deborah Gesensway is a freelance writer specializing in health care. She is based in Glenside, Pa.