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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.

Data Sources/Study Setting. Secondary data for NH residents for 1998–1999.

Study Design. 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.

Data Collection/Extraction 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.

Principal Findings. Hospice enrollment results in substantial savings in government expenditures (22 percent) among all short-stay (=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.

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