Hospice Location and Diagnosis Impact Spending

Medicare spending on hospice care rose by 52% between 2007 and 2015, increasing from $10.4 billion to $15.8 billion according to a study in the October 2016 issue of Health Affairs. Despite per-patient costs remaining flat, spending on hospice care rose due to increases in the number of patients receiving hospice services during the period.  The study used all Medicare hospice claims, including those enrolled in Medicare Advantage, for 2007 to 2015.

Highlights of the Study

• Geographic Variation. The recent growth in hospice spending showed significant geographic variation, with high-cost regions having average per-patient spending more than 3 times that of the spending in low-cost regions. Mean per-patient spending for hospice care ranged from $4683 in North Dakota to $18,106 in California. The authors found spending per patient was higher in California, Texas, the Southwest, and the South, and lower in central New York and North Dakota and South Dakota.
• Patient Diagnosis. Recent growth in hospice spending also varied  by patient diagnosis, possibly reflecting a change in diagnosis reporting rules. Hospice spending growth from 2007 to 2015 was driven by an increase in patients with non-cancer diagnoses, and the diagnosis of dementia accounted for 25% of spending for hospice care. Patients with cancer have the fewest average days of hospice care per patient, and those with dementia have the most average days. Stroke spending increased, possibly due to the changes in diagnostic reporting rules in 2013 and CMS changes in what hospice claims would be acceptable.
• Lengths of Stay. Regions with higher average spending per patient often have more hospice patients with dementia diagnoses compared with areas with lower per-patient spending. Also, regions with lower spending tend to have more hospice patients with cancer diagnoses than areas with high per-patient spending.

Recent research has shown providers’ practice patterns, patients’ preferences, and patient’s characteristics may play a role in hospice use and spending.