Early Hospice Admission Could Save Medicare $2.3 Billion

Enrolling patients in hospice earlier in the course of their terminal illness can reduce Medicare costs by $316 million to $2.43 billion, depending on length of stay and characteristics of the patient population, according to a recent policy brief from the National Hospice & Palliative Care Organization (NHPCO).

About 60 percent of Medicare decedents stay in hospice care for less than two weeks on average. If 20 percent of decedent beneficiaries used hospice for a period of four weeks, Medicare could save as much as $316 million. If 100 percent of decedents entered hospice for a duration of 24 weeks, Medicare would save an estimated $2.43 billion.

“Since health care delivery involves multiple health care professionals and providers, value in health care is largely about coordinating care and reducing cost across all care providers without compromising outcomes,” the brief stated. “Hospice is an early example of how interdisciplinary care and coordination of services can produce value-based care.”


Hospice since its inception has provided coordinated care through interdisciplinary teams that include the patient’s family caregivers. The family collaborates with physicians and nurses trained to provide end-of-life care, as well as social workers, chaplains, hospice aides, personal care and support staff, and volunteers.

“Hospice exemplifies the principles of quality, compassionate, personalized care that works for beneficiaries, payers, and policymakers,” said NHPCO President and CEO Edo Banach.

The prevalence of hospitalizations, intensive care admissions, and invasive procedures among patients with terminal illness who were not enrolled in hospice drives up health care costs for those patients. The hospice benefit can save Medicare $2,309 to $17,903 per hospice user, depending on length of stay and characteristics of the patient population, according to a 2014 study


NHPCO commissioned the health care economics and policy consulting firm Dobson, DaVanzo, & Associates to develop the brief, Hospice: Leading Interdisciplinary Care, which explains the physical, emotional, spiritual, and financial benefits of hospice care for patients, families, and communities, using evidence-based research and case-study analyses.

“The value proposition of the hospice program is demonstrated by the numerous research studies showing Medicare savings associated with the program,” according to the brief. “The weight of the evidence is that appropriate use of hospice can generate savings in Medicare across all lengths of stay, and savings are more pronounced for patients with more comorbidities and longer stays in hospice.”

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