Early Hospice Saves $14,000-$27,000 in Health Care Costs Per Patient

Patients who receive hospice earlier saved an average of $14,000 in health care costs during the last three months of life compared to patients who were admitted for a mid-term stay, according to new research from health care data analytics firm Trella Health.

Patients who did not elect hospice accrued $27,455 more in health care costs than patients who received an early hospice referral, the study found. These patients were also 10 times more likely to be admitted to the hospital.

“There is a strong correlation between hospice length of stay and reduced cost and utilization of the hospital setting. It’s not just that hospice provides value, but provides significantly more value to the patients that receive hospice earlier,” Tyler Rardin, vice president of sales for Trella Health, said. “From a cost standpoint this year, that dramatic difference in spend for patients that get into hospice versus those that don’t in the last months of life shows that hospice is an incredibly valuable service.”


Trella researchers examined data from more than 900,000 patients who died between July 2018 and June 2019, accounting for costs across care settings, hospitalization and emergency department utilization, among other metrics. Patients were divided into four cohorts depending on if and when they entered hospice.

Each patient considered during the study had at least one hospitalization within one year prior to their death, allowing Trella’s analysts to create comparable groups and to minimize the impact of patients who died without being eligible for hospice.

Hospice utilization in the United States topped 50% among Medicare decedents during 2018, according to the U.S. Centers for Medicare & Medicaid Services (CMS). Cancer is the most frequent diagnosis among hospice patients, though many patients have multiple comorbidities. In 2017, more than 30% of hospice patients were diagnosed with cancer.


Among the Trella report’s other findings was that of 120,000 respiratory patients, those admitted to hospice early consumed approximately $33,000 less in health care costs during the last three months of life than those who received no hospice. Also, patients who came to hospice late in the course of their illnesses were five times more likely to visit the emergency department during the last month of life than early hospice patients.

“The research shows that hospice is undervalued for the amount of value it creates. I don’t know of any other care setting that has remotely that type of return, based on the relatively small spend. It’s a very unique care setting, and it’s very obvious that it presents a wonderful return on investment for the payer, which in this case is usually taxpayer,” Trella CEO Ian Juliano told Hospice News. “It’s important for hospices as they come under the Medicare Advantage fold that they really make sure to keep that in mind.”

Medicare Advantage plans are offered by private insurance companies approved by CMS, and include HMO, PPO, and fee-for-service plans among other options. The program represents an integrated care model that promotes coordination of services and provides incentives for quality and patient satisfaction. Beginning in 2020, the program is available in all 50 states as well as U.S. territories. CMS is planning to test coverage of hospice through Medicare Advantage starting in 2021.

The Medicare Advantage program has been growing in recent years. The number of participating beneficiaries totals nearly 24.1 million enrollees in 30 states, according to CMS.

Hospice providers can leverage cost data as they negotiate for contracts with Medicare Advantage plans and other payers.

“One of the potential benefits of hospice going into Medicare Advantage is that these types of numbers are so plainly obvious that I do think that you’ll see the Medicare Advantage plans really start to push hospice earlier,” Juliano said. “It’s the right thing to do by their members or beneficiaries. It’s also the right thing for them from an economic standpoint.”

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