Hospice utilization has tripled among patients diagnosed with Alzheimer’s disease and related dementias (ADRD) during the past two decades. The trend has ignited concerns about these patients’ lengths of stay, as well as praise for hospices’ cost-savings potential.

Massachusetts Institute of Technology (MIT) researchers analyzed Medicare fee-for-service claims spanning between 1999 and 2019, including data on hospice billing, patient enrollment, hospitalizations, health costs and chronic condition indicators. Roughly 14.7% of ADRD patients utilized hospices services in 2019, nearly triple the 4.4% of patients who received this care in 1999, according to the research, which was published in the National Bureau of Economic Research.

The research compared billing claims among nonprofit and for-profit providers to explore spending associated with longer hospice stays among dementia patients.

The number of for-profit hospices has quintupled, reaching 3,300 companies in 2019, up from 624 in 1999, according to the research. The growth has outpaced that of nonprofit hospices, with for-profit companies taking on a larger proportion of Alzheimer’s and dementia patients in the two-decade research period.

Compared to nonprofit hospices, for-profit companies had a “considerably longer” average duration of stay and consequently faced higher capitation rate pressure, the research found. When faced with these financial and regulatory pressures, many hospices accepted fewer dementia and other long-stay patients, according to the findings.

Hospice services delivered by for-profit providers resulted in an estimated $29,000 in Medicare savings for each ADRD patient over the course of five years post diagnosis, the research found. Much the reduced spending was driven by longer hospice stays and less utilization of inpatient, skilled nursing and home health services as well as decreased pharmaceutical spending, the researchers indicated.

Researchers cited a “strong relationship” between an Alheimer’s or related dementia diagnosis and long hospice lengths of stay. Roughly 50% of hospice stays lasting more than 180 days were among ADRD patients, according to the findings. Meanwhile, the volume of dementia patients who die within six months of a hospice admission has decreased, the research found.

Patients must be within the last six months of life to be eligible for hospice services, a time frame that is often difficult to predict in patients with Alzheimer’s and related conditions.

The association between dementia diagnoses, longer stays and live discharges often serves as a red flag that can catch the attention of regulators. For example, hospices have been faced with a rising number of lawsuits for suspected violations of the False Claims Act, which largely hinge on patient eligibility.

Industry stakeholders have alleged that fraudulent actors may be targeting ADRD patients, admitting higher volumes of individuals with dementia to boost their margins, the researchers indicated.

“Patients with long stays in hospice are highly profitable, motivating concerns about overuse among the ADRD population in the rapidly growing for-profit sector,” MIT researchers said in the study. “We find striking evidence that, despite concerns about fraudulent behavior, for-profit hospice for the marginal ADRD patient saves money, mostly due to large reductions in the use of skilled nursing facilities and home health care. Hospice has saved money for Medicare by offsetting other expensive care for ADRD patients.”

Indeed, longer hospice stays can reduce health care costs in the last year of life by 11%, according to findings in a 2023 joint report from the National Alliance for Care at Home and NORC at the University of Chicago

Some claim that longer stays and higher discharge rates for dementia patients may signal a need for change to the Medicare Hospice Benefit, the MIT researchers stated. The findings suggest that life expectancy rates are becoming harder to predict over time among dementia patients in particular, they said.

The greatest cost-savings opportunities could lie in changes around the six-month hospice eligibility requirement, according to the MIT researchers.

“While for-profit admission of ADRD patients without an acutely terminal diagnosis may be considered

fraudulent or improper under current coverage rules, our results suggest that the problem may lie not with firm behavior, but with the rules themselves,” the MIT researchers said. “Our results suggest that, on the margin, expanding hospice eligibility would reduce Medicare costs, even if it meant bringing in patients who might live longer than six months.“