The Number of Beneficiaries Using Hospice Has Grown as Average Days Used Have Declined

From 1992 to 1998, the number of Medicare beneficiaries enrolling in hospice more than doubled, with growth in all population subgroups and in all states. The Number of Medicare Hospice Users More Than Doubled in 7 Years

Our analysis of Medicare claims data indicates substantial growth in hospice use. 1.) The most dramatic growth in use was among individuals with other terminal conditions, such as heart disease, lung disease, stroke, or Alzheimer’s disease. 2.) In 1998, 28 percent of all beneficiaries using hospice care did so for 1 week or less. While these beneficiaries historically had many more days of care than cancer patients, the average number of days used declined 38 percent between 1992 and 1998. Multiple Factors Influence the Use of the Hospice Benefit

Several factors influence beneficiary choice about whether and when to use hospice care. In addition, recent federal oversight of compliance with patient eligibility requirements may have affected certain beneficiaries’ use of the hospice benefit. Patient Choice and Circumstances

The use of hospice services by Medicare beneficiaries requires not just awareness of the benefit and a physician’s certification of prognosis but also acceptance that death is the outcome of their illness and the choice by beneficiaries to give up a portion of their standard Medicare benefits in order to receive hospice care. Public and Professional Awareness

Public and professional awareness also influences the use of the Medicare hospice benefit. Hospice Care Is More Widely Available, but Providers Report Cost Concerns

Sustained growth in the number of hospice providers participating in Medicare and in their distribution throughout the country suggests that hospice services are now more widely available to program beneficiaries. While all sectors of the hospice industry have grown over the past decade, recent growth has been particularly strong in the for-profit sector and among large hospice programs. At the same time, hospice industry officials report growing cost pressures from shorter patient stays and changes in the practice of palliative care. From 1992 to 1999, the rate of growth was greatest among for-profit providers and those in rural areas. Even with certificate-of-need (CON) requirements that apply to hospice providers in 14 states, the number and size of Medicare hospice providers increased in almost every state from 1992 to 1998.Among states with large Medicare enrollment and no CON requirements, the most dramatic growth was in Texas, where the supply of hospice providers relative to the size of the Medicare population nearly doubled. Industry Reports Increased Cost Pressures but the Effect on Providers Is Uncertain

Even as the hospice industry has grown, changes in the use of the hospice benefit and the delivery of hospice care have raised concerns about cost among providers. However, because reliable data on provider costs are not available, it is not clear how these factors may effect hospices’ financial status or their ability to serve Medicare beneficiaries. We calculated the period of enrollment by summing the number of days covered by each claim, even if they covered discontinuous periods of service, and excluded duplicate claims.Because records of hospice use are not complete for beneficiaries who entered hospice during the later years of our study period, we adjusted the claimed days of hospice service for 1996 to 1998 to better account for beneficiaries with very long stays.Our adjustment factor was calculated from 1992-95 data on the proportion of total beneficiary claim days accounted for within the first 2 calendar years of hospice use.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the Medicare hospice benefit, focusing on: (1) the patterns and trends in hospice use by Medicare beneficiaries; (2) factors that affect the use of the hospice benefit; and (3) the availability of hospice providers to serve the needs of Medicare beneficiaries.

What GAO Found

GAO noted that: (1) the number of Medicare beneficiaries choosing hospice services has increased substantially; (2) in 1998, nearly 360,000 Medicare beneficiaries enrolled in a hospice program, more than twice the number who elected hospice in 1992; (3) of Medicare beneficiaries who died in 1998, about one in five used the hospice benefit, but use varies considerably across the states; (4) although cancer patients account for more than half of Medicare hospice patients, growth in use has been particularly strong among individuals with other common diagnoses such as heart disease, lung disease, stroke, and Alzheimer's disease; (5) although more beneficiaries are choosing hospice, many are doing so closer to the time of death; (6) the average period of hospice use declined from 74 days in 1992 to 59 days in 1998; (7) half of Medicare hospice users now receive care for 19 or fewer days, and care for 1 week or less is common; (8) many factors influence the use of the Medicare hospice benefit; (9) decisions about whether and when to use hospice depend on physician preferences and practices, patient choice and circumstances, and public and professional awareness of the benefit; (10) along with these factors, increases in federal scrutiny of compliance with program eligibility requirements may have contributed to a decline in the average number of days of hospice care that beneficiaries use; (11) the growth in the number of Medicare hospice providers in both urban and rural areas and in almost every state suggests that hospice services are more widely available to program beneficiaries than in the past; (12) between 1992 and 1999, the number of hospices participating in Medicare increased 82 percent, with large providers and those in the for-profit sector accounting for a greater proportion of the services delivered; (13) at the same time, hospice industry officials report cost pressures from declining patient enrollment periods and increased use of more expensive forms of palliative care; (14) because reliable data on provider costs are not available, however, the effect of these reported cost pressures on the overall financial condition of hospice providers is uncertain; and (15) as required by the Balanced Budget Act of 1997, the Health Care Financing Administration began collecting information in 1999 from hospice providers about their costs to allow a reevaluation of the Medicare hospice payment rate.