Do Selection or Treatment Effects
Explain Differences in Medicare
EOL Costs Among Hospice and
Normal Care Users?
Donald H. Taylor, Jr.
Duke University
Funded by The Robert Wood Johnson Foundation’s
Changes in Health Care Financing and
Organization (HCFO) Initiative
Question
• Does hospice save Medicare money?
– Are observed differences in cost due to
treatment effects (hospice) or selection effects?
Background/Context
• Hospice improves patient QOL
• Large cost to Medicare near end-of-life
– Hospice/cost effect is mixed in past work
– Medicare hospice use expanding
Data
•
•
•
•
Screening sample for NLTCS
10,319 decedents (died 1993-2000)
Medicare claims 2 yrs. prior to death
Total Medicare-financed payments
Analytic Approach
• Match decedents on pred prob of hospice
• Compare cost--hospice users v. matches
– Marginal & cumulative costs
– Varied follow-up periods
• Predicted weekly costs in LYOL
– Regressed cost on time, t2, t3, t4
Results
• 13% died in hospice (1,309/10,319)
• 143 began, but did not die in hospice
• Median LOS=15 days; mean=50
– cancer dx longer
Comparing Marginal Costs of
Hospice Decedents to Matched
Controls
365 days
Follow up Period
180 days
150 days
120 days
1
90 days
60 days
28 days
-2000
-1000
0
1000
Cost Difference
2000
21 days
14 days
7 days
Comparing Cumulative Costs for
Hospice Decedents and Matched
Controls
Period Prior to Death
365 days
180 days
150 days
120 days
1
90 days
60 days
28 days
21 days
-4000
-2000
0
2000
Cost Differences
4000
14 days
7 days
Hospice Save Medicare Money?
• Marginal acctg—Yes. Hospice saves
Medicare ~$1,800 (50%) in the last 2 wks
• Cumulative acctg--Yes. Hospice saves
Medicare ~$1,600 (15%) during last 60
days
Predicted Weekly Costs for Persons Who Died in Hospice
Hospice users' total cost
Non-hospice users' total cost
2500
2500
2000
2000
Crossover Point
1500
1500
1000
1000
500
500
Weeks Prior to Death
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
42
44
46
48
0
50
0
52
Total Weekly Cost ($)
Hospice users' hospice cost
Predicted Cumulative Costs for Persons Who Died in Hospice
Hospice users' total cost
Non-hospice users' total cost
30000
30000
25000
25000
20000
20000
Crossover Point
15000
15000
10000
10000
5000
5000
Weeks Prior to Death
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
42
44
46
48
0
50
0
52
Total Cost Unitl Death ($)
Hospice users' hospice cost
Policy/Comment/Questions
• Matching increased cost savings ~10%
• Strong effect—savings in last 2 wks show
cumulative savings in last 2 months
• Answer is sensitive to follow up period
• Earlier use of hospice will improve QOL
and potentially save money
4
2
0
Percent
6
8
10
Distribution of Predicted Probabilities of Death in Hospice
0
.1
.2
.3
Probability of Death in Hospice
.4
.5
Matching
• Logit of hospice use
– Predictors of use: younger, white, later death,
higher Medicare costs in year prior, dx cancer,
urban
• Pred prob ranged from 0.03-0.49
• Matches were close; largest difference
between hospice user and match was 0.01
Limitations/Extensions
• Time to death is assumed exogenous to choice of
hospice/no hospice
• Partial solution: predict time of hospice entry and
costs prospectively from date of study entry
– Predict daily prob of hospice entry
– Calculate costs between each day and time of death
– Calculate expected cost after hospice entry by
integrating over all days (for hospice users and nonusers)