hospice care in the nursing home setting: a review of the literature

440 Journal of Pain and Symptom Management Vol. 38 No. 3 September 2009

NHPCO Review Article

Hospice Care in the Nursing Home Setting:A Review of the LiteratureDavid G. Stevenson, PhD, and Jeffrey S. Bramson, BADepartment of Health Care Policy, Harvard Medical School, Boston, Massachusetts, USA

Abstract
The U.S. Medicare hospice benefit has expanded considerably into the nursing home (NH)setting in recent years. This literature review focuses on the provision of NH hospice, exploringits growth and the impact of such care on NH residents, cost and efficiency implications forNHs and government, and policy challenges and important areas for future research.Although hospice utilization is relatively modest among NH residents, its increasedavailability holds great promise. As an alternative to traditional NH care, hospice has beenshown to provide high-quality end-of-life care and offer benefits, such as reducedhospitalizations and improved pain management. The provision of NH hospice also has beenshown to have positive effects on nonhospice residents, suggesting indirect benefits on NHclinical practices. Importantly, the expansion of hospice in NHs brings challenges, on bothclinical and policy dimensions. Research has shown that NH-hospice collaborations requireeffective communication around residents’ changing care needs and that a range of barrierscan impede the integration of hospice and NH care. Moreover, the changing case mix of hospicepatients, including increased hospice use by individuals with conditions such as dementia,presents challenges to Medicare’s hospice payment and eligibility policies. To date, there hasbeen little research comparing hospice costs, service intensity, and quality of care acrosssettings, reflecting the fact that few comparative data have been available to researchers. TheCenters for Medicare & Medicaid Services have taken steps toward collecting these data, andfurther research is needed to shed light on what refinements, if any, are necessary for theMedicare hospice program. J Pain Symptom Manage 2009;38:440e451. � 2009 U.S.Cancer Pain Relief Committee. Published by Elsevier Inc. All rights reserved.
Key Words
Nursing home, hospice, Medicare, Medicaid
The authors are grateful for financial support fromthe National Hospice and Palliative Care Organiza-tion (NHPCO). The views presented here are thoseof the authors and should not be attributed toNHPCO or its staff.

Address correspondence to: David G. Stevenson, PhD,Department of Health Care Policy, Harvard MedicalSchool, 180 Longwood Avenue, Boston, MA 02115,USA. E-mail: [email protected]

Accepted for publication: May 26, 2009.

� 2009 U.S. Cancer Pain Relief CommitteePublished by Elsevier Inc. All rights reserved.

IntroductionElderly individuals at the ends of their lives

can access health care through a number ofoptions in the United States. The most commonamong these is traditional curative care,through which patients receive care in accor-dance with their Medicare, Medicaid, or pri-vate insurance benefits. Unfortunately, forsome individuals, disease-modifying therapymay involve painful, invasive, and expensive

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Vol. 38 No. 3 September 2009 441Hospice Care in the Nursing Home Setting

procedures that do little to extend life or im-prove the end-of-life (EOL) experience. Inthese instances, a primary alternative is hos-pice care, which became available for publicfunding through the Medicare Hospice Benefitin 1983. While enrolled in hospice, a patientessentially waives his or her right to receivecurative care. In return, Medicare providesextensive palliative and EOL care, includingbereavement and spiritual services for thepatient and his or her family.

Although the Medicare hospice benefit ismost frequently provided in the patient’s ownresidence by a hospice agency, there hasbeen recent movement toward increased provi-sion of hospice care in nursing homes (NHs),with hospice services wrapping around servicesprovided by the facility as the ‘‘primary care-giver.’’ The expansion of hospice into the NHsetting raises a number of issues forresearchers and policymakers, given the char-acteristics of the NH population and themanner in which the benefit is provided andpaid for. This literature review will focus onthe provision of NH hospice, exploring thegrowth of hospice care in the NH, the impactof such care on the patients, cost andefficiency implications for NHs and the gov-ernment, policy challenges, and some sugges-tions for further research.

Background and TrendsThe Hospice Benefit

Medicare (the U.S. health care reimburse-ment program primarily for patients above 65years of age) added the hospice benefit in1983 as an alternative to curative care, bothto reduce costs and to improve the EOL expe-rience. Hospice includes a broad array of palli-ative and supportive services aimed atimproving symptom management and qualityof life for patients with a terminal illness. Onimplementation, the Medicare hospice benefitwas intended to allow terminally ill beneficia-ries (primarily cancer patients at that time)to die at home with improved quality of life;it was expected that patients using hospicewould have fewer hospitalizations at the EOL,and thus, that the cost of the benefit wouldbe offset by reduced Part A (including Medi-care reimbursement to hospitals) costs.

Hospice services in the United States are pro-vided by a variety of agency types, includingfreestanding agencies and those based inhome health agencies, hospitals and skillednursing facilities. Most of the hospice care isprovided by freestanding agencies, with theseproviders serving individuals across settingsof care (e.g., contracting with NHs andhospitals).

A Medicare beneficiary is eligible for theMedicare hospice benefit if his physician cer-tifies that his prognosis is a life expectancy ofsix months or less if the terminal illness runsits natural course, and if he agrees to forgo treat-ment intended to cure the terminal illness.Guided by a physician’s certification, Medicarehospice is administered in periods of care: fortwo initial 90-day periods and then an unlimitednumber of 60-day periods. It is important tonote that the benefit has no capped duration,as long as the patient continues to meet eligibil-ity requirements, including the six-month lifeexpectancy. Medicare hospice defines fourlevels of care: routine home care (which canbe received in personal residences, assisted liv-ing facilities, or in an NH setting), 24-hour con-tinuous home care, inpatient hospice care, andinpatient respite care. The vast majority ofMedicare hospice days are paid at the routinehome care rate.1

In the initial years of the benefit, most Medi-care beneficiaries electing hospice care did sowithin their own homes. With the OmnibusBudget Reconciliation Act (OBRA) of 1989,Medicare extended the availability of the hos-pice benefit, easing restrictions on NHs thatsought to integrate hospice care into theirEOL regimens and seeking to ensure accessto hospice care for Medicare beneficiaries inNHs. Now, any NH that desires such care canfreely contract with hospice agencies, althoughthere is no requirement to do so.2

Hospice PaymentThe Medicare hospice benefit is paid directly

to the hospice agency, regardless of the settingin which the enrollee receives care. Assumingthat hospice services fall under the routinehome care category, the per diem rate, adjustedannually by the Centers for Medicare & Medic-aid Services (CMS), is approximately $140. Pay-ment is capped based on an aggregate rate of$22,386.15, corresponding to the average for

442 Vol. 38 No. 3 September 2009Stevenson and Bramson

all enrollees in the agency over the 12-monthcap period.3 For individuals dually eligible forMedicare and Medicaid (the U.S. health carereimbursement program for the indigent) andresiding in NHs, state Medicaid programs alsopay the hospice agency for the NH stay at 95%of the facility’s Medicaid room and board rate,whereas private paying residents’ obligationsare determined by contract. Room and boardpayments are redirected to the hospice becauseof their responsibility to professionally managethe care of the patient. The hospice agency sub-sequently pays NHs a negotiated rate, typicallypassing the NH payment to the facility in full.4

Under most contracts, a hospice agency is re-sponsible for providing all palliative care relatedto an individual’s terminal illness, includingnursing, added personal care, counseling andsocial work services, medications, supplies,and so on. The NH, meanwhile, providesroom and board and the usual compensatorylong-term care services.

Growth and the Changing Natureof Hospice Use

Utilization of the Medicare hospice benefithas grown substantially in recent years. By2000, hospice enrollment among Medicaredecedents had increased to 27.3%, and itreached 40% five years later. Spending for hos-pice care has grown at an even faster rate:between 2004 and 2005, spending rose byalmost 20%, attributable both to an increasein the number of beneficiaries (10%) and torising payments per user (8%). Medicare hos-pice expenditures per year now exceed $10billion, and they are expected to double inthe next decade.5

In recent years, NHs have expanded theirhospice programs considerably, with thenumber of NH-hospice residents more thantripling between 1996 and 2004, from 13,000to 41,000.6 At the same time, though, theexpansion of NH hospice could be consideredmodest. Although 17% of hospice patientslived in NHs by 1995, 34% of these individualswere served by the 4.5% of homes that enroll5% or more of their EOL patients in hospice.Similarly, even though a large majority (87%)of NHs holds nominal contracts with hospiceagencies, only 30% of them actually have anyhospice enrolleesdand most of these haveonly one or two at a time.2 NH-hospice care,

in short, is not yet widely used among dyingNH residents.

The types of beneficiaries receiving hospiceservices in NHs and at home differconsiderably. Compared with home hospice,NH hospice patients are more likely to be old-er (76.6 vs. 70.3 years), female (55.3% vs.47.4%), unmarried (68.5% vs. 44.6%), and du-ally eligible for Medicare and Medicaid (13.9%vs. 4.2%).6 These are not surprising character-istics considering the general population ofNH residents, many of whom transitiondirectly from long-stay status to hospice astheir condition deteriorates. Diagnoses alsodiffer by care site: NH hospice patients havehigher rates of dementia and other noncancerdiseases as the primary diagnosis, whereashome hospice enrollees have more cancerand other terminal diseases.7 These differ-ences affect treatment options and profitabil-ity, both of which are addressed later.

The growth in NH hospice has coincidedwith a shift in the use of hospice care moregenerally. Perhaps most visibly, growing num-bers of patients with dementia and related con-ditions have enrolled in the Medicare hospicebenefit; compared with cancer, these condi-tions have a much wider range in life expec-tancy.8 Hospice agencies increasingly havealso enrolled patients with longer episodes ofcare, even within diagnosis groups. Themechanics of hospice payment could be par-tially to blame for these shifts.5 With paymentsmade on a per diem basis, it can be financiallyadvantageous for agencies to enroll longer-stayresidents, within limits (e.g., at any given pointin time, the average enrollee should continueto have an expected prognosis of six monthsor less).

A related point is that the role of for-profithospice agencies has been important in theexpansion of hospice care into the NH setting.Between 2000 and 2007, the number of hos-pice agencies participating in the Medicareprogram increased by more than 1000 pro-viders, almost all of which were for-profitagencies. More specific to NH hospice use, a re-cent report from the Medicare Payment Advi-sory Commission (MedPAC) found that 72%of hospice agencies predominantly focusingon institutionalized patients (i.e., for 40% ormore of their business) were for-profitagencies. In the context of these findings,


and given that hospice payment incentives re-ward longer patient stays, MedPAC expressedconcern that NHs were an attractive referralsource for hospice agencies and that higherprofit margins for long-stay residents couldpotentially result in inappropriate use. Assuch, MedPAC directed the Office of theInspector General to perform a comprehensivereview of hospice-NH arrangements to informfuture policy.5

Provision of Nursing Home HospiceResidents who enroll in hospice continue to

receive supportive services from the NH, muchlike the supportive services provided by familyand friends that the patient might receive if heor she were at home; at the same time, they re-ceive supplemental support and care for theirterminal condition from the hospice agency.There are benefits to this arrangement forboth the hospice and NH provider, such aseconomies of scale and assistance in providingsupportive services to patients for the hospice,improved resident access to specialized EOLcare, and assistance in providing supportiveend-of-life care for NHs. However, there arealso important regulatory and administrativehurdles that need to be addressed for suchagreements to work. In particular, NHs andhospice agencies must communicate suffi-ciently to ensure that care plans of both enti-ties are mutually compatible and compliantwith regulatory guidelines, that each entity isclear about its clinical responsibilities, andthat mechanisms are in place to ensure thatchanges in the residents’ status are communi-cated effectively.9

Clinical and Quality Impactof the Hospice Benefit in theNursing Home Setting

The numerous benefits of hospice care overconventional care have been documentedelsewhere.5,10e14 Among these are reducedhospitalizations, more comfortable conditionsfor both the patient and family, attention toemotional and spiritual needs, and betterpain management. The literature on the qual-ity of NH hospice care is less extensive and isfocused primarily on relative service use (e.g.,

hospitalization), though common themeshave emerged.

Nursing Home Hospice vs. Nursing HomeTraditional

Some studies suggest that EOL care is quitepoor in NH settings and that the provision ofhospice may be a mechanism to improveit.13,15 The comparison of NH hospice careto nonhospice care at EOL in the NH hasfound similar quality improvements to thoselisted earlier, with some additional benefitsworth noting. Some of the most detailed anal-yses on this topic were conducted byresearchers at Medstat and Brown Universityfor the U.S. Department of Health andHuman Services (HHS).16 These analysesmerged data from NH Minimum Data Setwith Medicare claims data across five statesfor the 1992e1996 period. The analyses foundthat residents enrolled in hospice were lesslikely to be hospitalized in the final 30 daysof life (24% vs. 44%),17 were more likely tobe assessed for pain, were twice as likely to re-ceive daily treatment for pain (given its pres-ence), and were more likely to receive painmanagement in accordance with clinicalguidelines.18,19 In addition, compared withsimilar residents not enrolled in hospice, resi-dents in hospice were less likely to have physi-cal restraints, receive parenteral/intravenousfeeding, receive medications by means of intra-venous or intramuscular injections, or havefeeding tubes in place.20

The detection and treatment of pain is espe-cially important given that freedom from painand symptom management are among severalconsensus measures consistently rated as im-portant at the EOL by patients, families, physi-cians, and other care providers.21

In contrast to the findings detailed earlier,one exploratory study of residents in twoNHs detected no statistically significant differ-ence in the quality of pain management be-tween hospice and nonhospice residents.22

Similarly, another study based on qualitativeinterviews of family and staff involved in EOLcare for NH and assisted living residents didnot find differences in unmet need or familysatisfaction between hospice and nonhospiceusers at EOL.23 These studies were muchsmaller in scope than the HHS studies butpoint to the need for more investigation of


these differences. Finally, one cross-sectionalstudy of a nationally representative sample ofNH residents found that hospice residents inNHs have a significantly greater completionof advance directives (93.6% vs. 69.9%), suchas living wills and do-not-resuscitate orders;these results potentially indicate better pre-paredness for death as a result of hospice en-rollment, but they could also simply reflectcharacteristics of the population that electshospice.24

Outside of the NH, one concern with hos-pice is that it could shorten patients’ lives bydenying them useful curative care. There hasbeen limited study of this issue for NH hospicerecipients, perhaps, in part, because shortenedlife expectancy is not a primary concern giventhe distinct age and diagnostic profile of NHresidents relative to more traditional hospicerecipients. One study comparing hospice andnonhospice residents at EOL found that lifeexpectancy does not differ after controllingfor disease category, suggesting that hospicecare does not necessarily come at the cost ofearlier death.25 Surprisingly, another studythat included both home and NH patientsfound somewhat increased survival for hospiceusers across four of the six diagnostic cate-gories it reviewed.26

Nursing Home Hospice vs. Home HospiceResearch studies comparing NH with home

hospice users have focused primarily on differ-ences in service use across these two settings asopposed to quality per se. For instance, onestudy found that hospice recipients in NHswere more likely to receive physician services(odds ratio: 2.55), prescription medicines(odds ratio: 1.60), diet and nutritional services(odds ratio: 2.33), and intravenous therapy(odds ratio: 2.33), whereas home hospice en-rollees were not significantly more likely toreceive services in any of the measured cate-gories.6 Another study found that NH-hospiceenrollees received fewer nurse visits thanhome users (odds ratio: 0.59), but more visitsfrom social workers (odds ratio: 2.46), aides(odds ratio: 1.97), and clergy (odds ratio:3.23).27 It is difficult to draw definitive conclu-sions about quality of care from these findings,primarily because much of the variation likelyreflects differences in patient characteristics,which remain even after controlling for

diagnosis.28 Moreover, in the absence of dataabout service intensity, assessing the relativedegree of care across settings cannot be deter-mined with any specificity.

Few articles have attempted to overcomethese obstacles to measure the quality differen-tial between NH and home hospice. Onenotable exception is the study by Casarettet al.,29 which examined the records of 167NH hospice and 975 home hospice enrollees.According to this study, NH-hospice enrolleeswere more likely to have no care need (58%vs. 36%), and less likely to experience consti-pation (1% vs. 5%) and pain (25% vs. 41%).At the same time, however, NH enrolleeswere twice as likely to need feeding tubes(8% vs. 4%) and had a significantly shortermedian time until death (11 vs. 17 days).29

Hospice Impact on Nursing Home PracticesOne analysis of NHs in five states identified

a 47% hospitalization rate in the last 30 days oflife in facilities that did not offer hospice care,compared with 39% in those with moderate hos-pice and 41% in those with low hospice use.17

Similar results were also found around pain as-sessment in NHs offering hospice care relativeto those that did not. Interestingly, these resultsmight denote that the important factor is the ex-istence of hospice use at an NH rather than itsdegree. Similarly, a pre/post study based on res-idents in one NH found that an intervention toimprove EOL care at one NH decreased overallterminal hospitalizations (48.2%e8.9%) andincreased completion of advance care planning(88%e100%) and treatment for pain(7.4%e31.1%).30 In light of these results, fu-ture research should consider both the directand indirect effects of NH hospice to evaluateits full impact.31

Spending, Payment,and EfficiencydGovernment

The incentive of the federal government inproviding hospice care is to provide high-qualityEOL care for Medicare beneficiaries at the low-est cost possible. Despite this clear goal, com-paring the cost of care across settings anddiagnoses is complex. Detailing the results ofprevious studies that generally compare thecost of hospice to nonhospice care at the


EOL across settings is not the goal of our re-view; however, it is important to note that thesestudies have reached somewhat conflictingconclusions. They have also taken differentmethodological approaches to dealing with se-lection bias and choosing the time period tobase the cost comparison on. These studiesgenerally have found that Medicare spendingfor hospice enrollees across settings is lessthan that for nonenrollees in the last fewmonths before death, but that these savings di-minish as hospice stays increase in length.5

Importantly, most previous studies examin-ing the cost of hospice care have not focusedon the NH setting specifically; yet, some ofthese analyses provide important insights inthe context of NH hospice recipients and theiruse of services. For instance, an important con-text for assessing the cost of NH hospice is thatprevious cost analyses of hospice care generallyhave identified large variance in costs acrosshospice recipients by diagnosis and length ofstay. One retrospective analysis of Medicareclaims data that found slightly higher costsoverall for hospice compared with curativecare identified substantial heterogeneity incosts across diagnoses.32 In particular, the anal-ysis found that Medicare costs for youngercancer patients were significantly lower (andmore predictable) compared with those ofolder patients with dementia. The formergroup posted cost decreases of up to 17%compared with nonhospice residents, whereasthe latter group had increases of up to 44%.

In addition, other generally focused (i.e., non-NH-focused) analyses have found substantialvariation across length of stay: although short-(8e30 days) to medium-length (30e90 days)stays were found to be cost-effective, very short(one week or less) and very long (>90 days) stayswere found to be very expensive. The latter arecostly because payments are per diem and theyoften do not end in death, whereas the formerdo not allow facilities sufficient time to assessand stabilize patients clinically and to makethem comfortable33 or to use some of the cost-saving strategies that require weeks to imple-ment.34 One recent analysis that more preciselyaccounted for the time of hospice use in deter-mining its impact on Medicare expendituresfound cost savings of around $2300 per benefi-ciary overall and found that the optimal hospicelength of servicedin terms of savings to the

Medicare program relative to usual caredwas ap-proximately seven weeks.35 The study also foundthat hospice achieved savings for up to an aver-age of 139 days of care for patients with non-cancer diagnoses and up to 154 days of care forpatients with cancer diagnoses.

In light of the general findings describedearlier, one would expect hospice care to berelatively expensive for the typical hospicerecipient in the NH. As discussed earlier, NHhospice has a higher proportion of noncancerdiagnoses than does home hospice, suggestinga higher likelihood of residents having longhospice stays and being discharged withoutdeath.34 In addition, at the other end of thelength-of-stay distribution, analyses haveshown that there is a greater likelihood ofNH hospice patients having short hospicestays, with 22% having enrollments of zero tothree days (vs. 12% at home) and 20% withfour to seven days (vs. 10% at home).6 Giventhese descriptive traits, the initial aggregateresults of costs for NH hospice care are some-what promising. One analysis of NH residentsin Florida found that mean governmentexpenditures in the last month of life werearound 10% less for hospice compared withnonhospice residents ($7365 vs. $8134).36

These aggregate results were largely confirmedin subsequent analyses of the same data;37 yet,both analyses also identified differences in sav-ings across resident diagnoses and overalllength of NH stay. In particular, results show-ing cost savings were more robust for short-stay NH residents relative to long-stayresidents.

Cost, Payment, and ProfitdNursingHomes and Hospices

Although MedPAC recently expressed con-cerns that profit incentives could inappropri-ately drive NH hospice referrals,5 there arefew systematic analyses of the costs of NH hos-pice or of the profitability for providing theseservices. One recent analysis of cost datafrom a single hospice agency serving residentsat home and in NHs found that costs tend tobe higher for noncancer patients and thataverage daily expenditures decrease with epi-sode length.38 Unadjusted results imply thatNH hospice care is relatively expensive, given


its higher proportion of noncancer diagnosesand short-stay residents; yet, within given diag-noses, NH hospice was found to be less costlythan home hospice, perhaps because the NHstaff provides some basic care. More generally,previous analyses of hospice cost data havefound that costs are relatively high duringthe initial and final days of the hospice stayand that they are somewhat lower in theinterim.8 However, it is unclear whether andhow these trends apply to the NH setting,both because of the distinct diagnostic profileof NH hospice recipients and because of thepotential for overlap between NH servicesand hospice care services (e.g., individualsare typically receiving supportive services inthe days leading up to hospice election).

Overall, hospice agencies’ Medicare profitmargins appear to be positive, with MedPACestimating aggregate margins of 3.4% in2005.5 Still, margins vary depending on agencytype, profit status, geographic region, patient-case mix, and average length of hospice stay.In particular, agencies serving patients withlonger lengths of stay generally had higherprofit margins, a factor indicative of the finan-cial incentive of Medicare’s per diem paymentfor longer hospice stays. An important caveatto this general point is that profit marginserode considerably in agencies that hit theper-beneficiary cap, as they must absorb100% of subsequent costs.5 At the same timeas hospice use is trending toward longer en-rollment periods, the number of individualswith short enrollment periods also seems tobe on the rise, perhaps because of people en-rolling later in their illnesses. As described ear-lier, NH hospice has a disproportionately highnumber of very short lengths of enrollment.Thus, in the context of uniform payment,late enrollments could threaten profitabilityby limiting service provision to the highest-cost days of treatment.34

Finally, assessing the financial benefit of hos-pice care for NHs is difficult, given that NHsdo not receive hospice payments directlyfrom Medicare; furthermore, residents mayhave their care financed in different ways ifthey choose not to opt for hospice care. Rela-tive to having residents receive EOL care inthe context of a Medicaid-financed stay (i.e.,typical long-stay NH residents), the NH haslittle to lose financially in the hospice-NH

arrangement. In particular, the NH typicallyreceives the full NH per diem payment whilealso receiving additional supports from thehospice agency for the residents who haveenrolled in the hospice benefit. Relative tohaving residents receive posthospital care inthe context of a Medicare-financed short stay,the Medicare hospice benefit reimburses facil-ities at a much lower rate, a financial disincen-tive of hospice to which we return later.

Barriers to Growth and Challengesfor Public Policy

If current trends are a reliable predictor, theNH hospice market is likely to see steadygrowth in the future. The structural mecha-nism for such an expansion exists, with 87%of all NHs holding at least nominal contractswith hospice agencies. In addition, 80% ofNH hospice enrollees enter hospice from thefacility instead of entering from the commu-nity, implying that a push for greater enroll-ment could be made from within the NHsetting itself.39

Nonetheless, other indicators suggest thatNH-hospice expansion might remain fairlylimited and that there are important barriersto its expansion. Hospice has certainly grownrapidly in the past 25 years, and NH hospice’sshare of total hospice has risen from one-tenthto one-third.6 Yet, only 6% of NH residents cur-rently elect the hospice benefit,39 even thoughnearly one in four deaths in U.S. residentsoccurs in an NH.40 Moreover, even if this gapis overcome, the government may face chal-lenging public-policy issues resulting from cur-rent rules and care practices. These limitingfactors include interaction between hospiceand the Medicare skilled nursing facility(SNF) benefit, facility reluctance to embracehospice, and shifting hospice demographicsin the context of eligibility and payment policy.

The Medicare Skilled Nursing Facility BenefitAs mentioned earlier, NHs face financial dis-

incentives to promote the Medicare hospicebenefit over Medicare SNF care for individualseligible for either benefit. In particular, forindividuals being discharged from the hospitaland who are eligible for either the Medicarehospice or SNF benefit, the facility receives


much lower reimbursement for hospice staysrelative to SNF stays; moreover, residents whoare not Medicaid eligible are liable for payingroom and board costs if they choose hospicecare instead of Medicare postacute care (finan-cial implications for dual-eligible residents areneutral across benefits).41,42 Calculating pre-cise numbers of residents enrolled in SNFcare who could benefit from earlier admissionto hospice is difficult; however, previous re-search has identified a sizeable minority of in-dividuals who transition from SNF care tohospice within one day of SNF discharge, pos-sibly suggesting that financial factors influencethe timing of referral.20 The clinical implica-tions of these incentives for residents and thenature of the transition from skilled-rehabilita-tive care to hospice care are unclear.

Facility ReluctanceEven though it might be financially advanta-

geous for NHs to enroll their residents in hos-pice care, some facilities have shown resistanceto the transition. The lack of enthusiasm couldcome from the NH administrator, especially ifpromotion of the Medicare hospice benefit isperceived to be an admission that the home’sEOL care is insufficient. Research has shownthat hospice enrollment within the NH tendsto rise as administrators’ general opinions ofhospice improve.43 A reluctance to expandhospice also may come from the doctors andnursing staff, who are more typically orientedtoward rehabilitative services in the NH set-ting, a feature reinforced by NH regulatorystandards themselves.44 Indeed, the literaturehas acknowledged a tricky balance in NHs be-tween maximizing health and facilitatinga comfortable death. Until this trade-off is ad-dressed by the homes and policy makers, facil-ity resistance could remain a serious barrier togrowth.45 Underscoring the importance offacility and staff attitudes regarding hospicecare, one study of nurses and aides in NHsshowed that enhanced training about terminaldecline, coupled with an improved under-standing of the role of hospice care, can signif-icantly increase hospice referrals.46 Likewise,an experimental intervention that gave physi-cians information on the appropriateness ofhospice care for 205 residents in three NHs in-creased hospice enrollment from 1% to 20%after 30 days, and from 6% to 25% after 90

days.47 An important caveat to emphasize inusing NH provider education in expanding ap-propriate use of hospice among eligible NHresidents is the high turnover of direct carestaff at NHs.

Shifting Hospice Demographics in the Contextof Hospice Eligibility and Payment

With growing rates of hospice use across set-tings among individuals with noncancer diag-noses and increasing enrollment lengths inevery diagnosis category, hospice care is be-coming more expensive for Medicare. Longerlengths of stay are partly a result of the diffi-culty of prognosis for patients with advanceddementia, which, even if a consensus diagnosisis reached, have variable symptoms and timesuntil death.48 Many of these patient-referralsdie in a short period of time, but a large por-tion survives well past six months. Althoughless than 10% of patients with cancer, genito-urinary diseases, and digestive diseases survivelonger than six months, this rate is 25% orhigher for hospice enrollees with Alzheimer’s,dementia, or other nervous system disorders.5

Even in the context of the changing patientmix across the hospice benefit, the typical NHhospice user is different from home hospiceusers, with a much greater likelihood of havingnoncancer diagnoses, such as dementia, andof being eligible for Medicaid. These differ-ences have important clinical and financial im-plications for providers and the Medicareprogram as a whole. For instance, longerlengths of stay for diagnoses common to NHresidents operate in the context of Medicare’saggregate payment cap, where agencies are re-sponsible for all costs of care if payments re-ceived exceed the limit. The vast majority ofhospice agencies were not subject to the pay-ment cap in 2005;5 however, those that didreach the limit disproportionately served indi-viduals with noncancer diagnoses. Thus, eventhough there is no maximum length of timeany individual is eligible to receive hospicecare, there is an incentive for hospice pro-viders to approach but not exceed the aggre-gate payment cap for its beneficiaries. Asagencies serve larger proportions of individ-uals with noncancer diagnoses, access to hos-pice and the issue of hospice disenrollmentand its effects should be monitored.


Another feature of Medicare hospice pay-ment that can present access barriers forsome potential recipients is the uniformity ofpayment. Outside of the geographicallyadjusted wage component of provider pay-ments, Medicare hospice per diem rates are in-dependent of all cofactors, including site ofcare, patient characteristics, diagnosis, and ser-vice provision. Of course, care intensity andservice costs do not display such consistency,creating differential profit margins for differentdiagnoses. This gap could influence referralsand it may similarly have negative conse-quences for access to care. Certain individualsmay be systematically screened out of a systemthat regards them as unprofitabledhospicepatients with genitourinary diseases, for in-stance, are expensive to treat and have a verylow (median: six days) expected time untildeath (at the same time, of course, the unifor-mity of hospice payment could also make someindividuals particularly profitable).5 MedPACrecently made recommendations to imple-ment hospice payment reforms to make pay-ments relatively larger during the first andlast periods of a hospice stay and smaller dur-ing the middle ones; however, MedPAC didnot recommend any modifications based onsetting or patient case mix.

Data Needs and Areas for FutureResearch

Little information about the direct costs ofhospice care is available to date, with hospiceagencies being required, until recently, to re-port only the number of enrollees and theirdurations of stay. The cost of hospice careper patient, as well as the service intensityand the breakdown of costs across servicetypes, remains largely unknown in the NH set-ting. More specifically, the inability to obtainservice use and cost data from most data sour-ces on hospice care, including Medicare ad-ministrative data, has been a substantialimpediment to understanding service provi-sion in this area. Medicare is moving to lessenthis barrier. New rules implemented in 2007require hospices to report on the location ofcare for all Medicare patients, and analyseswill begin soon to determine an accurate distri-bution of care settings. Other new rules willgradually increase data availability, with

compulsory reporting of agency visits for hos-pice enrollees beginning in July 2008.5 Forthe provision of NH hospice in particular, as-sessments of cost and service use should in-clude the cost of hospice and NH care.

A lack of quality data also hampers research onhospice care, and NH hospice in particular. Al-though a growing number of agencies voluntarilysubmit data on selected structure, process, andoutcome measures to the National Hospice andPalliative Care Organization, CMS has not man-dated submission of any such data.14 In addition,the current set of publicly reported NH qualitymeasures do little to assess the quality of EOLcare. Various quality indicators have been sug-gested, including family experience and satisfac-tion with care, freedom from pain, advancedirective completion, and reduced hospitaliza-tions. Important domains of care that havebeen identified include attending to familyneeds for support and information, coordina-tion of care, the provision of desired physicalcomfort and emotional support, and overall satis-faction.49 In combination with greater cost infor-mation from the NHs, data on quality of care willallow for more reliable evaluations and compari-sons of hospice care. As described earlier, analy-ses should also consider the potential indirecteffects of hospice care on overall NH practices(e.g., through diffusion of knowledge).

Future research must seek greater specificityin its evaluation of the Medicare hospice ben-efit with respect to potential differences acrosssettings. As with analyses of Medicare benefi-ciaries’ experience with hospice more gener-ally, endogenous selection of facilities andindividuals into the hospice program canthreaten the validity of comparative analyses.Several questions important to future hospicepolicy remain unanswered, including whetheragency costs are generally lower in NHs com-pared with home settings and whether differ-ent diagnoses affect the timing of hospiceuse and service costs among NH residents. Ifspending for hospice care continues to rise atits current pace, there will likely be increasedpressure on U.S. policy makers to assess thequality and appropriateness of hospice utiliza-tion and the methods used for its payment.This cannot be accomplished without furtherempirical insights, including how the growinguse of hospice outside the home affects op-tions for reform.


ConclusionThe Medicare hospice benefit has expanded

considerably into the NH setting in recentyears. Although utilization of hospice is stillrelatively modest among NH residents at theend of their lives, the greater availability ofhospice holds promise. As an alternative to tra-ditional NH care at EOL, hospice can providequality EOL care and offer benefits, such as re-duced hospitalizations and better assessmentand management of pain. The provision ofhospice care in NHs also has been shown tohave positive secondary effects on nonhospiceresidents in the homes, suggesting benefits forclinical practices.

The provision of hospice in the NH settingalso brings challenges on both clinical andpolicy dimensions. Collaboration betweenNHs and hospice agencies requires alignmentof clinical goals and effective communicationaround residents’ changing care needs. Asthe Medicare hospice benefit expands furtherinto the NH setting, policy challenges alsoarise, particularly with respect to paymentpolicy and even the conceptualization of thebenefit itself. In particular, the changing casemix of hospice patients, including theincreased use of hospice by individuals withconditions such as Alzheimer’s disease and de-mentia, has resulted in greater variance anduncertainty around the predicted and ob-served life expectancy for enrollees. To addressthese and other changes in the provision ofhospice across settings, there must be greateravailability of comparable data on cost, serviceintensity, and quality of care. CMS has takensteps toward collecting these data; however,further efforts are needed to bolster the infor-mation base for future reform and to shedlight on what refinements, if any, are necessaryfor the Medicare hospice program. By stream-lining and modernizing hospice care, particu-larly in the NH, Medicare can minimize costsand ensure access to high-quality EOL carefor the nation’s elderly.

AcknowledgmentsThe authors are indebted to Stephen Connor,

Jon Keyserling, and Judi Lund Person for guid-ance in the manuscript preparation andcomments on previous drafts.

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hospice care in the nursing home setting: a review of the literature

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