Hospice Costs & End-of-Life Options
Financial concerns can make end-of-life decisions even more challenging. Find out how Medicare and Medicaid can ease the money problems you might be facing.
End-of-life decisions are always difficult. The COVID-19 pandemic made them even worse because many more people have had to make those decisions.
The Centers for Disease Control and Prevention reported that 3,358,814 deaths occurred in the United States in 2020. The age-adjusted rate increased by 15.9%. COVID-19 was the underlying cause of death in 377,833 cases.
Secondly, the pandemic turned end-of-life care on its head. There was a shortage of beds, staffing and equipment. Tens of thousands of patients died in isolation. The crisis is prompting industry reforms.
“Failure to plan for adequate palliative and hospice care when a substantial increase in disease and death is expected is unconscionable, and it risks undermining patient-family trust, long-term emotional health, and the core values of society,” the authors of a 2021 Journal of the American Medical Association wrote.
Financial confusion can add to the heartbreak and bewilderment, since end-of-life decisions are based not only on a patient’s needs but also on financial capabilities. Here are some common choices.
What Is End-of-Life Care
End-of-life care is the treatment someone nearing death receives in the final days, weeks, months or sometimes years of his or her life.
During this time, medical care and support continues regardless of whether the patient’s condition is curable or not. Many receive professional medical care in hospitals, nursing homes, or even in their own homes.
Patients are then placed in either palliative care or hospice care, and the costs are paid by Medicare, Medicaid, private insurance, charities, the individual or other payment programs.
The fact that Medicare pays 100% of hospice costs should be a big inducement, yet many who are eligible do not take advantage of end-of-life services A 2019 study published in the Journal of the American Geriatrics Society estimated 2,700 Americans a day experience non-sudden deaths without the benefits of hospice.
The study said the “utilization rate”is only 52.4%. If you’re not using hospice care or considering it down the road, you’re making a mistake.
Research shows that hospice care improves the mental health of patients and their families, increases survival time, decreases the strain on loved ones and does a better job keeping patients comfortable.
Palliative care includes the emotional support and day-to-day help for someone with a life-threatening illness while doctors and nurses pursue a cure. Palliative care starts with the diagnosis and continues until the point at which it becomes clear the patient won’t survive.
Hospice refers to treatment in which nurses, doctors, social workers, volunteers and spiritual leaders come together to provide pain management for patients who are terminally ill.
Unlike palliative care, when a patient enters hospice care, they no longer receive treatment attempting to cure the condition. Doctors have exhausted those options and instead provide relief from the symptoms.
Hospice is not tied to a particular place. It can be offered at home or in an assisted living facility nursing home, hospital or hospice center.
A 2019 National Hospice and Palliative Care Organization (NHPCO) report found that nearly 1.5 million Medicare beneficiaries received hospice care. Figures for 2020 are not complete, but the number of beneficiaries might have dropped.
A National Association for Home Care & Hospice (NAHC) survey in May 2020 found that 95% of hospice agencies had existing patients refuse visits due to fears of contracting COVID-19.
There are about 4,600 Medicare-certified hospice providers in 2018, according to the NHPCO. More than 55% of providers were certified for 10 or more years.
Finding a certified provider is vital if you’re on Medicare, of course. But you should also consider size, staffing, services and other factors in choosing a provider.
To aid in that quest, the Centers for Medicare & Medicaid Services have a Hospice Compare website that displays information on the quality of care at each facility.
Respite care is a short-term break for care-givers of terminally ill patients. The patient can stay for up to five days in a Medicare-approved nursing home, hospital or hospice facility.
Options for End-of-Life Care
There are three major facilities for end-of-life care:
Hospitals offer around-the-clock medical care from doctors and nurses, a full range of treatment choices, modern medical equipment, teams of specialists, and the ability to receive tests and life-saving procedures.
High-intensity hospital care includes Intensive Care Units (ICUs) and Coronary Care Units (CCUs). Approximately 60% of Americans die in acute care hospitals, with 20% spending their last days in an ICU.
Nursing homes, also known as skilled nursing facilities, offer around-the-clock nursing care, although a doctor is not always present. There are more than 17,000 nursing homes in the country, housing more than 1.6 million residents, according to the National Center for Health Statistics.
According to the U.S. Census Bureau, just over 5% of the country’s 49.2 million, 65-plus aged population lives in a nursing home. Residency ratios increase with age: 50% of those older than 95 live there. Overall, 20% of deaths in the United States take place in nursing homes.
A Patient’s Home
Studies show that while 80% of Americans prefer to die at home, only about 20% do. This gap is largely due to the difficulties and costs of caring for a terminally ill patient at home; in most cases, nursing care and special equipment is required.
But at-home care is becoming more prevalent. An analysis by ATI Advisory consulting firm found that health plans offering home-based palliative care coverage increased from 61 in 2020 to 134 in 2021.
Who Pays for End-of-Life Care?
About 85% of end-of-life care costs are covered by various government entities, including Medicare, Medicaid, and health care programs sponsored by the Veterans Administration (VA) and the Department of Defense (DoD); and private medical and long-term care insurance.
Hospice costs are paid for in the following manner: Medicare – 85.4%; Medicaid – 5%; managed care or private insurance – 6.9%; other (including charity and self-pay) – 2.7%.
Medicare is required to pay for all medically necessary hospital and doctor care under Parts A and B, regardless of cost or the condition of the patient. Of the 2.854 million Americans who died in 2019, 82% were Medicare beneficiaries at the time of death. Medicare Hospice Benefit has paid for the care of eligible patients since 1982.
Eligibility for Medicare’s Hospice Benefit
- Patient must be 65 years or older
- Diagnosed with a serious illness
- Certification from a doctor that he or she has six months or less to live
- Agrees to forgo life-saving or potentially curative treatment
- Hospice provider must be Medicare-approved
Medicare provides care for two 90-day periods in hospice, followed by an unlimited number of 60-day periods. At the start of each period of care, a doctor must re-certify that the patient has six months or less to live.
Medicare’s hospice coverage includes a broad range of services:
- Nursing care
- Medical social worker services
- Physician services
- Counseling (including dietary, pastoral and other types)
- Inpatient care
- Hospice aide and homemaker services
- Medical appliances and supplies (including drugs and biologicals)
- Physical and occupational therapies
- Speech-language pathology services
- Bereavement services for families
Hospice costs not covered by Medicare
- Room and board
- Emergency care such as ambulance fees or emergency room costs
- Treatment or prescription drugs attempting to cure illness
Children with disabilities or adults who meet Medicaid’s financial eligibility criteria are fully covered for end-of-life care. Medicare beneficiaries who are dual-eligible for both programs (approximately 20% of all Medicare beneficiaries) can have Medicaid cover costs that Medicare doesn’t cover, such as outpatient prescription drugs and long-term care.
Medicaid and Medicare’s hospice eligibility requirements are almost identical: A patient must be certified to have six months or less to live and must receive services from a Medicare-certified hospice facility or agency. However, Medicaid policies can vary from state to state.
In addition to covering hospice services, Medicaid also pays at least 95% of room and board costs for hospice patients in a nursing home. Funds are allocated to the hospice agency, which then pays the nursing facility.
Private health insurance plans vary widely in terms of coverage. If the policy includes hospice, end-of-life care or palliative care, it will cover most of those costs.
Not all plans pay for hospice care, although most do since it is typically much less expensive than hospital treatment. Some policies that cover hospice care may have limits on hospice expenses.
TRICARE is a health care program sponsored by the U.S. Department of Defense that provides health benefits for active military personnel and retirees, and their dependents. Hospice care is covered through this program.
CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs) is a health care program sponsored by the Veterans Administration that insures eligible beneficiaries of certain deceased or disabled veterans. It covers most medically necessary care, including hospice.
Individuals without private health insurance, and who are not covered by a government policy, must pay for end-of-life care themselves. Some hospice care can be paid on a sliding scale, or through charitable or other donations.
Costs for End-of-Life Care
Of the $3.65 trillion Americans spent on healthcare in 2018, $365 billion went for end-of-life care. Hospital costs were appreciably higher than hospice costs.
A 2019 study by healthcare data analytics firm Trella Health found that patients who did not elect their hospice benefit incurred as much as $27,455 in additional healthcare costs, compared with patients who received hospice care in their last months of life.
Patients who receive hospice earlier in the course of their illnesses 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.
“The research shows that hospice is undervalued for the amount of value it creates,” Trella CEO Ian Juliano said. “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 the taxpayer.”
About The Author
Max Fay has been writing about personal finance for Debt.org for the past five years. His expertise is in student loans, credit cards and mortgages. Max inherited a genetic predisposition to being tight with his money and free with financial advice. He was published in every major newspaper in Florida while working his way through Florida State University. He can be reached at [email protected].
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