One-quarter of annual Medicare expenses in the traditional program (non-Medicare Advantage) are expended for 5% of Medicare enrollees, with much of this expenditure occurring in the last year of life. Hospice use may reduce end-of-life costs. However, evidence has been inconclusive due to sample selection and differences in insurance coverage for hospice. Claims data for HIV-positive Californians enrolled in Medicare who died in the period 2008 to 2010 were used to examine the relationship between hospice use and costs in the last 6 months of life. Logit estimates related hospice use to sickness levels and demographics. Inpatient and outpatient costs were analyzed separately. Logit regressions examined hospitalization probability. Robust regressions were used to examine the determinants of conditional inpatient costs and non-inpatient costs. Bootstrapped post-estimates were then used to determine the marginal probability of costs for the sample by hospice use. Hospice users have greater disease burden and are less likely to be African American. Controlling for disease burden, hospice users would have non-inpatient costs that were $14 771 greater than hospice non-users, but inpatient costs that were $20 522 lower. Thus, hospice reduces costs on net. Hospice is chosen by patients with more comorbidities. Controlling for these comorbidities, hospice use is associated with lower inpatient costs, greater non-inpatient costs and reduced end-of-life costs.
Keywords: HIV; Medicare; hospice; hospitalization; medical expenditures.