CBO Examines Medicare Per Beneficiary Spending
Growth in Hospice, SNF Use Increase Age Group with Highest Per Beneficiary Spending
December 1, 2015 09:15 AM
The Congressional Budget Office (CBO) has issued a working paper, “Changes in Medicare Spending per Beneficiary by Age” that identifies “rapid growth in spending on SNF [skilled nursing facility] and hospice care and the increasing concentration of the use of hospice care among the very old” as accounting for “almost the entire increase in the age for which Medicare spending per beneficiary was highest.” Between 1999 and 2012, the age with the highest Medicare spending per beneficiary rose by almost a decade, from 87 to 96. Over the same time period, changes in spending on SNF care, hospice care, and acute inpatient care contributed substantially to the changes in the profile of Medicare spending per beneficiary by age. Specifically, spending on SNF and hospice care for all age groups rapidly rose, with an increasing concentration of hospice use among the very old, while use of acute inpatient care declined more rapidly for younger Medicare beneficiaries than for those aged 85 or older. It should be noted that before the late 1990s rapid growth in spending on home health and SNF care were drivers of the average growth rate in spending for very old beneficiaries; that appears to have shifted to a combination of hospice and SNF care in more recent years.
CBO points out that payment rules may have an impact on the quantity of services provided under Medicare, identifying payment for hospice services on a per diem basis (regardless of whether care is provided on that day) as an incentive for hospices to enroll healthier patients with less need for services. CBO notes that the growing percentage of hospice patients that are discharged before death may be a potential indication of inappropriate use of hospice care, but also cites studies positing that the growing use of hospice services may reflect a shift to more cost-effective end-of-life care.
The CBO study found that while growth rates of per-beneficiary spending on hospice care are progressively larger over the period studied (1999 - 2012) for older age groups, this is primarily due to the fact that use of these services is growing more rapidly among older beneficiaries than younger ones. All age groups saw a “striking increase in the annual cost of hospice care, with real spending on hospice care per user rising by more than 50 percent between 1999 and 2012” but “the differences in the increase in spending per user among the age groups were not very pronounced.” CBO identifies differential growth rates in the likelihood of hospice use among the different age groups (with older beneficiaries having a higher likelihood of using hospice) as contributing to the shift in the age profile of Medicare spending.