Medical care at the end of life: disease, treatment patterns and costs”. NBER Working Paper No

In recent years, the use of Medicare-covered home health care and hospice services has grown dramatically. Hospice care, like much home health and nonacute hospital care, is designed to meet the needs of dying patients, who are known to generate disproportion-ately large costs of care. How has use of these services by dying Medicare beneficiaries changed over time? How has it varied by dis-ease? Does recent experience suggest that these services have helped save the Medicare program money by displacing hospital care and other costly services? To address these questions, we examined linked Medicare claims files from 1988 to 1995, determining the loca-tion of death, days of use of services, and expenditures for the care of beneficiaries in the final months of life. We found that use of hospice and home health services by dece-dents grew rapidly over the eight-year study period, and especially rapidly among patients who died with a predictably terminal illnes