Managed care, hospice use, site of death, and medical expenditures in the last year of life

Background: We examined deaths of Medicare beneficiaries in Massachusetts and California to evaluate the effect of managed care on the use of hospice and site of death and to determine how hospice affects the expenditures for the last year of life. Methods: Medicare data for beneficiaries in Massachusetts (n=37933) and California (n=27685) who died in 1996 were merged with each state's death certificate files to determine site and cause of death. Expenditure data were Health Care Financing Administration payments and were divided into 30-day periods from the date of death back 12 months. Results: In Massachusetts, only 7% of decedents were enrolled in managed care organizations (MCOs); in California, 28%. More than 60% of hospice users had cancer. Hospice use was much lower in Massachusetts than in California (12% vs 18%). In both states, decedents enrolled in MCOs used hospice care much more than those enrolled in fee-for-service plans (17% vs 11% in Massachusetts and 25% vs 15% in California). This pattern persisted for those with cancer and younger (aged 65-74 years) decedents. Decedents receiving hospice care were significantly (P<.001 for both) less likely to die in the hospital (11% vs 43% in Massachusetts and 5% vs 43% in California). Enrollment in MCOs did not affect the proportion of in-hospital deaths (those enrolled in fee-for-service plans vs MCOs: 40% vs 39% in Massachusetts; and 37% vs 34% in California). Expenditures in the last year of life were $28 588 in Massachusetts and $27 814 in California; about one third of the expenditures occurred in the last month before death. Hospital services accounted for more than 50% of all expenditures in both states, despite 77% of decedents being hospitalized in Massachusetts and just 55% being hospitalized in California. Among patients with cancer, expenditures were 13% to 20% lower for those in hospice. Conclusions: Medicare-insured decedents in California were more than 4 times more likely to be enrolled in MCOs, were 50% more likely to use a hospice, and had a 30% lower hospitalization rate than decedents in Massachusetts, yet there are few differences in out-of-hospital deaths or expenditures in the last year of life. However, patients with cancer using hospice did have significant savings.