This study provides a detailed report describing Medicare expenditures among NH residents with advanced dementia. Throughout the residents’ clinical course, hospitalizations and hospice care accounted for the greatest proportion of expenditures. Expenditures were highly skewed: spending was less than $500 in 77.1% of 90-day assessments and more than $12 000 in 5.5% of assessments. In the last year of life, Medicare expenditures increased as residents approached death largely because of increasing use of acute care and hospice services. Not living in a special care unit was associated with higher total 90-day Medicare expenditures, regardless of whether or not hospice was included as part of these expenditures. The lack of a DNH order and the presence of a feeding tube were additional modifiable factors associated with higher 90-day Medicare expenditures when hospice was excluded from these expenditures.
Inconsistent methods hinder direct comparisons between the total expenditures that we observed in advanced dementia and those reported for other terminal illnesses. Nonetheless, limited available data suggest that our estimates of Medicare expenditures in this cohort of NH residents with end-stage dementia were relatively low compared with other Medicare patients at the end of life.8,19,20
This finding is likely explained, in part, by the fact that in the months before death most residents received only NH care, a costly non-Medicare service that is most often paid for by Medicaid; relatively few residents were hospitalized, in an SNF, or enrolled in hospice. In contrast, most Americans who are older than 65 years and dying of cancer or other terminal conditions are not cared for in NHs3
and therefore rely on Medicare services (eg, hospice or hospital) for their end-of-life care.
The increase in Medicare spending that we observed as patients with advanced dementia approached death is consistent with prior research.23
Also, we provide novel findings regarding the sources of those expenditures in end-stage dementia. Roughly one-third of all Medicare expenditures were for hospitalizations. Hospital transfers are potentially burdensome in advanced dementia. As we previously reported,7
most hospitalizations in this cohort were for conditions that were potentially treatable with the same efficacy and at reduced costs in the NH compared with the hospital setting (eg, pneumonia, 68%).24
Moreover, approximately 10% of Medicare expenditures were for SNF care after hospitalization; more than half of residents with a qualifying hospital stay transitioned to SNF status post discharge. Given that these residents were totally functionally and cognitively impaired, their ability to benefit from skilled nursing or intense rehabilitative therapies is questionable. Taken together, our observations support the notion that acute and subacute care in this population may be shaped not only by clinical need alone but also by financial incentives created by Medicare and Medicaid policies. For example, an SNF stay represents substantial financial benefit to NHs because daily Medicare SNF reimbursement is higher than Medicaid NH payments.
Hospice payments accounted for the largest proportion of all Medicare expenditures in our cohort. Hospice has been shown to benefit residents dying with dementia,25,26
although patients with dementia are relatively underserved by hospice.27
While only 22% of residents in our cohort received hospice care, hospice services accounted for close to half of the Medicare expenditures. Whether hospice services lower end-of-life expenditures remains unclear and appears to depend on the terminal diagnosis and the length of hospice stay.6,18
Total Medicare and Medicaid costs in the last month of life for NH residents with dementia are reported to be the same or slightly higher with hospice than without hospice.6
The rich CASCADE data set provided a unique opportunity to identify factors associated with higher Medicare expenditures in advanced dementia. The strong association between the lack of a DNH order and higher acute care expenditures supports the notion that advance care planning may be a key step toward preventing aggressive end-of-life care, while reducing costs.8
Tube feeding, a potentially burdensome intervention with no demonstrable benefits in advanced dementia,28
was also independently associated with higher nonhospice expenditures.
This study has several limitations. First, Medicare expenditures were not derived from claims data but were estimated from publicly available fee schedules. This commonly used approach likely underestimated Medicare expenditures in our cohort.5,8
Second, there may be inaccuracies in the utilization data obtained from chart reviews because of errors in both documentation and abstraction. Third, we did not examine Medicaid expenditures, which are expected to be less variable than Medicare expenditures.6
Fourth, we described expenditures only during a snapshot of the course of advanced dementia and the period leading up to death. However, it would be challenging to conduct a prospective study describing expenditures from the moment patients first meet the criteria for advanced dementia. Fifth, we are not able to make causal inferences between factors shown to be associated with expenditures. Finally, the generalizability of our findings outside the greater Boston area is uncertain in terms of both Medicare expenditures and clinical factors (eg, the CASCADE cohort had a relatively high use of DNH orders). Nonetheless, Medicare expenditures were based on national data, and our analyses focused on the association between clinical factors and expenditures. It is also notable that expenditures varied considerably among residents, even within the narrow region of this study.
Dementia is a terminal illness, yet prior work suggests that persons dying with this disease receive suboptimal end-of-life care.27
Medicare policies play a key role in shaping that care. This study demonstrates that a large proportion of Medicare care expenditures in advanced dementia are attributable to acute and subacute services that may be avoidable and may not improve clinical outcomes. Strategies that promote palliation in advanced dementia may shift expenditures away from these aggressive treatments in advanced dementia toward a more comfort care approach (eg, hospice); however, the net effect on total Medicare expenditures remains unresolved. Finally, a better understanding of fiscal incentives that may be driving the pattern of health care expenditures among NH residents with advanced dementia (eg, temporary cost shifting from Medicaid to Medicare) is needed.