The Cost of End-of-Life Care in Oncology

November 2013, Vol 4, No 9

The recent Institute of Medicine report “Delivering High-Quality Cancer Care: Charting a New Course for a System in Crisis” addressed the important issues of delivering high-quality cancer care, including end-of-life care.1 Given that for many patients cancer can be a terminal illness, the cost of end-of-life care in oncology has recently been a significant focus for public and private payers.

Communication and shared decision-making are important components of high-quality cancer care. The adoption of advance care directives, palliative care, and hospice care as necessary components of end-of-life care is crucial, and can help to address the medical and psychosocial needs of patients, caregivers, and their families.

For more than 30 years, the costs associated with dying have been recognized as significant components of the overall healthcare spending. Medical care at the end of life may be responsible for as much as 20% of the overall Medicare budget.2

Despite efforts to address these costs, the expenses associated with the treatment of cancer at the end of life are significant. There are concerns that patients with cancer are hospitalized and visit emergency departments at a higher frequency than is necessary, and that many of these visits are avoidable. Many members of the healthcare and payer communities believe that the expenditures associated with end-of-life care are at times unnecessary, because some of the treatments that are administered to patients with cancer at the end of life may be futile. For example, patients with poor performance status are less likely to respond to chemotherapy.

Many also believe that hospitalization in an intensive care unit (ICU) is inappropriate for patients with cancer, yet a recent brief from the Dartmouth Atlas reported that 28.8% of Medicare beneficiaries with cancer are hospitalized in an ICU during the last month of life.3 Furthermore, this brief reported that in 2010, 24.7% of Medicare beneficiaries with cancer died in the hospital.3

Despite the ongoing efforts to educate physicians, providers, and patients about hospice care, some still believe that end-of-life care, specifically hospice care, is underutilized. Although several studies have demonstrated significant decreases in the cost of care at the end of life as a result of advanced illness programs and hospice care, other reports suggest that hospice care may be overutilized and is more costly than is necessary.
A 2010 study by Jennifer Temel, MD, and colleagues published in the New England Journal of Medicine demonstrated that early palliative care for patients with metastatic non–small-cell lung cancer (NSCLC) improved the quality of life and the survival of patients who were studied.4

In a subsequent publication, early palliative care administered to patients with metastatic NSCLC was shown to lower hospital utilization, by reducing inpatient visits and chemother­apy administration at the end of life.5 The mean cost-savings was $2282 per patient compared with a cohort of patients that did not receive early palliative care.5 This study was performed at a single tertiary care center, with access to palliative care physicians, who are not typically available in many community hospitals or practices.5 A number of studies, however, have suggested that the cost-savings reported in palliative care settings may be a function of one’s proximity to death.6

Despite the focus of end-of-life care, specifically hospice care, there are concerns that this focus has led to a boom in hospice care. Today, numerous for-profit and not-for-profit hospices exist, and the number of patients in hospice care has increased 10-fold in the past decade. In the same period, the number of hospices has increased by more than 50%.

The goals of hospice care include assisting terminally ill patients and supporting the families of terminally ill patients and other caregivers throughout the end-of-life process. In 1989, Medicare paid only $205 million for hospice care, but by 2011, Medicare paid $13.7 billion to cover 1.2 million beneficiaries. Of this money spent, Medicare paid an excess of $1.1 billion for inpatient hospice care.

The Affordable Care Act (ACA) requires the Centers for Medicare & Medicaid Services (CMS) to reform the hospice payment system. The ACA also requires CMS to develop quality measures for hospices, and requires hospices to report quality data. CMS is currently using 2 quality measures—one related to pain management, and a second related to the way hospices track patient care.7

During the past decade, an increasing number of hospices have been alleged to have submitted false claims to the federal government.8 In 2011, an article in Bloomberg reported that there were multiple pending or settled lawsuits against hospice companies that provided enrollment-based incentives that had led to admitting patients who did not qualify for hospice care.9 In 2009, a report from the Office of Inspector General about Medicare claims for hospice patients living in nursing homes found that as many as 82% of such claims failed to meet Medicare requirements.10

As the oncology community faces further pressure to reduce the cost of care, improve the quality of care, and, ultimately, improve the value of cancer care and end-of-life care, it will be important to better define quality parameters and the appropriate costs for palliative care and hospice care, as necessary components of end-of-life care.


  1. Institute of Medicine. Delivering High-Quality Cancer Care: Charting a New Course for a System in Crisis. September 10, 2013. Accessed November 13, 2013.
  2. Emanuel EJ, Emanuel LL. The economics of dying. The illusion of cost savings at the end of life. N Engl J Med. 1994;330:540-544.
  3. Goodman DC, Morden NE, Chang CH, et al. Trends in cancer care near the end of life: a Dartmouth Atlas of Health Care brief. September 4, 2013. Accessed November 13, 2013.
  4. Temel JS, Greer JA, Muzikansky A, et al. Early palliative care for patients with metastatic non-small-cell lung cancer. N Engl J Med. 2010;363:733-742.
  5. Greer JA, McMahon PM, Tramontano A, et al. Effect of early palliative care on health care costs in patients with metastatic NSCLC. J Clin Oncol. 2012;30(suppl). Abstract 6004.
  6. Chochinov HM, Kristjanson L. Dying to pay: the cost of end-of-life care. J Palliat Care. 1998;14:5-15.
  7. Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy. March 2012. Accessed November 13, 2013.
  8. Frantz D. Hospice boom is giving rise to new fraud. New York Times. May 10, 1998. Accessed November 13, 2013.
  9. Waldman P. Aunt Midge not dying in hospice reveals $14B market. Bloomberg. December 6, 2011. Accessed November 13, 2013.
  10. Office of Inspector General. Semiannual Report to Congress, April 1, 2009-September 30, 2009. Fall 2009. 2009/semiannual_fall2009.pdf. Accessed Novem­ber 13, 2013.

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