Long-term trends in Medicare payments in the last year of life

Abstract

Objective: To update research on Medicare payments in the last year of life.

Data sources: Continuous Medicare History Sample, containing annual summaries of claims data on a 5 percent sample from 1978 to 2006.

Study design: Analyses were based on elderly beneficiaries in fee for service. For each year, Medicare payments were assigned either to decedents (persons in their last year) or to survivors (all others).

Results: The share of Medicare payments going to persons in their last year of life declined slightly from 28.3 percent in 1978 to 25.1 percent in 2006. After adjustment for age, sex, and death rates, there was no significant trend.

Conclusions: Despite changes in the delivery of medical care over the last generation, the share of Medicare expenditures going to beneficiaries in their last year has not changed substantially.

Diagram 1

Examples of Allocation of 2006 Medicare Payments between Decedents and Survivors Notes: These examples use person-months to illustrate the allocation principle. Actual allocations were made at the level of person-days. X, month of death; D, months allocated to decedents; S, months allocated to survivors.

Figure 1

Percent Dying and Percent of Medicare Payments Spent in the Last 12 Months of Life, among Medicare Beneficiaries Aged 65 and Older, 1978–2006 Notes: Figure excludes beneficiaries enrolled in managed care at any point during the year. Payment data were not available for years 1998–2000. ^*Adjusted to the age, sex, and survival status of the 1978 sample. For linear trends 1978–2006: p<.01 (unadjusted costs), p=.64 (adjusted costs), and p=.11 (death rates). Source: Medicare Continuous History Sample.