Spotlight on Hospice Care Claim Problems

The goal of hospice care is to help terminally ill beneficiaries continue life with minimal disruption and to support beneficiaries' families and caregivers throughout the entire process. It includes pain control, symptom management, and counseling for beneficiaries and their families in an effort to make the last days of a beneficiary's life as comfortable as possible. Clearly, this type of care is both important and personal, yet hospice care in the Medicare program does not escape the problems of fraud, waste, and abuse. This spotlight page highlights this issue and the Office of Inspector General's (OIG) efforts to eliminate it.

What is the Medicare hospice benefit?

To be eligible for Medicare hospice care, a beneficiary must be entitled to Part A of Medicare and be certified as having a terminal illness with a life expectancy of 6 months or less. The hospice care may be provided in various settings, including the home or a nursing facility. This care is palliative—improving quality of life—rather than curative—curing the illness.

What is the status of the Medicare hospice benefit?

Medicare is paying more and more each year for hospice care. Between 2005 and 2009, hospice payments increased 53 percent. Payments for hospice care in nursing facilities rose even faster: nearly a 70-percent increase over the same years.

There are also more hospices providing care to Medicare beneficiaries, and an ever greater percentage are for-profit hospices. In 2009, more than half of Medicare hospices (56 percent) were for-profit, up from 13 percent in 1992.

In addition, there are compliance issues with hospice claims and Medicare requirements. Eighty-two percent of hospice claims for beneficiaries residing in nursing facilities did not meet Medicare coverage requirements in 2009, totaling $1.8 billion. ( Medicare Hospice Care for Beneficiaries in Nursing Facilities: Compliance With Medicare Coverage Requirements) Sixty-three percent of Medicare hospice claims did not meet the plan-of-care guidelines, which state that hospices must establish a plan of care for each beneficiary describing what is supposed to be done, by whom, at what time, and for what purpose.

Also, OIG found that in 46% of all hospices surveyed, health deficiencies were cited most often in regard to patient care quality and planning.

Why are some hospices seeking out nursing facility residents?

A recent OIG report (Medicare Hospices That Focus on Nursing Facility Residents, OEI-02-10-00070) found that hundreds of hospices had more than two-thirds of their beneficiaries residing in nursing facilities in 2009. These "high-percentage hospices" typically served beneficiaries who required less complex care than other beneficiaries but required hospice care for longer periods. By serving beneficiaries for longer periods, these hospices billed Medicare more per beneficiary, on average, which can mean larger profits. The numbers reflect this; compared to the overall pool of hospices, high-percentage hospices are more likely to be for-profit.

What does OIG recommend to address this issue?

This report shows that the current payment structure provides incentives for hospices to seek out beneficiaries in nursing facilities, who often receive less complex care but receive it for longer periods. Accordingly, OIG recommends that the Centers for Medicare & Medicaid Services (CMS):

• monitor hospices that depend heavily on nursing facility residents and
• reduce Medicare payments for hospice care provided in nursing facilities.

CMS concurred with these recommendations. For more information, see the full report.

What other work has OIG done related to hospice care?

OIG's work in the hospice care area is not new. For example, in 1999, OIG issued compliance guidance for hospices. In 2001, an advisory opinion was posted concerning a payment arrangement between a Medicare-certified hospice and certain nursing facilities for services provided to residents of such facilities who are eligible both for Medicaid and Medicare hospice benefits ("dually eligibles").

Earlier this year, OIG published an audit regarding Medicare hospice payments made by the Massachusetts Executive Office of Health and Human Services, pointing out various errors totaling $1.7 million in overpayments.

Also, several enforcement actions have been related to hospices. Examples are highlighted below:

• SouthernCare Inc. , an Alabama-based company, and its shareholders allegedly submitted false claims to the Government for hospice patients who were not eligible for such care. In 2009, SouthernCare Inc. agreed to pay a total of $24.7 million to settle allegations and enter into a corporate integrity agreement (CIA) with OIG.
• Roberto Ruiz, M.D., and his company, Southwest Internal Medicine Group, P.C., entered into an integrity agreement with OIG in 2009 to resolve charges of submitting false claims to Medicare for hospice services. The agreement requires written policies, employee education, and annual audits. He also paid $525,000 to resolve his civil liability.
• In 2008, Solaris Hospice, Inc. , formerly Home Hospice of North Texas, and its two owners agreed to pay $500,000 plus interest to resolve allegations that Solaris submitted improper claims for hospice-related items and services. The improper claims included, for example, alleged misrepresentation to Medicare of the medical conditions of patients to ensure that they would be or continue to be hospice patients. Also, Solaris Healthcare, the parent company of Solaris, agreed to enter a 5-year CIA with OIG.

What does OIG plan to do from here?

OIG will continue to monitor hospice care in the Medicare program and take action against those who break the rules. OIG also has some forthcoming reports planned, including:

• investigating the business relationships between high-percentage hospices and nursing facilities and the way hospice services are marketed and
• assessing the appropriateness of hospices' general inpatient care claims and hospice beneficiaries' drug claims under Part D. 

Dallas L Alford IV, CPA is a licensed Certified Public Accountant in the state of North Carolina and owner of Atlantic Financial Consulting, a consulting firm that provides comprehensive medical billing services, practice management consulting, coding audits, Medicare compliance, Medicare RAC support and other general medical practice consulting services.
To learn more about Atlantic Financial Consulting you may visit their website at
http://atlanticfinancial.us  or contact Dallas L Alford IV, CPA directly at 1 888-428-2555, Ext. 200.