Kusserow on Compliance: OIG report on vulnerabilities in the Medicare hospice program

15 specific actions recommended to reduce Hospice vulnerability

4 million Hospice beneficiaries with an annual cost of $17 billion

CMS plans to increase hospices reimbursement by $340 million


The HHS Office of Inspector General (OIG) reported on numerous evaluations, audits, and investigations of the hospice program that have resulted in questioned costs, as well as criminal and civil prosecutions. The result of this work has identified vulnerabilities in the program. By way of background, the objective of hospice is to provide great comfort and care to beneficiaries, their families, and caregivers at the end of a beneficiary’s life. This program has grown steadily over the past decade, with Medicare now paying about $17 billion annually on behalf of 1.5 million beneficiaries—grown from a half million in 2000. According to CMS, hospice expenditures are anticipated to continue rising 8 percent annually as more beneficiaries utilize the care. In their review of this program, the OIG found:

  1. Hospice providers do not always provide needed services to beneficiaries; sometimes provide poor quality care; and were not able to effectively manage symptoms or medications, leaving beneficiaries in unnecessary pain for many days.
  2. Beneficiaries and their families and caregivers do not receive crucial information to make informed decisions about their care.
  3. Hospices’ inappropriate billing costs Medicare hundreds of millions of dollars that included billing for an expensive level of care when the beneficiary does not need it.
  4. A number of fraud schemes in hospice care negatively affect beneficiaries and the program with some involving enrolling beneficiaries who are not eligible for hospice care, while other schemes involve billing for services never provided.
  5. The current payment system creates incentives for hospices to minimize their services and seek beneficiaries who have uncomplicated needs with a hospice being paid for every day a beneficiary is in its care, regardless of the quantity or quality of services provided on that day.

The OIG recommended that CMS implement 15 specific actions that relate to seven areas for improvement. The OIG called upon CMS to:

  1. Strengthen the survey process-its primary tool to promote compliance-to better ensure that hospices provide beneficiaries with needed services and quality care.
  2. Seek statutory authority to establish additional remedies for hospices with poor performance.
  3. Develop and disseminate additional information on hospices, including complaint investigations, to help beneficiaries and their families and caregivers make informed choices about hospice care.
  4. Educate beneficiaries and their families and caregivers about the hospice benefit, working with its partners to make available consumer-friendly information.
  5. Promote physician involvement and accountability to ensure that beneficiaries get appropriate care.
  6. Strengthen oversight of hospices, including analyzing claims data to identify hospices that engage in practices that raise concerns.
  7. Take steps to tie payment to beneficiary care needs and quality of care to ensure that services rendered adequately serve beneficiaries’ needs, seeking statutory authority if necessary.

Meanwhile CMS announced in proposed rulemaking plans to increase payments for hospices by 1.8 percent, or $340 million, up from $180 million increase last year. CMS also included under the new Proposed rule:

  • New standards to help determine what measures hospices will no longer have to report under its meaningful measures initiative.
  • Changes to the Hospice Compare policies site to correct massive amounts of incorrect addresses, phone numbers and profit status for providers.
  • Beginning January 1, 2019, Hospices will have 4½ months after the end of each quarter to review and correct data that will be reported publicly on the website.
  • Physician assistants will be recognized as attending physicians for Medicare hospice.
  • Aggregate cap limiting overall annual hospice payment will increase by 1.8 percent to $29,205.44.


Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2017 Strategic Management Services, LLC. Published with permission.