Medicare paid $6.6 billion in non-hospice care for hospice patients

Medicare may be paying twice for some items and services provided to hospice patients, according to a Health and Human Services Department Office of Inspector General report Wednesday.

Medicare claims data shows the government paid out $6.6 billion in non-hospice claims for hospice patients between 2010 and 2019, primarily from costs associated with for-profit hospices. The findings indicate that Medicare could be double paying for these services if providers bill for non-hospice items and services that should already be covered through the hospice bundle, the OIG report said.

Medicare is the largest payer of hospice services, and Medicare spending on hospice went from $12.9 billion in 2010 to $20.9 billion in 2019, according to the Medicare Payment Advisory Commission. The number of beneficiaries using hospice also increased 39% during that time to 1.6 million, and the average length of stay in hospice rose by two days.

CMS projects that total Medicare hospice payments will continue to grow by 8.5% each year, due to the increase in Medicare enrollment, heightened awareness of hospice services and the growing preference for home- and community-based care. That's compared to a projected 7.4% annual increase for overall Medicare spending.

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Hospice services are provided under Medicare's inpatient benefit, or Part A. When beneficiaries enter hospice care, they waive coverage for services related to their terminal illness but can still get Medicare coverage for unrelated conditions. Hospices receive bundled payments to cover nursing care, physician services, home health aide services, counseling, drugs and more.

"It would be unusual and exceptional to see services provided outside of hospice for those individuals who are approaching the end of life," CMS wrote in a proposed rule for the 2019 hospice payment update.

However, OIG findings indicate this hasn't held true over the last decade.

More than $4 billion of the $6.6 billion in non-hospice payments tracked by OIG went towards outpatient, or Part B, items and services, OIG said. Part B payments for hospice patients increased by 38% during the ten years OIG studied. Part A payments for hospice patients actually decreased by 45% during that time.

Roughly 58% of non-hospice Part B claims for hospice patients included a modifier that signaled the item or service was for a condition unrelated to the patient's terminal one. But a prior OIG audit showed that even among durable medical equipment claims with the modifier, 63% still should have been covered under the hospice per diem payment. This error rate showcases the possibility for inappropriate payments for all Part B services, regardless of modifier use, OIG said.

Judi Lund Person, regulatory and compliance vice president for the National Hospice and Palliative Care Organization, believes most of these non-hospice payments arise because hospices aren't told about outside claims. She wants the Centers for Medicare and Medicaid Services to figure out a way to alert other provider types when a beneficiary elects their hospice benefit, so that if a provider tries to bill for a service, the system can flag the claim and get the hospice service involved.

"That's our biggest frustration, is that a lot of this is really taking a look at the hospice as the one responsible for all these bills going through to other providers, and that is not the case—there's no way for the hospice to know that that has happened," Person said.

Notably, 62% of the total Medicare non-hospice payments made from 2010 through 2019 were associated with for-profit hospices, OIG found. Non-hospice payments associated with for-profit hospices increased 17% since 2010.

For-profit hospices increased by 78% during the decade and now corner the majority of the hospice market, OIG noted. But Person said the figures do raise questions.

"In some ways, it might go along with the increase in providers, but it's something to also take a look at, like, how is it that the profit status really shows such a differential?" she said. "I think that's going to require more digging to figure out exactly what's happening there."

OIG referred to its prior reports that recommended CMS work with hospices to make sure they're providing drugs covered under the hospice benefit and develop a strategy to make sure Medicare doesn't pay for hospice-covered drugs. OIG said these suggestions haven't been implemented. Another earlier OIG report recommended CMS look into whether it can increase palliative items and services not related to a beneficiary's terminal condition within the hospice per diem rate. CMS hasn't implemented this idea either, according to OIG.

These recommendations, along with the new data might help CMS decide if it needs to restructure hospice payment to reduce duplicate charges, OIG said.