Confessions of a Hospice CEO: CMS Audits May Kill Us

Hospices are under increasing levels of regulatory scrutiny from the U.S. Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health & Human Services Inspector General’s Office (OIG), particularly in the form of audits, and many hospice leaders are expressing frustration with the associated costs and workload.

Hospice News’ Confessions interviews give hospice and palliative care professionals a space to sound off on the pressing issues that affect their businesses and patients. This piece has been condensed and edited for clarity, as well as to protect the anonymity of today’s subject.

Leading drivers of CMS audits are issues such as live discharges, utilization of the four levels of hospice care covered under the Medicare Hospice Benefit, and lengths of stay beyond six months. In addition to audits, a number of organizations have found themselves in court proceedings, accused of knowingly filing fraudulent claims.

OIG recently released a report indicating that about 20% of hospices surveyed by regulators or accreditors between 2012 and 2016 had a deficiency that posed a serious safety risk; a second OIG report detailed 12 extreme examples of those deficiencies. The reports called on CMS to step up their enforcement efforts in the hospice industry.


These reports followed another OIG report published last year outlining vulnerabilities in the Medicare hospice program, which also called for CMS to step up enforcement.

Hospice News recently spoke with one hospice CEO about the OIG reports and the rising scrutiny hospices face.

What are some of the concerns that hospice leaders have about the current regulatory environment?


Regulators consider live discharges, levels of care and lengths of stay beyond six months to be red flags that can trigger an audit, often alleging that the hospice provider knowingly submitted claims under the Medicare Hospice Benefit for someone who was not expected to die within six months.

Certainly, this may happen, but there is a widely held belief [among hospice professionals] that this position may be more about the ability to “Monday Morning Quarterback” prognosis, than any deliberate erroneous prognostication. Research validates the inability of practitioners to accurately predict death.

The Hospice Medicare Benefit statute states that only physicians are allowed to certify a patient as terminally ill and eligible for hospice. However, every day audits are conducted by nurses who are reviewing charts determining whether a patient was “terminally ill enough” to be covered by the Hospice Benefit.

Do you think there are ways for regulators to make enforcement systems more equitable?

There are some things they could do from a regulatory perspective. To me if they don’t like the benefit, redesign it. They created it. It’s also old, and it is out of touch with the changing demographics and the conditions of our patients and their needs. It needs to be redesigned but there isn’t any energy to do that.

The benefit wasn’t so much poorly designed as it has had too many loopholes that need to be filled up as the industry grew.

For example, general inpatient care [GIP] was never designed to be done in a nursing home by concept. Expanding it to nursing homes was understandable, because the level of care expected is defined by statute as being the level of care provided in a skilled nursing bed day. It’s a skilled nursing level of care, and so it made sense that it could be offered in a contracted manner with a skilled nursing facility.

The regulations are very specific in what that care would have to entail if it were delivered in a skilled nursing facility, but no one surveys to it. The states don’t survey to it. CMS doesn’t survey to it. So, we have hospices coming into these facilities and doing what I call “drive-by hospice.” They hardly ever see the patient, and they are getting paid the same amount per day as a hospice that is running its own inpatient facility. Why not pay for it at the skilled nursing rate? That will put the kabosh on a lot of inappropriate GIP billing.

And instead of the constant audits, why not have the surveyors who are already coming in review some of these questions of eligibility. Make the surveys more complete. They come in and they talk to patients; they review charts; they look at our policies. They could do the work of these auditors. They are looking at the charts; they can see whether the patient is terminally ill.

This is one of the notions that has been suggested by the OIG.

If hospices are doing a bad job, go shut them down and stop using data mining to penalize the rest of the providers. CMS knows who these providers are. They have their provider numbers. It’s not a secret. The data are there; 10% of providers are way out of line in terms of practice. This is where the focus must be, and much as the report suggests CMS needs to use the “teeth” they have to get those providers to change or close.

As a hospice leader, what was your initial response to the new OIG reports?

My first response was to email a colleague and say, “Why the heck are they picking on us?” [Incidents described in the report] were one-time occurrences repeated for effect as if they are widespread.

We have had two deficiency-free surveys in the last five years and have some of the highest quality scores. We have been subjected to capricious auditing, holding up our cash to the point of financial jeopardy, only to find years later that we should have been paid for all the claims that they have held. The costs to the organization to fight these audits have been almost equal to the cash held.

If you talk to the people who are actually doing these audits, they feel they are doing “God’s work.” Unfortunately, there is a huge gap between what appears on the surface to be a major problem and what the major problems actually are. The result of their work appears to be putting good hospices out of business while the ones that are creating the problems are making 20% to 30% margins, and their stockholders are getting wealthy.

After [decades] in hospice care, I am exhausted and depressed about the unraveled state of the social reform movement called “hospice” that I was a part of almost 40 years ago, now pared down to a “scaled” hospice industry lacking commitment to the internationally held core values and principles of hospice volunteerism, family focus, grief care and helping people live well until they die.

The current [regulatory] concerns are not unjustified. However, in many ways CMS is responsible due to the current lack of clarity of regulations related to eligibility and levels of care. I believe the benefit was genius when created, but as years have passed patient’s diagnoses changed and the motive for profit became prolific, clarity has become more paramount.

Can you say more about that? What needs to be clarified?

I believe that if CMS identified which services must be covered, and hospices were paid appropriately to provide those services, the hospice benefit would have more integrity. I think that looking at the information in terms of what the benefit pays for, and what the costs are for hospices to provide those things, could really help sustain the benefit.

CMS allows each hospice to determine which services should be covered under the hospice benefit. This is left over from 1984 when there were only about 200 hospices in America, half of them in rural areas. CMS didn’t want to put them out of business before they even got started, and so there was a lot of latitude in terms of what you could cover and not cover.

In hospice, and I say this categorically, we could say that we don’t believe in IVs for hospice patients, that we don’t believe in blood transfusions, that we don’t believe in surgery. You can’t be on hospice and have radiation. We don’t believe in emergency care, and so on. I can just choose what we are not going to pay for and then [patients and families] would have to pay for it out of pocket or revoke the hospice benefit and go back to Medicare Part A.

This happens every day in America, even with something as simple as a hospital bed. There are some hospices that have a policy that you cannot have a hospital bed unless you pay for it privately or unless you are bedridden — not considering that it’s easier to care for you in a hospital bed — and Medicare has allowed for that.

Instead of having a prescribed set of services they leave it up to the providers, and then they complain about it. I don’t have much sympathy for it because I feel like policy makers are looking in all the wrong places to do right, and that’s a frustration to me. There is an economist, Harold Miller, who stated in an address that capitation only works with altruism. I believe that is particularly pertinent to the state of affairs with hospice.

How has the increased scrutiny affected your organization in particular?

We were just notified that we were going to have another audit. After I saw the hospice deficiencies report, I noted that 95% of the hospices in our state who have been surveyed had at least one deficiency for the past five years of surveys. Our hospice has had none. I’m unclear why this hospice has the majority of challenges with audit.

It seems like they want to do the easy thing– data mine and look for aberrancies and then write the story based on data and not information. If you look at our data that they mine, it says that we have 19% of patients in hospice for more than 180 days on our [Program for Evaluating Payment Patterns Electronic Report]. CMS has arbitrarily decided that 20% is bad; so we must be doing something fraudulent; so we must be audited.

We have an average of 6 to 7 days of acute care in our hospice facility that provides intensive palliative care, staffed daily with a medical provider and a 1:4 nursing ratio. The report says that more than five days average stay is “bad” based on “average” industry experience.

[Earlier this year] we had four-months of cash reserves, and that has been reduced to 19 days because of auditing, and we haven’t done anything wrong. If the auditing continues, our only choice may be to redesign care to make it less expensive. We raise more $2 million annually from the communities we serve to meet the budget of our comprehensive hospice program. These programs transform the experience of illness and grief for thousands every year.

Placing a program in jeopardy that actually saves Medicare money seems unusual. Our region has some of the lowest Medicare overall costs in the last two years of life. It is the model of hospice practiced here that makes that happen. I truly believe that if we are driven to be more conventional– cover less, staff less, respond less in order to stay in business not only will our community suffer, but ultimately Medicare costs will escalate.

Know someone who’d want the opportunity to speak freely about the current state of hospice — or want to sit down yourself? Reach out to for consideration.