Regulators Eyeing Medicare Hospice Spending

As hospice utilization and associated costs continue to rise, federal regulators are looking more closely at providers and the services they provide. The U.S. Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health & Human Services Officer of the Inspector General (OIG) are zeroing in on longer lengths of stay, billing for services deemed unrelated to the terminal diagnosis and use of general inpatient care, among other concerns.

In 2019, more than 1.6 million Medicare beneficiaries elected the hospice benefit, costing CMS $20 billion, according to the Medicare Payment Advisory Commission (MEDPAC). This is up from about 548,000 and $3.5 billion in 2001. The cost of care per hospice patients rose to $12,687 in 2019 from $11,258 in 2010, MEDPAC reported.

While hospice certainly reduces health care spending in contrast to hospital or other high-acuity care, regulators are on the lookout for opportunities to cut costs. While CMS has no rules that limit the duration of services such as general inpatient care, the agency seeks to ensure that providers are applying appropriate criteria, as well as affirming patients’ eligibility for hospice.


“[Regulators] are concerned about [spending]. They want the program to be, of course, one that can sustain itself. They are looking to make sure that the spending is actually what it should be,” said Beth Noyce, hospice and home health consultant at Noyce Consulting, at the National Association for Home Care & Hospice Fall Summit. “Although they realize hospice is a less expensive benefit than perhaps spending the last days in the ICU, they still want to make sure that what we’re spending in hospice is appropriate.”

Corrective actions by CMS have reduced improper fee-for-service payments by $27.72 billion during the past seven years. The agency identified claims for hospital outpatient, skilled nursing facilities, home health and hospice as major contributing factors to improper payments during Fiscal Year 2021 — more than 38% of the total estimate. 

Improper payments of hospice claims rose to 7.77% during Fiscal Year 2020, up from 6.69% in 2020. CMS indicated that this change was not statistically significant.


The most commonly occurring issue leading to improper hospice payments is, unsurprisingly, insufficient documentation to support certification or recertification.

Submitting inadequate or incomplete required written documentation is a sure-fire way to bring surveyors or auditors to a hospice’s doorstep. As regulators increasingly fix their eyes on the hospice space, providers need to ensure their documentation is airtight.

Patients are admitted to inpatient hospice care when their symptoms are too severe to manage in the home, or when they lack sufficient caregiver support in the home. Associated documentation must clearly establish the patient’s needs, including the appropriate level of care. Inaccuracies or inconsistencies could attract the attention of regulators.

“Be sure that your documentation is clear and accurate and true, and that it focuses on the items that show the patient’s eligibility all the way through,” Noyes said. “If a patient does become ineligible, show that you’re not afraid to discharge that patient if it is appropriate, so the diagnosis trend does match what has changed that resulted in longer length of stay.”

General inpatient care is one area that regulators are watching closely.

Hospice providers nationwide are reporting an increase in Medicare Administrative Contractor (MAC) audits pertaining to claims for general inpatient care stays that are longer than seven days. These audits can be expensive and time consuming processes for hospices; some of whom say they fear that this practice will inhibit patient access to that level of care.

CMS temporarily suspended Targeted Probe and Education audit activity to reduce the burden on providers during the COVID-19 pandemic. In August 2020, MACs indicated that they would resume some medical review audits related to a limited number of topics. These topics include review of inpatient claims for inpatient hospice care (GIP) greater than or equal to seven days.

“OIG has said that it’s concerned that sometimes there’s potentially inappropriate billing for general inpatient care, that is being either billed for longer times that it should be or maybe it should have been another level of care,” Noyce said. “The documentation needs to show that the [general inpatient care] was reasonable and medically necessary. A lot of times they have denied payment at that level and said it should have been routine home care or that it actually should have been respite.”

CMS is also scrutinizing the services that patients receive outside the Medicare Hospice Benefit. Hospices often face challenges when it comes to documenting which services are directly related to a patient’s terminal diagnosis as opposed to a comorbidity. These are often complex decisions that can lend themselves to varying opinions about what the hospice benefit should cover. 

A CMS rule that took effect Oct. 1, 2020, requires hospices to provide Medicare beneficiaries with a written statement called a “Patient Notification of Hospice Non-Covered Items, Services, and Drugs” upon request, detailing the conditions, items, services or drugs that are determined to be unrelated to their terminal illness and conditions and not covered by the hospice benefit.

Patients admitted on or before the effective addendum date have the option to request the notice upon electing the Medicare Hospice Benefit. When the patient or their representative requests the addendum on the day of admission, hospices have five days after the date of election to prepare the addendum and deliver it. If the addendum is requested at any point after the date of admission, the hospice must issue the written addendum within three days, or 72 hours.

Hospices must also issue an updated addendum to patients or their representatives, regardless of request, when there are changes in what is considered to be unrelated to their course of care.

“[CMS] wants to understand how each hospice is making this decision. CMS has never taken away the requirement that the physician should document the reasons why conditions are considered unrelated to the terminal prognosis,” Noyce said. “They still want to know how we’re citing that. They also want to know how we are integrating that when we’re establishing the hospice plan of care.”

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