OIG: CMS Paid $6.6 Billion for ‘Unrelated’ Care for Hospice Patients

Medicare between 2010 and 2019 paid a total $6.6 billion to non-hospice providers for services provided to hospice beneficiaries, according to a new report from the U.S. Department of Health & Human Services Office of the Inspector General (OIG).

While hospices themselves do not bill Medicare for the non-hospice services, OIG recommended that CMS study whether hospice reimbursement reform is needed to address duplicate payments. OIG reached similar conclusions in a 2019 report about Medicare Part D claims.

The agency is repeating earlier calls for stronger oversight of potentially inappropriate “unbundling” of services, though industry stakeholders question whether those efforts should be directed as hospices.

“A factor not specifically addressed in the report is that hospices are not billing for and cannot fully control non-hospice expenditures,” Katie Wehri, director of Home Health & Hospice Regulatory Affairs for the National Association of Home Care & Hospice (NAHC), told Hospice News. “Therefore, oversight of hospices can only have limited impact.”

The majority of the $6.6 billion in non-hospice payments were made through Medicare Part B, OIG found — 65% compared to 35% for Part A. Physician/suppliers services represented the bulk of these payments, which went up close to 70% during the 10-year audit period.

Part B outpatient items and services claims rose by 52%, and durable medical equipment payments by 44%, according to OIG.

The agency examined Medicare claims data to determine these amounts, but stated that it did not independently verify the accuracy of the claims or conduct a medical review of whether services were related to the terminal diagnosis. OIG stated that the audit was done in accordance with generally accepted government standards.

Medicare Conditions of Participation (CoPs) allow health care providers to receive payments for items or services that are considered unrelated to a hospice patient’s terminal illness and related conditions.

However, the U.S. Centers for Medicare & Medicaid Services (CMS) has taken a longstanding position that virtually all the care needed by a terminally ill patient should be covered through the hospice benefit, and that payments outside the benefit should be “exceptional, unusual, and rare.”

These determinations are complex and generally rely on a judgment call from clinicians.

“Deciding what’s related or unrelated obviously comes down to the clinical judgment of the physician regarding the terminal diagnosis contributing to the decline,” said J. Cameron Muir, M.D., chief innovation officer for theNational Partnership for Hospice Innovation. “The hospice physician will know best, and the more engaged and more knowledgeable they are the better that decision will be.”

One obstacle to relying on that expertise is that oftentimes, the provider offering additional services to the patient may not be aware that the person is in hospice.

When health care organizations provide services to hospice patients, they are directed to use a GW modifier in their billing to indicate that the care is unrelated to the terminal condition, according to Judi Lund Person, vice president of regulatory and compliance for the National Hospice & Palliative Care Organization (NHPCO). 

But no triggers exist in Medicare Part B systems to alert providers that the patient has elected hospice.

“The hospice may not know when a patient goes to a physician,” Person said. “Much of the time, the [other] providers have no idea that the patient is in hospice, and so they bill Medicare like they always do for every other patient. The hospice has no idea ever that the filing of the claim has taken place. This shouldn’t be painted as a hospice problem, because it is a system problem.”

Echoing reports from prior years, OIG indicated that these payments were associated more prevalently among for-profit companies than nonprofits, accounting for about 62% of the $6.6 billion.

This reflects the for-profit sector’s rise to dominance in the hospice space. Between 2010 and 2019, the number of for-profit hospice companies rose 78%, compared to a 12% decrease in nonprofits, the OIG report stated, citing data from the Medicare Payment Advisory Commission.

But again, for-profit or nonprofit, the hospice is not the organization filing these claims.

Hospices have come under increasing regulatory scrutiny in recent years, partly due to findings of False Claims Act violations and survey deficiencies and also as part of an overall effort to control Medicare spending. 

CMS projects that its total Medicare hospice payments will rise 8.5% annually, a higher rate than the 7.5% projected for the program’s total spend. The agency attributes these increases to the higher number of patients that are electing the benefit, growth in the number of individuals becoming eligible for Medicare, and a growing preference for care in the home.

CMS as of Oct. 2020 implemented new rules pertaining to relatedness.

Hospices must provide Medicare beneficiaries with a written statement called a “Patient Notification of Hospice Non-Covered Items, Services, and Drugs” 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.

The rule gives patients and families the right to request the notice when they elect the Medicare Hospice Benefit, and hospices must provide the addendum within 72 hours of the request.

According to CMS, this higher level of transparency with patients should reduce the need for beneficiaries to seek care outside of the hospice benefit for services related to the terminal illness. Given that the rule was implemented in 2020, data are not yet available to measure the effectiveness of this approach. 

In the hospice community, providers seek a better processes to ensure all health care stakeholders understand the patient is receiving hospice care.

“To achieve greater impact, procedures for billing non-hospice items and services could be tightened,” Wehrli said. “Specifically, systems improvements are needed to ensure hospice and non-hospice providers have better access to information on patients accessing services outside of their control.”