Medicare Claims for Unrelated Services Put Hospices at Risk

Medicare claims for unrelated services creates serious financial and legal risks for hospice providers — even if they are not the ones who sent the bill.

During recent years, payouts for non-hospice services provided to Medicare beneficiaries have tipped into the billions. Investigators have urged regulators to ramp up oversight of potentially inappropriate billing practices. The vast majority of the time, the hospice is not the organization billing for services outside of the benefit, but these practices and the regulatory response impacts them nevertheless.

This means hospices can expect to see heightened auditing and scrutiny of what costs are deemed “unrelated” to end-of-life care, according to Judi Lund Person, vice president of regulatory and compliance for the National Hospice and Palliative Care Organization.


“We are seeing increased scrutiny of Medicare spending outside the benefit in Parts A, B, or D after a patient has elected their Medicare Hospice Benefit,” Lund Person told Hospice News in an email. “Additional scrutiny about these expenditures is on the rise, and providers should expect to see questions from the [Medicare Administrative Contractors (MACs)] and other auditors about why some items were considered to be unrelated. There will always be gray areas with relatedness based on diagnoses and treatments specific to an individual patient.”

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

Though allowed, payments outside the Medicare Hospice Benefit should be “exceptional, unusual, and rare,” according to the U.S. Centers for Medicare & Medicaid Services (CMS). CMS has taken a stance that essentially all the care needed by a terminally ill patient should be covered through the benefit.


These “unrelated” payments have been soaring. Between 2010 and 2019 Medicare paid a total of $6.6 billion to non-hospice providers for services provided to hospice beneficiaries, according to a report from the U.S. Department of Health & Human Services Office of the Inspector General (OIG).

These rising costs led to a recommendation from OIG that CMS study whether hospice reimbursement reform is needed to address duplicate payments.

MACs and other Medicare audit contractors are now being asked to take a much closer look at hospice claims details, such as the use of modifiers or codes, to determine whether the hospice may be responsible for item and services billed, Lund Person stated.

CMS is closely watching for high numbers of claims associated with inpatient/hospital, outpatient/medical and prescription drug coverage for hospice patients, as well as how these claims trend over time, Carol Javens, account manager at Acclivity Health, and Robin Stawasz, the company’s program development executive, told Hospice News in an email.

When other providers file claims after patients begin accessing the Medicare Hospice Benefit, they may be putting their hospice partners at risk for an audit and financial penalties, they stated.

“While it may be frustrating for hospices, even if the overpayment might not be the hospice’s ‘fault,’ it will still be their responsibility,” Javens and Stawasz said in the email. “Not knowing that it occurred is not an acceptable excuse to CMS.”

Red flags for regulators include claims tied to medical equipment such as wheelchairs and walkers, which may be considered related to the terminal illness but not provided by hospices, according to Lund Person. Additionally, some medications commonly used for a primary terminal diagnosis, such as congestive heart failure or chronic obstructive pulmonary disease (COPD), are sometimes reported as unrelated or are paid outside the hospice benefit after the Medicare beneficiary elects hospice, she said.

Clinical management and supply costs associated with wound care can also trigger an audit, as can behavioral health counseling services, podiatry or other ancillary services offered in facility settings, added Stawasz and Javens.

“If hospices do not have good processes in place, they can have culpability that the improper billing occurred,” said Stawasz and Javens. “For the first time, the word ‘fraud’ is being used, which can result in criminal proceedings.”

False Claims Act (FCA) cases have been on the rise in the hospice space, often involving issues related to patient eligibility for the benefit. Repercussions have been heavy for hospice providers, with some facing hefty fines, criminal charges, or prison sentences. Other individuals have been barred from practicing altogether.

Hospices should be watching for any potentially duplicated claims from other providers associated with patients on their services that could signal an overpayment, according to Stawasz and Javens.

Monitoring claims submissions for their patients across all care settings is vital for hospices, as is educating referral partners and pharmacies about appropriate service billing for hospice patients, said Lund Person. Services and items provided to patients in nursing homes are a particular area of risk for hospices, she said.

Case in point, the skilled nursing and long-term care service provider American Senior Communities recently settled an FCA case for upwards of $5.5 million. The Indiana-based provider offers hospice services to residents and was accused of billing separately for therapy services that should have been covered through the Medicare Hospice Benefit. The settlement does not constitute an admission of guilt, according to the U.S. Department of Justice.

Having hospice clinical staff review documentation can also help ensure that the “gray areas” of unrelated services and items are covered, added Lund Person.

“Clear, comprehensive hospice physician documentation with details about the decision about relatedness will be key for any medical review,” Lund Person said. “This review is one of the most important compliance steps.”

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