Medicare Making Fewer Improper Payments to Hospices

Medicare fee-for-service programs made $31.23 billion in improper payments during 2023, though a smaller proportion of those dollars went to hospices than in years prior.

Hospices received nearly 5.4% of improper payments from Medicare in 2023, down from 12% in 2022, according to a new report from the U.S. Department of Health & Human Services (HHS). The leading cause of these payments were inaccurate or incomplete documentation.

“Improper payments occur when a payment is made in an incorrect amount under statutory or other legally applicable requirements,” HHS indicated in the report. “For some payments, agencies may be unable to determine a payment is proper or improper due to missing or insufficient documentation; in that case, the payment is deemed to be ‘unknown.’ In cases where documentation is missing or insufficient, payments may be labeled as ‘unknown’ since their propriety cannot be determined.”


Only a small portion of improper hospice patients were related to questions of medical necessity, though that issue has become the subject of much attention from regulators. HHS’ Office of the Inspector General (OIG), for instance, is currently conducting a national audit of hospice eligibility determinations. 

In addition, many providers routinely undergo audits to assess the medical necessity of hospice care or certain levels of care, such as General Inpatient.

Outside of hospice, improper documentation continues to be the leading cause of improper fee-for-service payments throughout the care continuum, with inpatient rehabilitation facilities being the outlier. For those facilities, medically necessity issues were the leading cause.


HHS uses a number of mechanisms to determine which payments are improper, including automated edit and predictive analytics systems designed to detect errors, a range of provider audit types and other fraud prevention methodologies.

All told, these efforts reduced improper payments by $28 billion between 2022 and 2023.

Despite the reductions, HHS continues to see hospice as a high-priority area for reducing improper payments.

“Improper payments for SNF, hospital outpatient, IRF and hospice claims were major contributing factors to the Medicare FFS estimate, comprising 38.19% of the overall estimate,” HHS indicated in the report.

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