Investigating Medicare Hospice Overpayments

As auditing activity by regulators continues to spike, hospices need to know how to conduct internal investigations to identify any potential improper payments.

Audits by Medicare Administrative Contractors (MACs) have proliferated during the past two years, including Targeted Probe and Educate (TPE) audits, as well as those by Unified Program Integrity Contractors (UPIC), Supplemental Medical Review Contractors (SMRC) and Recovery Audit Contractors (RAC).

Performing internal evaluations can help providers identify and correct potential issues before regulators come knocking. They are also useful in prevention as well as response to an ongoing audit.


One early place to look may be the organization’s hospice election statements, Andrew Brenton, attorney for Husch Blackwell said at the National Hospice and Palliative Care Organization’s Annual Leadership Conference.

“One common [claim] denial reason relates to the election statement. We are seeing the MACs really hone in on the election statement,” Brenton said. “Which is unfortunate, because if your election statement is being denied because of some inherent flaw with the form itself, well, then think how easy it is to exceed that error-rate threshold.”

The U.S. Centers for Medicare & Medicaid Services (CMS) actively works to recoup payments that it deems improper.


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 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.”

One key consideration is CMS’ 60-day rule. The agency requires providers to report and return any overpayments within 60 days of the date they were identified, due to provisions introduced in the Affordable Care Act.

However, the hospice can notify CMS that they are conducting an investigation into the matter, for which the agency can allow for up to six months.

The consequences for not returning an overpayment can be “severe,” according to Brenton.

“It can lead to what we call a reverse false claim under the federal False Claims Act. So many people think about the False Claims Act in the context of affirmatively submitting claims for fictional or medically unnecessary services,” he said. “But False Claims Act liability also can apply in the context of the rule, because knowingly retaining an overpayment or not investigating credible information of a potential overpayment can result in False Claims Act liability.” 

Brenton and co-presenter Erin Burns, also a Husch Blackwell attorney, recommended that hospices work with a lawyer during these processes, one that is well-versed in Medicare’s regulations.

Another critical point at the outset is to establish the scope of the investigation. For example, it could focus on small or infrequent issues or it could require system-wide interventions, according to Burns.

“There is nothing wrong, inherently, with refunding money to the government. In fact, it’s expected of you. People are human; people make mistakes,” Burns said at the conference. “If the government ever were to scrutinize you for the issue that led to the investigation, what they’re going to judge you on, essentially, is what you knew, when you knew that and what you did about it.”

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