OIG Audit: Hospitals Overpaid for Care of Hospice Patients

The Office of the Inspector General (OIG) details the findings of its examination of Medicare payment to acute-care hospitals for outpatient services provided to hospice enrollees for these services from calendar years 2017 through 2021 in a new report. "Our objective," writes the OIG, "was to determine whether Medicare payments to acute-care hospitals for outpatient services provided to hospice enrollees complied with Medicare requirements."

OIG sampled 100 items for outpatient services provided to hospice patients and found 70 items did not comply with requirements for payment. Specifically, Medicare paid acute-care hospitals for outpatient services that palliated or managed hospice enrollees' terminal illnesses and related conditions. For 30 of 100 sample items, payments to acute-care hospitals for outpatient services provided to hospice enrollees complied with Medicare requirements.

The audit covers $283.7 billion in Part B payments to acute-care hospitals for 1.3 million outpatient services billed with the condition code 07, which refers to the service not being related to a hospice patient's terminal condition.

OIG cited the reason for the $190.1 million in overpayments as: (1) the prepayment edit process was not properly designed; (2) most acute-care hospitals reviewed only whether outpatient services palliated or managed terminal illnesses, not related conditions; (3) Medicare guidance lacks details; and (4) Medicare contractors did not conduct prepayment or postpayment reviews.

OIG further noted that hospice enrollees themselves could have saved $43.6 million in deductibles and coinsurance which was incorrectly collected. OIG made six recommendations to CMS which in turn CMS agreed to except for improving the system edit process. This report is the latest in OIG's review of spending outside the hospice benefit.

LeadingAge has continued to advocate for solutions regarding payments outside the benefit, including in our response to the Hospice CARES Act draft legislation, while reminding Congress and CMS that much of this spend is outside the control of hospices.