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Should The OIG Have Suggested Increased Oversight Of Hospice-concurrent Payments?

Should the OIG Have Suggested Increased Oversight of Hospice-concurrent Payments?

In February, the Office of the Inspector General (OIG) released a data brief calling out the Centers for Medicare and Medicaid Services (CMS) for not heading their advice. The brief bears the title: “Medicare Payments of $6.6 Billion to Nonhospice Providers Over 10 Years for Items and Services Provided to Hospice Beneficiaries Suggest the Need for Increased Oversight.” An alternative title for the same set of facts could have been, “A Mere 0.6% Increase in Medicare Payments to Nonhospice Providers Over 10 Years Does Not in Itself Suggest a Change in Oversight.” The OIG report is riddled with data descriptions that could be considered prejudicial and ultimately reaches a conclusion not supported by its own data.

Background: How Medicare Pays Hospice

Medicare pays hospice a bundled rate for all covered services, supplies, and meds a patient needs, but only for care that is related to the hospice diagnosis. This is a great advantage for patients, because Medicare also pays 100% for hospice care, saving patients a great deal in deductibles and co-pays. That bundled benefit covers all the medications, nursing, equipment, supplies, aide services, and social services a patient should need, so long as it relates to the hospice diagnosis.

How Bundled Hospice Payment Affects Other Healthcare Providers

Most Medicare-certified hospice agencies are primarily specialized home-nursing agencies with teams of nurses, aides, hospice chaplains, volunteers, social workers, and sometimes physical therapists and other therapists. Separate healthcare providers can provide other needed services. These include home medical equipment and home pharmacy. However, these other services are coordinated by the hospice agency and bill the hospice agency. The big exception here is for services not related to the hospice diagnosis. For example, Medical Coding News describes the case of a hospice patient with cervical cancer seeing her urologist for treatment of kidney stones. The kidney stones are not related to the cervical cancer, and therefore, are billable directly to Medicare.  

Medicare Says Nonhospice Services to Hospice Patients Should be Rare Despite the Fact that Such Services are Common

In the Federal Register, CMS states that “it would be unusual and exceptional to see services provided outside of hospice for those individuals who are approaching the end of life” (83 Fed. Reg. 20934, 20946 (May 8, 2018)). CMS reiterated this point in 2019, stating that its “long-standing position [is] that services unrelated to the terminal illness and related conditions should be exceptional, unusual and rare given the comprehensive nature of the services covered under the Medicare hospice benefit” (84 Fed. Reg. 38484, 38506 (Aug. 6, 2019)). All hospice-related services must be provided directly by the hospice or under arrangements with the hospice (42 CFR § 418.64 and 418.70).

However, these bold declarations contrast sharply with reality. Medicare routinely pays for services not related to the hospice diagnosis. In fact, the February OIG report finds that consistently over the past ten years, 44% of hospice patients received Medicare-covered services outside of hospice. On the other hand, all those services combined only amounted to 4% of Medicare expenditures during hospice. These millions of bills come from doctors, ambulance services, hospitals, skilled nursing facilities, and others. Are these thousands of healthcare professionals misjudging situations with the patients before them, or is Medicare repeating an outdated and overstated declaration?

Increasing Payments to Nonhospice Providers Correlates with Increase in Non-cancer Diagnoses

It was 1983 when CMS first made the statement that virtually all the covered services a patient needs should be covered by the hospice benefit [Social Security Act § 1812(d)(2)(A)]. At that time, cancer alone accounted for most hospice cases. Today, cancer patients make up a minority of the hospice census. Other diagnoses are being seen in hospice in greater numbers. The data trends reported by the OIG show that non-cancer patients tend to need more nonhospice medical care than cancer patients.

The OIG Report Uses the Term “For-profit” 39 Times

The 21-page February report from the OIG uses the term “for-profit” 39 times. Other federal agencies such as the Department of Education routinely opt for the term “proprietary” instead of “for-profit.” It is easy to see how one could find the term “for-profit” prejudicial. “For-profit” seems to imply a mercenary motive. On the other hand, “proprietary” denotes the ownership type without using language that could be confused to say what the business is for. Indeed, a thorough study of the mission statements of proprietary hospices nationwide would find them largely indistinguishable from the mission statements of non-profit hospices. Hospices, regardless of ownership, are for improving the quality of life of patients and families dealing with terminal disease in an advanced state.

Possible Prejudicial Treatment of Proprietary Hospices by the OIG

Moreover, the OIG report seems to say that proprietary hospices are more implicated in nonhospice billing than non-profit hospices. This implication calls out from subtitles and chart titles such as “Of Total Nonhospice Payments, 62 Percent Was Associated with For-Profit Hospices.” A deeper read of the report’s data shows there is no reason to phrase the titles this way. As proprietary hospices represent more than two thirds of hospice providers and the majority of hospice payments, their patients appropriately represent 62% of nonhospice payments. Would it not be more appropriate to phrase the titles as “Proprietary and Non-profit Hospice Patients Make Up Roughly Proportional Shares of Nonhospice Payments?”

What’s worse, the OIG report throws in a non-related statement about length of stay. The median stay with proprietary hospices is longer than the median stay with non-profit hospices. The OIG means to imply this is a warning sign of fraud. However, there is not one hospice expert or researcher calling for shorter hospice stays. The average hospice stay is below what experts have shown would be ideal for patients. Longer hospice stays are associated with greater symptom relief, better mental health, improved survival, lower costs for families, lower costs for Medicare by thousands per patient, and improved family satisfaction.

Nonhospice Payments Small and Declining in Real Dollars

Nonhospice payments rose from $711 billion in 2010 to $715 billion in 2019. That’s an increase of six-tenths of one percent – far below the rate of inflation. This would mean declining nonhospice payments in real dollars. The percentage of patients who need nonhospice care has remained steady at 44% for the past decade. Finally, and again, the total amount of Medicare spending on nonhospice payments adds up to only 4% of total Medicare spending during hospice.


The OIG makes an opening statement in the title of their February 2022 data brief, “Medicare payments of $6.6 billion to nonhospice providers over 10 years for items and services provided to hospice beneficiaries suggest the need for increased oversight.” In truth, this small percentage of Medicare expense for dying patients was deemed appropriately nonhospice by the doctors and hospitals billing it, was deemed appropriate by the Medicare contractors approving those bills at the time, and has declined in real dollars over the past decade. It is arguable that the $6.6 billion, ten-year sum, in fact, does not suggest a change in oversight.