OIG investigates payments for hospice beneficiaries

WASHINGTON – Medicare improperly paid suppliers an estimated $117 million over four years for DMEPOS provided to hospice beneficiaries, according to a new report from the Office of Inspector General. 

Specifically, for 58% of the sampled DMEPOS items billed without the GW modifier (67 of 115 items) and 63% of those billed with the GW modifier (54 of 85 items), the items were provided to palliate or manage a beneficiary’s terminal illness and related conditions. The GW modifier indicates that an item is not related to the beneficiary’s terminal illness and related conditions. 

“Medicare pays the hospices for the DMEPOS items provided to the beneficiaries as part of the hospices’ per diem payments,” the OIG states. “These items should have been provided directly by the hospices or under arrangements between hospices and the suppliers.” 

The improper payments occurred, according to the OIG, because (1) the majority of the suppliers were unaware that they had provided DMEPOS items to hospice beneficiaries, (2) the system edit processes that should have prevented the improper payments were not effective or did not exist, and (3) the suppliers inappropriately used the GW modifier. 

The OIG recommends that CMS (1) improve the prepayment edit process by instructing the DME Medicare contractors to deny DMEPOS claims submitted by suppliers without the GW modifier for DMEPOS items provided to hospice beneficiaries; (2) implement a post-payment edit process; (3) direct the DME and hospice Medicare contractors, or other contractors as appropriate, to conduct pre-payment or post-payment reviews of supplier claims billed with the GW modifier; and (4) study the feasibility of including palliative items and services not related to a beneficiary's terminal illness and related conditions within the hospice per diem. 

CMS concurred with the first and third recommendations but did not concur with the second and fourth recommendations. The OIG maintains that the second recommendation is valid, but it has revised its fourth recommendation.