OIG: Medicare overpaid hospitals for hospice patients

WASHINGTON – Medicare improperly paid acute-care hospitals an estimated $190 million over five years for outpatient services provided to hospice patients, according to a new report from the Office of Inspector General. 

For 30 of 100 sample items, payments to acute-care hospitals for outpatient services provided to hospice enrollees complied with Medicare requirements. For the remaining 70 items, however, payments did not comply with the requirements. 

Specifically, the OIG found that Medicare paid acute-care hospitals for outpatient services that palliated or managed the terminal illnesses and related conditions of hospice enrollees. These services were already covered as part of the hospice per diem payments and should have been provided directly by the hospices or under arrangements between the hospices and acute-care hospitals.  

The OIG says Medicare improperly paid the acute-care hospitals because, among other causes: (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. 

The OIG recommended that CMS: (1) improve system edit processes to help reduce improper payments for outpatient services provided by acute-care hospitals to hospice enrollees; (2) educate acute-care hospitals to analyze whether outpatient services palliated or managed conditions related to enrollees’ terminal illnesses; and (3) clarify Medicare guidance to specifically mention “related conditions.”  

CMS concurred with all but the first recommendation, stating that it has concerns about the feasibility and effectiveness of the type of modifications to the system edits described in the report. After reviewing CMS’s comments, the OIG refined its first recommendation: Improving CMS’s system edit processes could help reduce improper payments going forward.