Last week, OIG released a report analyzing trends in the last decade relating to Medicare payments for hospice beneficiaries outside of the hospice per diem. In the report, OIG notes that CMS has taken the position that services provided to a hospice beneficiary that are unrelated to the beneficiary’s terminal illness and related conditions should be exceptional, unusual and rare. But the OIG report showed that in the last ten years, almost half of hospice beneficiaries received nonhospice benefits, totaling $6.6 billion in nonhospice payments. This report calls for increased scrutiny on nonhospice payments.

Medicare Part A provides the Medicare hospice benefit to eligible beneficiaries with the goal of helping terminally ill beneficiaries to receive palliative care. To receive hospice care, a beneficiary who has been certified as having a terminal illness with a life expectancy of less than 6 months if the illness runs its normal course must waive Medicare coverage for services related to treatment of the terminal illness and related conditions. The beneficiary retains coverage for services to treat conditions unrelated to the terminal illness. The hospice agency assumes responsibility for medical care related to the beneficiary’s terminal illness and related conditions, and is paid a set daily rate based on the level of hospice care provided.

OIG analyzed Medicare Part A hospice claims (hospice payments) and Medicare Part A and Part B claims for items and services provided outside the hospice benefit during a hospice period of care (nonhospice payments) for the years 2010-2019. The report provided the following key takeaways:

• Growth in the hospice industry: The audit revealed a 59% increase in hospice payments in the last decade. This increase may be credited to an increase in the number of hospice beneficiaries (39%), an increase in the number of hospices (38%), and an increase in the overall number of hospice claims (32%), combined with a 15% increase in the average hospice payment per beneficiary. CMS projects that total hospice payments will continue to grow at a rate of approximately 8.5% annually, outpacing the projected 7.4% increase for overall Medicare spending.

• Breakdown of nonhospice spending: Over the last decade, 65% of nonhospice spending was on Part B payments. Over the course of the decade, Part A spending declined by 45%, while Part B spending increased by 38%. The largest increase in Part B spending is attributable to physician, supplier and other miscellaneous Part B payments.

• Total spending: Overall, in the last decade, CMS paid $6.6 billion in nonhospice payments. These payments were made for 44% of hospice beneficiaries, leaving 56% of beneficiaries who only received hospice benefits during their hospice-care period.

• Unbundling: OIG suggests that the high volume of nonhospice payments may represent inappropriate unbundling, wherein providers separately billed other parts of Medicare for items and services that were already paid for under the hospice per diem.

• Ongoing concern regarding for-profit hospices: The OIG report expresses OIG’s continued skepticism of for-profit hospices. Over the last decade, the number of for-profit hospices increased 78%, while the number of nonprofit hospices decreased by 12%. In a prior OIG audit, OIG took the position that for-profit hospices were more likely than other hospices to bill inappropriately for inpatient care, and the median patient stay in for profit hospices exceeded that of non-profit hospice stays. Similarly, OIG concluded that nonhospice payments associated with for-profit hospices exceed those of non-profit hospices both in volume and growth.

The report did not offer specific recommendations, but rather referred back to and reinforced the recommendations of three prior OIG reports. The prior reports made several recommendations to CMS to establish oversight and scrutiny of Medicare nonhospice payments, including: (1) working with hospices to ensure they are providing drugs covered under the hospice benefit; (2) developing a strategy to endure that Medicare Part D does not pay for drugs that should be covered by the Part A hospice benefit; and (3) studying the feasibility of including palliative items and services not related to a beneficiary’s terminal illness and related conditions within the hospice per diem. The report is available here.