OIG Report Outlines Five Recommendations for Hospice Care Reform

February 19, 2015 | By Lawrence J. Tabas

The Patient Protection and Affordable Care Act requires the Centers for Medicare and Medicaid Services (“CMS”) to reform the hospice payment system, collect data relevant to revising hospice payments and develop quality measures for hospices. In a recently released report, the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) made several findings and recommendations for CMS to consider regarding hospice reform.

Specifically, the OIG found that Medicare payments for hospice care in assisted living facilities (“ALF”) more than doubled in five years, totaling $2.1 billion in 2012. Further, the OIG found the following:

  • Hospices provided care much longer and received much higher Medicare payments for beneficiaries in ALFs than for beneficiaries in other settings;
  • Hospice beneficiaries in ALFs often had diagnoses that usually require less complex care;
  • Hospices typically provided fewer than 5 hours of visits and were paid about $1,100 per week for each beneficiary receiving routine home care in ALFs; and
  • For-profit hospices received much higher Medicare payments per beneficiary than non-profit hospices.

The OIG stated that “[t]his report raises concerns about the financial incentives created by the current payment system and the potential for hospices to target beneficiaries in ALFs because they may offer the hospices the greatest financial gain.” As a result of its findings, the OIG made five recommendations for CMS to consider as CMS works to reform hospice care. The five recommendations are as follows:

  • Reform payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays;
  • Target certain hospices for review;
  • Develop and adopt claims-based measures of quality;
  • Make hospice data publicly available for beneficiaries; and
  • Provide additional information to hospices to educate them about how they compare to their peers.

CMS agreed with all of the OIG’s recommendations and provided the following responses to them:

  • CMS is analyzing new payment models;
  • CMS supports the development of a Fraud Protection System model, which will target hospices that have a high percentage of beneficiaries who rarely receive visits, as well as considering hospices that provide high percentages of their beneficiaries at the continuous care level;
  • CMS will consider including claims-based measures as part of its measure development;
  • CMS plans to publicly report data from the Hospice Item Set as well as any future measures to be developed in the Hospice Quality Reporting Program;
  • CMS said that the development and implementation of a standardized data set for hospices must precede providing information to hospices about how they compare to their peers or for public reporting of hospice quality measures, and CMS said that hospice review and public reporting may occur during the FY 2018 Annual Payment Update Year.

Check back with the Health Law Gurus™ as we continue to follow hospice care reform.

To read a full copy of the report, click here.

About the Authors

Lawrence J. Tabas


Lawrence is the Chair for Obermayer’s Health Care Law Department and Election Law Practice Group. Lawrence’s Health Care Law legal experience includes the representation of Pennsylvania County governments in Behavioral Health Managed...

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