Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
Medicare  Hospice  Beneficiaries: 
Services  and  Eligibility 
JUNE GIBBS BROWN 
Inspector  General 
APRIL  1998 
OEI-04-93-00270  OFFICE  OF INSPECTOR  GENERAL 
The mission of the Office of Inspector  General (OIG),  as mandated by Public Law  95-452,  is to 
protect  the integrity  of the Department  of Health  and Human  Services programs  as well  as the 
health and welfare  of beneficiaries  served by them.  This statutory  mission is carried out through  a 
nationwide  program  of audits, investigations,  inspections,  sanctions, and fraud alerts.  The 
Inspector  General informs the Secretary of program  and management problems and recommends 
legislative,  regulatory,  and operational  approaches to correct  them. 
Office  of Evaluation  and Inspections 
The Office of Evaluation  and Inspections  (OEI)  is one of several components  of the Office of 
Inspector  General.  It conducts  short-term  management and program  evaluations (called 
inspections)  that focus on issues of concern to the Department,  the Congress, and the public.  The 
inspection  reports  provide  findings  and recommendations  on the efficiency,  vulnerability,  and 
effectiveness of departmental  programs. 
OEIs Atlanta  Regional  Office  prepared this report  under the direction  of Jesse J. Flowers, 
Regional  Inspector  General, and Christopher  Koehler,  Deputy  Regional  Inspector  General. 
Principal  OEI  staff included: 
REGION  HEADQUARTERS 
Betty  Apt,  Project Leader 
 Stuart Wright,  Program Specialist 
Jackie Watkins,  Program Analyst 
 Brian Ritchie,  Technical Support 
Joe Townsel,  Program Analyst 
 Barbara Tedesco, Statistician 
Paula Bowker,  Program Analyst 

Greg Jones, Program Analyst 

Jason Stanfield, Program Analyst 

To obtain copies of this report, pleasecall the Atlanta Regional Office at (404) 562-7743. 
Reports  are also available on the World  Wide Web at our home page address: 
http :llwww.  dhhs.gov/progorgloei  EXECUTIVE  SUMMARY 
PURPOSE 
To describe services for and eligibility  status of Medicare  hospice beneficiaries. 
BACKGROUND 
Hospice  is an approach to caring for a person who  is diagnosed as terminally  ill. Hospice  services 
are intended to provide  comfort  and relief from pain, as opposed to curative care.  To elect 
hospice care under Medicare,  a beneficiary  must be eligible for Part A Medicare.  Beneficiaries 
must also be certified  by a physician as being terminally  ill, with  a life expectancy of 6 months or 
less if an illness runs its normal course. 
Medicare  payments for hospice care are based on a capitated amount per day.  In  1994, Medicare 
hospice payments to  1,445 hospice agencies totaled  over $1.3 billion.  In 1995, 1,726 Medicare-
certified  hospice agencies received $1.8 billion--a  38 percent increase in funding  and a 19 percent 
increase in agencies.  Prior  Office of Inspector  General (OIG)  studies indicated  that some hospice 
agencies may be enrolling  beneficiaries who  do not meet Medicares  eligibility  requirements  at the 
time they are enrolled  in hospice. 
FINDINGS 
Hospice  agencies seemed to plan for  and provide  appropriate  services 
The hospice agencies that treated the beneficiaries we sampled had developed formal plans of care 
for 96 percent of the beneficiaries  and 93 percent of beneficiary  families.  In 99 percent of the 
patient records  examined by our medical reviewer,  the documentation  showed that beneficiaries 
and their families received services as indicated by the plans of care.  Hospice  services for both the 
patient and their family were provided  continuously,  allowing  agency personnel to remain close to 
a beneficiary  and the family on a regular basis throughout  the entire course of treatment. 
A significant  portion  of hospice patients  in nursing  homes were ineligible 
We found  a significant  association between living in a nursing home and being ineligible  for the 
hospice benefit.  Twenty-nine  percent of sampled hospice beneficiaries in nursing homes were 
ineligible.  However,  only 2 percent of beneficiaries not residing in nursing homes were ineligible. 
Overall, 7 percent of beneficiaries  in our sample were ineligible  for hospice care, and 81 percent 
were eligible.  We could not determine eligibility  for  12 percent of the beneficiaries. 
i  CONCLUSION 
Overall, the Medicare  hospice program  seems to be working  as intended.  However,  recent OIG 
work  indicated  problems regarding  eligibility  of beneficiaries in specific hospices and raised 
questions more generally  about hospice provided  to nursing home beneficiaries.  This study adds 
to our concern about the Medicare  hospice program  in the nursing home setting.  We have no 
further  recommendations  to make at this time, but refer the reader to our other reports,  which  are 
mentioned  in the background  section. 
AGENCY  COMMENTS 
The HCFA  Administrator  reviewed  our draft report,  and agreed that problems  exist with  the 
hospice benefit provided  to beneficiaries in nursing homes.  She stated that HCFA  staff  are 
currently  studying  the issues involved  and working  to identify  appropriate  ways to correct  the 
problems. 
The President of the National  Hospice  Association  (NHO)  and the Executive  Director  of the 
Hospice  Association  of America  (HAA)  also commented on our draft report.  Both  agreed with 
our finding  that, overall, the program  seemed to be working  well,  but some problems  exist with 
hospice care in nursing home settings. 
The NH0  President expressed concern about the studys  description  of patients as being ineligible 
when our reviewers  and the patients  attending  physician differed in their medical opinions  about 
prognosis  of death.  He was also concerned that, as a result of continuing  OIG  scrutiny,  hospice 
services may be underutilized,  and hospices may not be enrolling  eligible beneficiaries.  While we 
recognize the difficulty  of making prognosis  of death, we believe that, overall, our study correctly 
describes both the general success of hospices in service delivery and the program  vuneralability  in 
the nursing home area.  We certainly  do not condone depriving  any beneficiary  of services to 
which  they are entitled. 
The HAA  Executive  Director  requested that we compare the findings  of this report  to previous 
OIG audits.  Previous  OIG  audits focused on specific providers.  Such results cannot be used to 
make national  projections,  and hence cannot be compared to those of our nationally 
representative  sample.  However,  all previous  OIG work  has noted special problems with  hospice 
care in nursing homes. 
ii    TABLE  OF  CONTENTS 

PAGE 
EXECUTIVE  SUMMARY 
INTRODUCTION  . . . . . . . . .  . . . . . . . . . .  .....................................  1 

FINDINGS  . . . . . . . . . . . . . . .  .....................................  4 

l  Services Seemed Appropriate  . . . . . . . . . .  .....................................  4 

Plans of Care Were Made  . . . . . . . .  .  .....................................  4 

Services Were Consistent  with  Plans of Care  .................................  4 

Services Were Continuous  ..............................................  .4 

@Ineligible Beneficiaries  Likely  to Reside in Nursing  Homes  ..........................  4 

CONCLUSION..  ...........................................................  . 
AGENCYCOMMENTS  ...................................................  ...8 

APPENDICES 
Variances,  Confidence  Intervals,  and 

Chi-squarevalues  ................................................  ..A- 1 

Unweighted  Numbers  .................................................  B- 1 

AgencyComments  .................................................  ..C- 1 
 INTRODUCTION 

PURPOSE 
To describe services for and eligibility  status of Medicare  hospice beneficiaries. 
BACKGROUND 
Hospice  Care 
Hospice  is an approach to caring for a person who  is diagnosed as terminally  ill. Hospice  services 
are intended to provide  comfort  and relief from pain, as opposed to curative care.  Services are 
usually rendered in a beneficiarys home. 
To elect hospice care under Medicare,  a beneficiary  must be eligible for Part A Medicare. 
Beneficiaries  must also be certified  by a physician as being terminally  ill, and have a life 
expectancy of 6 months or less should a disease runs its normal course.  A Medicare  hospice 
beneficiary  waives the right to receive curative treatment  for their terminal  illness, and elects to 
receive palliative  care.  A beneficiary  selects a Medicare-approved  hospice agency to provide 
medical care and social services.  The beneficiary  signs a statement choosing  hospice benefits in 
lieu of fee-for-service  Medicare  benefits.  Medicare  payments for hospice care is based on a 
capitated  amount per day. 
Services provided  by hospice agencies include (1) physician services, (2) nursing  care, (3) medical 
appliances, (4) medical supplies, (5) drugs for symptom management and pain relief, (6) short-
term inpatient  care, (7) home health aide and homemaker  services, (8) physical and occupational 
therapy  (9) speech pathology  services, (10) medical social services, (11) counseling,  (12) 
bereavement services, and (13) volunteer  services.  Interdisciplinary  teams at hospice agencies 
plan and monitor  beneficiary  plans of care.  That team typically  includes a physician, nurse, home 
health aide, social worker,  and a pastoral counselor. 
In 1994, Medicare  hospice payments to  1,445 hospice agencies totaled  about $1.3 billion.  In 
1995, 1,726 Medicare-certified  hospice agencies received $1.8 billion--a  38 percent increase in 
funding  and 19 percent increase in agencies. 
Hospice  Benefit  Periods,  Revocation,  and Resumption 
Hospice  eligibility  is divided into benefit periods.  The first two  benefit periods are go-days each. 
Effective  with  the Medicare  Hospice  Benefit  Amendments  of 1997, signed into law on August  5, 
1997, the first two  benefit periods are followed  by an unlimited  number of 60-day periods.  After 
each benefit period,  a hospice physician assessesa beneficiarys condition  to determine if hospice 
care is still appropriate. 
1 
 Beneficiaries  can revoke their hospice benefits at any time, and return to curative treatment.  A 
hospice agency may discharge a beneficiary  if they determine that a beneficiarys condition  has 
stabilized or improved,  and the eligibility  criteria  are no longer met. 
Beneficiaries  who  leave hospice care, by their decision or an agencys decision, and later wish to 
return to hospice care are admitted into the benefit period  following  the one they were in at 
revocation  or discharge.  For example, beneficiaries who  leave in the second benefit period  are 
admitted  into the third  period  if they return to hospice care. 
Prior  Office  of Inspector  General  Work 
In 1994, the Office of Inspector  General (OIG)  examined medical records of hospice beneficiaries 
in Puerto  Rico to determine eligibility  for hospice.  We found  significantly  high eligibility  errors. 
Based on this, the audit effort was expanded to in-depth  audits of 12 selected large hospice 
providers  in the Continental  United  States who  had higher than average numbers of long-term 
patients.  The audits found  high ineligibility  rates among the long-term  patients.  A 
disproportionate  number of these ineligible  patients resided in nursing homes.  Findings  of those 
audits are contained  in a summary report  (A-05-96-00023). 
In conjunction  with  those targeted  hospice reviews, additional  OIG  studies have been conducted 
in an effort to obtain national  data concerning  the hospice benefit.  One such study examined 
eligibility,  services, and growth  in the number of hospice patients living in nursing homes (OEI-
05-95-00250).  Another  report  examines contractual  relationships  between hospices and nursing 
homes (OEI-05-95-0025  1).  Both  studies revealed problems related to hospice care in nursing 
homes. 
METHODOLOGY 
Medical  Review 
We contracted  with  a medical consulting  agency with  hospice experience to review  medical 
records of 236 beneficiaries who  were enrolled in hospice on June 14, 1996. 
First, we used a stratified  cluster sample to select 36 hospice agencies.  We identified  hospices 
that were Medicare-certified  before July 1, 1995.  We eliminated hospices from our universe 
where there was continuing  OIG work.  In selecting the 36 hospice agencies, we used six strata. 
One stratum was created for each of the five Operation  Restore Trust  States.  The sixth stratum 
contained  all of the remaining  States.  From each stratum, we selected six hospice agencies. 
In 1995 and 1996, ajoint initiative  referred to as Operation RestoreTrust (ORT) was conductedbetweenOIG, 
the Health Care Financing Administration (HCFA) and the Administration on Aging.  Among its objectives, 
Project ORT sought to identify vulnerabilities in the Medicare program and develop solutions that would reduce 
Medicaresexposureto fraud, abuseand waste. Project ORT targetedlive States(California, Florida, Illinois,  New 
York and Texas) that account for approximately 40 percent of Medicare expenditures and beneficiaries. ORT 
projectsfocusedon home health care, nursing home care, durable medical equipment and hospice care. 
2 
 We asked each of the 36 agencies in our sample for their enrollment  roster for June 14, 1996, 
which  was a date approximately  2 weeks prior  to our request.  From those rosters, we randomly 
selected the names of up to seven beneficiaries per agency.  Some agencies did not have seven 
beneficiaries  enrolled  on the specified day.  In such instances, we selected all beneficiaries 
enrolled.  Cumulatively,  we selected and collected  copies of medical records for 243 selected 
beneficiaries.  All  agencies responded to our request.  However,  one agency sent their  seven 
records too late to be reviewed  by our medical contractor.  Thus, our contractor  reviewed  a total 
of 236 records. 
The contractors  registered  nurses reviewed  the 236 records for evidence of the existence of plans 
of care, of services provided  to beneficiaries  and their families, continuity  of care, and for 
eligibility  and appropriateness  of services.  The nurses referred  102 of the 236 records for the 
contractors  physician to review.  Those were for beneficiaries that were either in nursing homes 
or the reviewing  nurses had questions about their eligibility. 
The physicians examined the services provided,  comparing  them to the plans of care, and 
reviewed  the medical information  to determine if patients were eligible for hospice benefits.  To 
determine eligibility  for patients with  non-cancer  diseases, our contractor  used guidelines 
developed by the National  Hospice  Organization.  The guidelines  are to help hospice agencies 
determine if a non-cancer  illness has progressed to within  6 months of death. 
We sent the medical records of beneficiaries that the contractor  determined  ineligible  to Regional 
Home Health  Intermediaries  @HI-I&)  for a second medical opinion  on hospice eligibility.  RHHIs 
process Medicare  claims for hospice.  In this report,  we counted  as ineligible  only those cases 
where the RHHI  agreed with  the medical contractors  decision that the patient was ineligible. 
All  percentages in the report  were properly  weighted  according  to each hospice agencys 
proportion  to the universe.  Appendix  A shows the variance, confidence  intervals, and &i-square 
values.  Appendix  B shows the unweighted  numbers of beneficiaries. 
Site Visits 
We conducted  site visits at 13 of the 36 randomly  selected hospice agencies.  The agencies were 
chosen because of their location  and ownership.  We selected agencies in close proximity  to 
facilitate  visiting  as many as possible.  We also selected a sample of both for-profit  and not-for-
profit  agencies.  We visited agencies in each of the five ORT  States. 
During  the site visits, we used a standardized  questionnaire.  We interviewed  hospice directors 
and other staff about operating  practices, staffing, referral  sources, and marketing  strategies. 
We conducted  this inspection  in accordance with  the Quality Stanahds for Inspections issued by 
the Presidents Council  on Integrity  and Efficiency. 
3 
 FINDINGS 

HOSPICE  AGENCIES  SEEMED  TO  PLAN  FOR  AND  PROVIDE  APPROPRIATE 
SERVICES 
Hospices  Made  Plans  of Care for  Both  Beneficiaries  and Families 
Our medical contractor  found formal plans of care developed by the hospices for 96 percent of 
the beneficiaries  and 93 percent of the families. 
Typically,  when a patient enrolls in hospice, the hospice agency assigns a team of individuals  to 
provide  care required  by the terminal  condition.  After  a preliminary  examination  of a patient by a 
nurse, all members of the team meet to outline  a plan of care to specifically  meet the physical, 
emotional,  spiritual,  and other needs that a patient or family may require. 
Services Provided  Were Consistent  with  Plans  of Care 
In 99 percent of the patient records reviewed  by the contractors  physician, there was 
documentation  that showed beneficiaries  and their families received services as indicated by the 
plans of care.  The medical contractors  review  also showed that in 92 percent of all the sample 
cases, there was documentation  of a periodic  re-evaluation  of the patients plan of care by hospice 
agencies multidisciplinary  teams.  In 6 1 percent of those cases, beneficiary  needs did change.  In 
every case except one, the hospice team responded appropriately  to the change.  The medical 
reviewers  were unable to determine from the other record  if the hospice team responded 
appropriately  to the change. 
Most  Services  Were Provided  on a Continuing  Basis 
Hospice  regulations  require that care to beneficiaries and their families be continuous,  or 
uninterrupted.  This requirement  recognizes the need for agency personnel to remain close to a 
beneficiary  and the family on a regular basis throughout  the entire course of treatment.  The 
medical contractors  review  found that hospice agencies provided  most services on a continuing 
basis.  However,  some beneficiaries  do not want  all services offered by the hospice agency.  For 
example, a beneficiary  who  has his own minister may decline spiritual  counseling. 
A SIGNIFICANT  PORTION  OF HOSPICE  PATIENTS  IN  NURSING  HOMES  WERE 
INELIGIBLE  FOR  THE  MEDICARE  HOSPICE  BENEFIT 
We found  a significant  association between living in a nursing home and being ineligible  for the 
hospice benefit.2  Of the 19 beneficiaries found to be ineligible,  10 resided in nursing homes.  Of 
all sampled beneficiaries  in nursing homes, 29 percent were ineligible.  However,  only 2 percent of 
Appendix A contains details about statistical testsused. 
4  beneficiaries not in nursing homes were ineligible.  The chi-square test shows this difference to be 
statistically  significant.  (See appendix A for the confidence intervals.) 
Another  OIG report  (OEI-05-95-000250)  discusses in more detail eligibility,  services, and growth 
in the number of hospice patients living in nursing homes.  In that study, we found the eligibility 
error rate for hospice patients in nursing homes to be 19 percent.  The confidence  intervals of that 
estimate overlap those of this study, thus confirming  a substantial error rate for those patients. 
Our medical contractors  physician reviewed  records of all 39 beneficiaries in our sample who 
were living in nursing homes.  Table 1 shows the primary  diagnosis of each of the 10 ineligible 
beneficiaries  living in a nursing home. 
Table  1 
INELIGIBLE  BENEFICIARIES  IN  NURSING  HOMES 
Patient  Primary  Diagnosis 
1 	 Pagets Disease 
(Chronic  Inflammation  of Bones) 
2  Senile Dementia 
1 
3  Prostate Cancer 
4  Lung  Cancer 
5  Lung  Cancer 
6  Anemia. Dementia 
7  Congestive Heart Failure 
8  Heart Disease 
9  Alzheimer 
10  Cognitive  Dementia 
Patient records  showed that, overall, 7 percent of beneficiaries were ineligible.  Based on 2 
different  medical reviews,  19 patients, or 7 percent of the beneficiaries in our sample, were 
ineligible.  Our medical contractor  found that 8 1 percent of the beneficiaries were eligible, i.e. had 
terminal  illnesses, and it was reasonable to expect they would  die within  6 months.  Eligibility  for 
the remaining  12 percent of the beneficiaries  could not be determined because beneficiary  records 
did not have sufficient  documentation  to determine eligibility. 
5 
 Directors  of the hospices we visited said their patients are referred to them by hospitals, 
physicians, and beneficiary  family members.  None  of the hospices had sales staff, and the hospice 
directors  told us they do not solicit patients.  To advertise their services, they have booths  at 
health fairs, and they visit or write  hospitals and physicians--primarily  oncologists. 
6 
 CONCLUSION 
Overall, the Medicare  hospice program  seems to be working  as intended.  However,  recent OIG 
work  indicated  problems regarding  eligibility  of beneficiaries in specific hospices and raised 
questions more generally  about hospice provided  to nursing home beneficiaries.  This study adds 
to our concern about the Medicare  hospice program  in the nursing home setting.  We have no 
further  recommendations  to make at this time, but refer the reader to our other reports,  which  are 
mentioned  in the background  section. 
7 
 AGENCY  COMMENTS 
The HCFA  Administrator  reviewed  our draft report,  and agreed that problems exist with  the 
hospice benefit provided  to beneficiaries in nursing homes.  She stated that HCFA  staff  are 
currently  studying  the issues involved  and working  to identify  appropriate  ways to correct  the 
problems. 
The President of the National  Hospice  Association  (NHO)  and the Executive  Director  of the 
Hospice  Association  of America  (HAA)  also commented on our draft report.  Both  agreed with 
our finding  that, overall, the program  seemed to be working  well,  but some problems exist with 
hospice care in nursing home settings. 
The NH0  President expressed concern about the studys description  of patients as being ineligible 
when our reviewers  and the patients  attending  physician differed  in their medical opinions  about 
prognosis  of death.  He was also concerned that, as a result of continuing  OIG  scrutiny,  hospice 
services may be underutilized,  and hospices may not be enrolling  eligible beneficiaries. While we 
recognize the difftculty  of making prognosis  of death, we believe that, overall,  our study correctly 
describes both the general success of hospices in service delivery and the program  vuneralability  in 
the nursing home area.  We certainly  do not condone depriving  any beneficiary  of services to 
which  they are entitled. 
The HAA  Executive  Director  requested that we compare the findings  of this report  to previous 
OIG audits.  Previous  OIG  audits focused on specific providers.  Such results cannot be used to 
make national  projections,  and hence cannot be compared to those of our nationally 
representative  sample.  However,  all previous  OIG work  has noted special problems with  hospice 
care in nursing homes. 
We have made the technical  changes suggested by HCFA,  NHO,  and HAA.  The full text of their 
comments can be found  in appendix C. 
8 
 APPENDIX  A 

VARIANCE,  CONFIDENCE  INTERVALS 

AND  CHI-SQUARE  VALUES 

A-l  VARIANCE  AND  CONFIDENCE  INTERVALS 
The tables below  contain  estimates, corresponding  standard error,  and 90 percent confidence 
intervals for the findings  section of this report. 
Hospices  Made  Plans  of Care for  Both  Beneficiaries  and Families 
Standard  Boundaries  for  90% 
&scription  Estimate  Error  Confidence,  jcnterv@s 
Formal Plans of Care developed for  3.24  I  +I- 5.32% 
* 
Formal Plans of Care developed for  +I- 5.20% 
ServicesProvided WereConsistent With Plans of Care 
Description  Estimate 
I 
Beneficiaries  received services as  98.72% 
indicated  in plan of care  I 
Documentation  of periodic  re- 92.09%  ~  +I- 4.56% 
evaluation  of nlan of care  I 
Beneficiary  needs changed during  61.25%  4.99  +/- 8.21% 
hosnice care  I 
A-2 
 Most  Services Were Provided  on a Continuing  Basis 
0 Patients-
Description  Estimate  Standard  Error  Boundaries  for  9@% Confidence  Intervals 
Yes  No  UTD  Yes  No  UTD*  Yes  No  UTD 
Nursing 
 94.87%  4.17%  .96%  3.02  3.29  1.04  +I- 4.97%  +/- 5.41%  +/- 1.71% 
Aide 
 84.29%  6.99%  8.73%  8.39  4.48  4.40  +/- 13.80%  +I- 7.37%  +I- 7.24% 
Social Work 
 92.34%  5.69%  1.97%  2.91  3.30  1.33  +I- 4.79%  +-I-5.43%  -+-I-2.19% 
Spiritual 
 83.27%  7.11%  9.62%  5.88  3.23  3.31  +I- 9.67%  +/- 5.3 1  +-I-5.44% 
Grief  Counseling 
 70.44%  10.82%  18.74%  3.27  5.54  5.45  +I- 5.38%  +/- 9.11%  +I- 8.97% 
To Families-
Description  Estimate  Standard  Error  Boundaries  for  90%  Confidence  Intervals 
Yes  No  UTD  Yes  No  VP  Yes  NO  UTD 
Nursing 
 92.73%  4.88%  2.39%  2.78  3.22  1.53  +/- 4.57%  +I- 5.30%  +I- 2.52% 
Aide 
 82.01%  8.78%  9.21%  8.29  4.57  4.40  +I- 13.64%  +I- 7.52%  +I- 7.24% 
Social Work 
 91.84%  5.99%  2.17%  2.86  3.31  1.40  +/- 4.70%  +I- 5.44%  +I- 2.30% 
Spiritual 
 83.29%  7.61%  9.09%  5.78  3.12  3.25  +/- 9.5 1%  +I- 5.13%  +I- 5.35% 
Grief Counseling 
 75.76%  9.03%  15.22%  4.35  5.24  4.88  +/- 7.16%  +I- 8.62%  +I-8.03% 
*Unable to Determine 
A-3 
 Ineligibles  Likely  to Reside in Nursing  Homes 
DescriDtion 
 Estimate  Standard  Boundaries  for  90% 
Error  Confidence  Interval 
Eligible 
 80.89%  4.92  +/- 8.09% 
Ineligible  - Overall 
 7.21%  3.81  +I- 6.27% 
- In Nursing  Home  29.3 1%  9.93  +I- 16.33% 
- Not  in Nursing  Home  2.01%  1.30  +/- 2.14% 
Could  Not  Be Determined  12.10%  2.47  +I- 4.06% 
A-4  CHI-SQUARE  VALUES 
We computed  &i-square  values to determine if there was a significant  association between living 
in a nursing home and being ineligible  for the hospice benefit.  The &i-square  values in the table 
below  show that the association between living in a nursing home and ineligibility  was significant 
at the 92 percent confidence  level. 
ConfidenceLevel  Degrees of Freedom  Chi-Square 
I 
92%  2  5.42 
A-5 
 APPENDIX  B 
UNWEIGHTED  NUMBERS  AND  WEIGHTED  PERCENTAGES 
Numbers  and percentages are based on number of responses to each question. 
Description  Number  of  Weighted  Percent 
Beneficiaries 
-----------------------------------------  ------------------------------------------------------------------------- 
Formal Plans of Care 
Beneficiary: 
Yes  233  96.51 
No  2  4.39 
Unable to Determine  0 
Family: 
Yes  223  93.46 
No  5  5.50 
Unable to Determine  2  1.03 
Services Documented  in Record3 
Yes  99  98.72 
No  1  .31 
Unable to Determine  2  .97 
Periodic  Review  Documented 
Yes  215  92.09 
No  11  7.02 
Unable to Determine  3  .89 
Change in Patients Needs 
Yes  137  61.25 
No  91  37.34 
Unable to Determine  5  1.41 
This  question was only askedabout casesthat went to the contractorsphysician 
B-l  Description  Number  of  Weighted  Percent 
Beneficiaries 
----------------------------------------- 
____________________----------------------------------------------------

Overall Eligibility  of Beneficiaries 

Eligible 
 196  80.69 
Ineligible 
 19  7.21 
Unable to Determine 
 21  12.10 
Beneficiaries  in Nursing; Homes 

Eligible 
 23  45.21 
Ineligible 
 10  29.3 1 
Unable to Determine 
 6  25.48 
Beneficiaries  Not  in Nursing; Homes 

Eligible 
 169  86.65 
Ineligible 
 9  2.01 
Unable to Determine 
 19  11.33 
B-2  APPENDIX  C 

AGENCY  COMMENTS 
.  HCFA 

b  National  Hospice Organization 

b  Hospice Association  of America 

C-l  DEPARTMENT  OF HEALTH  &  HUMAN  SERVICES  Health  Care  Financing  Administration 
The  Administrator 
Washington,  D.C.  20201 
EN3 
MAR231998  Et! 
DIG-AS 

DATE:  ZE

DIG-EC 

DIG-Q 
DIG-01 

TO: 	 June Gibbs Brown  DIG-MI 

AIG-LC 

Inspector General 
OGC2Id 

Ikccscc 

Dltcsull 
FROM:  Administrator 
_. 
Health Care Financing Administration 	 .  G 
-- 
_. 
Cl 
SUBJECT:  Office of Inspector General (OIG) Draft Report, Medicare Hospice - 
Beneficiaries: Servicesand Eligibility,  (OEI-O4-93-00270) 
We reviewed the subject draft report on servicesand eligibility  of Medicare hospice 
beneficiaries.  We recognize the problems with the Medicare hospicebenefit provided to 
beneficiaries in nursing homesdiscussedin this and severalother OIG reports. The 
Health Care Financing Administration (HCFA) is currently studying the issuesinvolved 
and we are working to identify the most appropriate way to addresstheseconcerns. 
We would like to take this opportunity to provide severaltechnical comments: 
In your report, you statethat 29 percent of all hospicebeneficiaries in nursing 
homes were in fact ineligible for the benefit.  Basedon the discussionon page 6, it 
seemsyou found 29 percent of those hospice beneficiariesin nursing homes 
included in the study to be ineligible, as opposedto 29 percentof the entire 
Medicare hospice population residing in nursing homes. If this is the case,it is not 
clear in the Executive Summary. We would askthat you provide clarification  of 
this statistic in the Executive Summary. 
Current Federal regulations at 42 CFR 418.3 define terminally ill as meaning that 
the individual has a medical prognosis that his or her life expectancyis 6 months 
or less should the illness run its normal course. Pleasemakethis clarification  in 
the secondparagraphunder the section entitled, Hospice Care on page 1. 
page 1 of the report lists a minister astypically being a memberof the 
Also, 
interdisciplinary  team. We note that other types of counselorscan participate in 
the interdisciplinary  team. Federalregulations, at 42 CFR 4 18.68,require that  2 
either a pastoral or other counselor be a memberof the interdisciplinary team. 
Pleaseclari&  that either a pastoral or other counseloris required to participate on 
the interdisciplinary team. 
On page 2, secondparagraph,pleaseadd the phrase,or discharge. at the end of
0  #
the first sentence. 
Thank you for the opportunity to provide commentson this draft report.  January 29,1998 
The Honorable June Gibbs Brown 

Inspector General 

Department of Health and Human Services 

330 Independence Ave., S.W., Room 5246 

Washington,  DC  2020l-000 1 

Dear Inspector General Brown: 
Thank you for the opportunity to review andrespondto a draft of the Office of the Inspector 
&meral  report, Medicare HospiceBeneficiaries: Servicesand Eligibility  asdevelopedby the 
OfTice of Evaluation and Inspections(OEI). We would also like to expressour appreciation 
for the cooperativeefforts of OEI staffprovided our office during the developmentof this 
report. 
The National HospiceOrganization(NHO) is pleasedthat after almost four yearsof auditsand 
evaluations of hospicecarein the LJnitedStatesthe Office of the InspectorGeneralhas 
concluded  that  Overall,  the Medicarehospiceprogram seemsto be working asintended. 
NH0  is encouragedby the findings that suggestthat hospicesplan for andprovideappropriate 
semi-,  and was alsopleasedto seethe OIG reportthat the servicesprovidedby hospices 
were consistentwith the plan of care,andthat hospicesrespondedappropriatelywhenthe 
patients condition changed. 
NH0  was also encouragedby findings showingthat hospiceserviceswereprovidedon a 
continuing basis. Suchfindings suggestthat hospicesareestablishingcloseandongoing 
relationships with patientsandfamilies which canbe critical to the transitionprocessthat 
patients and ihmilies experiencewhen coping with term&l  illness. This finding alsostrongly 
suggeststhat hospicescontinueto provide appropriatelevelsof servicesregardlessof the 
iinancial incentivesto providefewer or lessexpensiveservices. 
The National HospiceOrganization,however,continuesto be distressedby theOKs 
. 
c-on  of patientsbeingineligible for the Medicarehospicebenefitwheredifferences 
in medical opinion relatedto theprognosisof a patientexist betweenOIG reviewersandthe 
patients attending physicianandhospicemedicaldirector.  The well-regardedInstituteof 
Medicine hasvery clearly warnedthe OIG not to draw conclusionsabouttheveracityof 
hospice programsbasedon thesedifferencesof medical opinion 
The National HospiceOrganimtion encouragesall hospiceprograms,thephysiciansworking 
with them asmedical directorsandattendingphysiciansto establishthe mostaccurate 
prognosis  possible,and to not acceptpatientsinto the Medicarehospicebenefitwho&arly 
have a prognosisof six monthsor more if theprognosisrunsits normal course.However, 
NH0  will  not, asadvocatesfor the needsof the terminally ill, encouragehospicesand 
National  Hospice  Organization,  1901  North  Moore  Street,  Suite  901,  Arlington,  VA 22209 
7031243-5900  7031525-5762  fax  hcrp://m.nho.org  lhe HonorableJuneGibbs Brown 
January29,1998 
-Page2-
physiciansto aspireto a standardwherethey admit ody those@kd~  who they canbe 100 
percentcertain will die within six months. To do sowill createanenvironmentin which tens 
of thousandsof peoplewill  be deniedfor daysandweeksthe caretheyrequireandareentitled 
to asMedicare beneficiaries,andNH0  will resistattemptsto createsuchanenvironment 
NH0 believesthat an unintentional wnsequenceof the OIGs intensescrutinyof hospices 
overthe past few years,togetherwith anever-changingandchaotic  healthcareenvironment 
hasresulti  in an undemtihzation of hospicecare. As such,  Wminally ill Medicare 
beneficiariesarenot receiving the hospiceservicesthey needandareentitledto aswell as 
increasingcoststo the Medicare Trust Fund  NH0 wasdisappointedthatthe OIG report did 
not usethis opportunity to commenton the underutilizationof hospicecareand its harmful 
impact on beneficiariesandthe Trust Fund  As notedin the report: Yhe mission of the 
OfEm of the hqector  General,asmandatedby Public Law 95-452,is to protectthe integri~ 
of the Departmentof Health andHuman Se&ces programsaswell asthehealth andwelfare 
of beneficiariesservedby them. Surely,this mandatemustextendto as&stingbeneficiaries 
to identify andreceivethe servicesthey need,becauseto do otherwiseonly servesto diminish 
their health and welfare. 
NH0  recommendsthat the industry, the OIG andHCFA work togetherto determinea 
methodology for identifying truly aberrantbehavioron the part of hospicesandphysiciansin 
establishingeligibility  for the Medicarehospicebenefit,andto vigorouslypursueany 
wrongdoers. In this way, the important goalof ferretingout fraud,ahuseandwastein the 
Medicare systemcanbe achieved,but the concernraisedby the OIG canbemore correctly 
focusedon thosethat would abusethe systemratherthanon dif%rencesin medical opinion. 
The National HospiceOrganizationalsOmakesthe following specificcomments: 
As noted,NH0  is generallyencornagedby the reportsfindings;however,it must be 
statedthat while the finclingsmay be representativeof thepopulation,the readerof this 
and ~IGOUS OIG reportsshouldbe cautionedto resistacceptingthefindings of thesevery 
limited studiesasa perfidy  accumteportrayalof the hospicecommunityandexpending 
the conclusionsof thesereportsto a broaderpopulationshouldhedonewith an 
understandingof thoselimitations. 
In the ExecutiveSummaryunderBackground the statementshouldreflect that 
Beneficiaries must alsobe certified by a physicianasbeingterminauyill, andhavea life 
expectancyof 6 months or lessifthe diseaserunsits normalcourse. 
In the Imoduction  sectionunder Servicesprovided...volunteersshouldbe addedasa 
covefed  senice. Number (11) shouldbechanged  to counselingasdietarywmsding  is  The Honorable JuneGibbs Brown 

January29,1998 

-Page3-

only one of the requiredcounselingservices.The team typically includesa pastoral 
counselor ratherthan a Snister. 
The statementis maderegardingthe growth of hospicecarein a mannerthat leavesthe 
l 	
impression that suchgrowth is not appropriate. On the contmry,suchgrowth is not only 
appropriate,it shouldbe expectedin a still emergingbenefitprogram. According to 
HCFA datathe increasein expendituresrelatedto this programarebeing drivenprimarily 
by the increasein patientsserved,not by increasedcostperpatient. Additionally, this 
report suggeststhat hospicepatientsaregenerallyeligible for the benefitsthey are 
receiving andthat hospicesdeliver the servicesthey areobligatedto provide.. 
In the sameintroductory sectionof the reportthe statementis madethat a hospiceagency 
l 	
can also revokecareby determiningthat a beneficiarys condition stabilizesor improves, 
and hospicecareis no longer appropriate. This statementis not altogetheraccurate.The 
hospicemay dischargea patient tirn  the Medicarehospicebenefit if eligibility criteriaare 
no longer met. 
Table 1 of the report identifies theten ineligible beneficiariesliving in nursinghomes,and 
l 	
their primary diagnoses.From the reports findings we areunableto detexmineif 
comorbidities were consideredwhen the medical contractorde&mined prognosis.The 
absenceof  considerationof theseadditional factorscould havean impact on final 
determinationsof prognosis. 
The final pamgraphof the report on page8 states:None of the hospiceshadsalesstaff, 
l 	
and the hospicedirectorstold usthey do not solicit patients. To advertisetheir services, 
they haveboothsat healthfairs, andthey visit or write hospitalsandphysici
primarily oncologists. NH0  would objectto this statementifit  is meantto imply thata 
good hospice is onethat limits servicesto patientswith canceror doesnot makeall 
reasonableand appropriateefforts to respondto its communitys needfor accessto 
hospicecare. 
Respondingto issuesraisedby previousOIG reports,NH0  hastakenthe following actionsto 
improve the delivery of hospicecare: 
0 	 In the absenceof a governmentor medical community initiative NH0  hasspent 
significant resourcesdevelopingguidelinesfor establishingterminal prognosesto 
encouragethe referralof patientsto hospicecare,and to provideattendingphysiciansand 
hospicephysiciansthe tools to increasetheir certainty that only appropriatepatientsare 
admitted to hospicecare.  The HonorableJuneGibbs Brown 

January29,1998 

-Page4-

NH0  hasalso spentconsiderableresourcesandalmosta decadein an effort to improve 
the quality of hospicecareprovided in the nursinghome,andto improvethe relationship 
betweenthe hospiceand the nursinghomewhile r&imZng  thepotential for abusive 
behavior. Theseefforts havebeenmadewith minimal governmentassistanceto clarify 
the rulesgoveming theserelationships. 
NH0  hasestablishedaNursing Home TaskForcethatcontinuesto identify problemsand 
solutionsto this complex issue. 
Despiteour di&rences, NH0  hasworked closelywith theOIG to identify problemsand 
to communicatetheseissuesto hospices. 
NH0  is alsoworking closely with HCFA to developnew MedicareConditionsof 
Participation,including new provisionsconcerninghospicecareprovidedin the nursing 
home. We haveworked  with HCFA andthe RegionalHomeHealthIntem~~Earieson 
focusedmedical review, andwe arealsoworking with theRHHI Medical Directorsto 
designLocal Medical Review Policies. 
NH0  is working with HCFA to developnew costreportsfor hospices,andwe arehopefbl 
that thesenew tools will  assistthe hospicecommunity andthe governmentin making 
soundpolicy decisionsaboutthe ti  of the Medicarehospicebenefit, 
NH0 thanksyou for your considerationof our comments,andwe look forward to working 
with your office in the finthemnceof our commongoals.  228SevcnthScnxt,SE 
was&ton,  DC 
moo3-4306  February lo,1998 

(202B46-4759 
Fax 002B47-9559  The Honorable June Gibbs Brown 

Inspector General 

R--YJ.  H Department of Health and Human  Services 

a?air 
330 Independence Ave., SW 

Room 5246 

Diam  H. Jones 
-Dirwctor  Washington, DC 2020 l-0001 

Dear Inspector General Brown: 

The Hospice Association  of America  would like to thank you for the opportunity  to 

comment on the draft report,  Medicare  Hospice Beneficiaries: Services andEligibility. 

We appreciate the positive  tone of the report and believe that it is a fair reflection  of the 

hospice industry. We concur that hospices are doing a good job. We also appreciate what 

appears to be a growing  understanding  by the Office of the Inspector General (OIG) of 

the unique constellation  of hospice services and how they are delivered; the need to have  . 

these services audited by experienced and skilled hospice professionals; and the 

advisability  of selecting and auditing  patient records with tools that had been developed 

and are being used by the industry. 

INTRODUCTION 

Overall, this draft inspection  report accurately describes what we believe to be true about 

the hospice industry:  the error  rate for determining eligibility  for the Medicare  hospice 

benefit is low; hospice agencies plan for and provide appropriate services; and there are 

problems with the eligibility  of hospice patients residing in nursing homes. We commend 

the OIG for its perseverance in improving  the methodology for conducting  hospice 

audits. The industry looks forward  to working  together with OIG in the development of a 

model hospice corporate compliance  plan that will  hopefully eliminate the need for 

future audits such as ORT. Our comments will  focus on the conclusions drawn by this 

draft report in comparison to previous reports issued by OIG since the reader is referred 

to those reports for recommendations. 
 The Honorable  June  Gibbs  Brown 

February  lo,1998 

Page 2 

REVIEW  OF HOSPICE  INDUSTRY  RESPONSE  TO FRAUD,  WASTE,  AND  ABUSE 

The examination  of hospices began in 1994 in Puerto Rico and soon expanded into focused medical 

review  (FMR)  by the Regional Home Health Intermediaries @HI-II),  followed  by Operation Restore 

Trust (ORT),  a joint  initiative  of OIG, the Health Care Financing  Administration  (HCFA),  and the 

Administration  on Aging.  Throughout  this period of time the hospice  industry responded quickly  and 

vigorously  by emphasizing  policies of zero tolerance for fraud, abuse, and waste; developing and 

expanding  a set of medical  guidelines for non-cancer diagnoses (Medical Guidelinesfor 

Determining Prognosesin SelectedNon-CancerDiseases);providing  national, regional, and local 

educational  programming;  and working  in cooperation with OIG,  HCFA,  RHHIs, and state 

surveyors. At the present time RHHIs are in the process of implementing  hospice local medical 

review  policies  (LMRP),  which  were developed by HCFA and based on the industrys Medical 

Guidelines. The purpose  of the LMRP  is to assist RHHIs in claims review as well as provide 

guidance  for hospice  programs in appropriately  enrolling  and recertifying  patients. In addition the 

two  national  organizations  representing hospice providers, HAA  and the National Hospice 

Organization  (NHO)  are developing a model hospice corporate compliance  plan (CCP) in 

conjunction  with  OIG. 

COMMENTS 

Auditing  of hospices  under ORT began in early 1995 and examined  medical records between the 

period January  1993 and the first quarter of 1996. Problems of hospice programs identified  in earlier 

reports included:  determining  eligibility  for enrollment  in the Medicare  hospice benefit; nursing 

home patients  receiving  hospice services; marketing strategies; and weak internal controls in the 

areas of physician  certifications,  claims processing, and medical and cap report reviews at the RI-W. 

There were specific  recommendations addressing these identified  problems, including: 

*.  Reinforcing  the six-month prognosis requirement; 

-.  Prohibiting  hospices from paying nursing homes more for room and board than the hospices 

receive from  Medicaid; 
-.  Ensuring  that hospice marketing materials prominently  feature Medicare eligibility 
requirements;  monitoring  the use of sales commissions as incentives for patient recruiting; 
-.  Requiring  physician  certification  forms contain a statement concerning the penalties for false 
claims; 
-.  Requiring  RHl-lls  to place more focus on front-end reviews  and nontraditional,  suspect, or 
exceedingly  vague diagnoses; 
-.  Seeking  legislative  change to the hospice cap; requiring  RHHIs  to establish audit procedures 
for cap reports;  and 
-.  Seeking  legislative  amendment to change the reimbursement  for dually eligible hospice 
nursing  home patients. 
This draft report,  Medicare  Hospice Beneficiaries: Services and Eligibility,  which reviewed 
medical  records of beneficiaries  who were enrolled in hospice on June 14,1996, reflects an apparent  , 

increased sophistication  on the part of hospices in terms of enrollment  practices, documentation, and 
provision  of services. It would  be helpful for the report to comment  on the earlier concern of high 
eligibility  errors for hospice patients not living  in nursing homes and if OIG believes this continues 
to be problematic.  The  Honorable  June Gibbs Brown 

February  10,199s 

Page 3 

An  analysis  of the difference in eligibility  errors between the reports would help direct future 

activities  regarding  OK  recommendations that would:  require HCFA to reinforce the six-month 

prognosis;  modify  physician certification  forms;  require RHHIs to place more focus on front-end 

reviews  and nontraditional,  suspect, or exceedingly  vague diagnoses; and seek legislative changes 

for the hospice cap amount. These recommendations  may no longer be appropriate given the 

operational  improvements within  the hospice industry. 

The report  indicates that all of the hospice patients and their families, including patients residing  in 

nursing  homes, had formal plans of care and received appropriate services, all of which were 

appropriately  documented in the patients  medical  record. It would be helpful for the report to 

comment  on the differences between the results of this audit and earlier ones, particularly  in light of 

an OIG  recommendation  to seek a legislative  amendment to reduce the payment for dually  eligible 

hospice  patients residing in nursing homes. 

The report  does corroborate the problems previously  identified with nursing home residents enrolled 

in hospice  programs as they relate to eligibility  errors. Reinforcing the recommendations regarding 

marketing  materials and prohibiting  the practice  of paying nursing facilities more for room and 

board than hospices receive from Medicaid  would  seem to be appropriate actions to combat this 

problem.  As an alternative to prohibiting  excessive payments for room and board, we recommend 

that federal  statute be changed to require Medicaid  room and board payments be made directly  to the 

nursing  facility  rather than passing through the hospice. 

CONCLUSION 

HAA,  along  with  the hospice industry, commends OIG for the work it has done in helping eliminate   

fraud,  waste, and abuse from Medicare and Medicaid  programs. We are particularly  pleased that this 

report  helps to set the record straight  and paints a more realistic picture of what hospice looks like 

in the US. Regarding  concerns about hospice services provided in nursing homes, we reiterate what 

we have said in previous correspondence with  OIG: hospice services should not be denied to eligible 

nursing  home residents, regardless of income status. We do support the idea of further study and 

analysis  for the development of a reimbursement  formula that accurately reflects the costs of hospice 

services provided  to hospice patients residing  in nursing homes. 

HAA  is committed  to establishing a national  hospice financial data base.To this end we conducted a 

pilot  study  in 1997 using HAAs HospiceFinancial RecordKeepingManual,which is a hospice cost 

report  that has been distributed to several hundred  hospices around the country. We are now 

preparing  to launch the second study in mid-l  998. The number of participating hospices will  be 

increased,  and the cost report will  be updated to allow hospices to track their nursing home program 

costs. This tool will  give hospices the ability  to compare their nursing home costs with home-based 

costs within  their own programs as well as benchmark  with national data. We believe that this 

information  will  help hospices ensure that they are providing  appropriate services across all sites of 

care, including  services provided to hospice patients residing in nursing facilities. 

On another,  more global note, we would  like to comment on the statutory requirement for a six-

month  prognosis. 
 -+T  iK\
1  * 
.  1 
v 
The Honorable  June  Gibbs  Brown 
February  lo,1998 
Page 4 
The hospice industry,  along  with  hundreds of other interested organizations,  foundations, and 
individuals,  are committed  to continuing  the quest of improving care at the end of life. The Medicare 
hospice benefit  by statute can only  provide services for those who have a certifiable  prognosis of six 
months or less, which  in reality  translates to the last few days or weeks of life. Hospice care is 
therefore a relatively  small part of the continuum of care required by seriously  ill people to ensure 
that the last chapter of their  lives is free from pain and can be lived to its fullest. 
The latest HCFA  statistics  report  the national average length of stay for a Medicare beneficiary  has 
dropped and is now  under 54 days. Our experience of the last few years tells us that the art  and 
science  of prognostication  are not exact and prone to a high rate of error. It would  seem to be 
unwise and even inhumane  to support a system that focuses on error-free  prognoses of six months or 
less to allow  access to the holistic,  patient and family-centered care hospice provides. We are 
striving to find a better indicator  to trigger hospice care and at the same time find ways to work  with 
other providers  so that those in need of end-of-life  care will  not be lost. We will  also continue to 
educate hospices about the law as it exists today, encourage the implementation  of CCPs, and work 
to eliminate  fraud, waste, and abuse. 
Thank you again for allowing  HAA  to comment on this draft report. We look forward to continuing 
our work  with  your  offtce. 
sinYy&&  u  ;3u-w-
Diane H. Jones 
Executive Director 
DHJ:lj 
cc: 	 George F. Grob 
Deputy  Inspector  General 
Offtce  of Evaluations  and Inspections