Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
H   I
OSPICES  NAPPROPRIATELY 
 
BIL  LED MEDICARE OVER  
 
$250 M G
    ILLION FOR  ENERAL 
I C  
NPATIENT  ARE
 
 
 
 
Daniel R. Levinson 
Inspector General 
 
March 2016 
OEI-02-10-00491   
EXECUTIVE SUMMARY:  HOSPICES INAPPROPRIATELY BILLED MEDICARE 
OVER $250 MILLION FOR GENERAL INPATIENT CARE  
OEI-02-10-00491 
 
WHY WE DID THIS STUDY  
 
Recent investigations by the Office of Inspector General have shown a number of instances in 
which hospices inappropriately billed Medicare for hospice general inpatient care (GIP).  Misuse 
of GIP includes care being billed but not provided and beneficiaries receiving care they do not 
need.  Such misuse has human costs for this vulnerable population as well as financial costs for 
Medicare. 
 
The goals of hospice care are to help terminally ill beneficiaries with a life expectancy of  
6 months or less to continue life with minimal disruptions and to support beneficiaries families 
and other caregivers.  The care is palliative, rather than curative.  Hospices must establish an 
individualized plan of care for each beneficiary.  GIP is the second most expensive level of 
hospice care and is intended to be short-term inpatient care for symptom management and pain 
control that cannot be handled in other settings.  
 
HOW WE DID THIS STUDY 
 
We based this study on data from a medical record review of a stratified random sample of all 
GIP stays in 2012.  We analyzed the results of the medical record review to estimate the 
percentage of GIP stays that were billed inappropriately.  We also used Medicare Part D data to 
identify the drugs paid for by Part D and provided to beneficiaries during GIP stays.    
  
WHAT WE FOUND 
 
We found that hospices billed one-third of GIP stays inappropriately, costing Medicare  
$268 million in 2012.  Hospices commonly billed for GIP when the beneficiary did not have 
uncontrolled pain or unmanaged symptoms.  
 
 
Percentage of Inappropriate GIP Stays, 2012 
 
 
  20% Beneficiary did not need 
GIP at all during stay
  20% Beneficiary did not 
69% 31%
  need GIP at all during 
69% Inap3p1r%opriate the stay
 
  Inappropriate
 
  10%
  $754 million  $268 million
10% Beneficiary did not need 
  GIP for part of the stay
  Noevidence that 
1%
  beneficiary elected hospice 
1% Noevidence that 
or had terminal illness
 
beneficiary elected 
  hospice or had terminal 
illness
   
For example, a hospice billed for GIP for a beneficiary with a circulatory disease who had no 
unmanaged symptoms.  This beneficiary could have been cared for at home, but the hospice 
billed Medicare for 46 consecutive days of GIP.  The hospice was paid just over $31,000 for the 
stay.   
 
Some States, such as Florida, had many inappropriate GIP stays.  Hospices were more likely to 
inappropriately bill for GIP provided in skilled nursing facilities than GIP provided in other 
settings.  For-profit hospices were more likely than other hospices to inappropriately bill for GIP.  
We also found that Medicare sometimes paid twice for drugs because they were paid for under 
Part D when they should have been provided by the hospice and covered under the hospice daily 
payment rate.  Further, hospices did not meet all care planning requirements for 85 percent of 
GIP stays and sometimes provided poor-quality care.  For example, one hospice provided GIP to 
a beneficiary with dementia for 16 days, but his pain was never brought under control.   
 
WHAT WE RECOMMEND  
 
The findings in this report make clear the need to address the misuse of GIP and hold hospices 
accountable when they bill inappropriately or provide poor-quality care.  We recommend that the 
Centers for Medicare & Medicaid Services (CMS) (1) increase its oversight of hospice GIP 
claims and review Part D payments for drugs for hospice beneficiaries; (2) ensure that a 
physician is involved in the decision to use GIP; (3) conduct prepayment reviews for lengthy 
GIP stays; (4) increase surveyor efforts to ensure that hospices meet care planning requirements; 
(5) establish additional enforcement remedies for poor hospice performance; and (6) follow up 
on inappropriate GIP stays, inappropriate Part D payments, and hospices that provided poor-
quality care.  CMS concurred with all six recommendations. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................6 
Findings........................................................................................................8 
Hospices billed one-third of GIP stays inappropriately, costing       
Medicare $268 million in 2012 ........................................................8 
Hospices billed inappropriately for about half of GIP stays in              
SNFs ...............................................................................................10 
For-profit hospices were more likely than other hospices to bill 
inappropriately for GIP .................................................................. 11 
Medicare sometimes paid twice for drugs for beneficiaries            
receiving GIP .................................................................................12 
Hospices did not meet care planning requirements for 85 percent               
of GIP stays ....................................................................................13 
Hospices sometimes provided poor-quality care and often did                  
not provide intense services ...........................................................14 
Conclusion and Recommendations ............................................................17 
Agency Comments and OIG Response..........................................20 
Appendixes ................................................................................................21 
A:  Detailed Methodology .............................................................21 
B:  Statistical Estimates and Confidence Intervals ........................25 
C:  Chi-square Tests for Statistically Significant Differences .......29 
D:  Agency Comments ...................................................................30 
Acknowledgments......................................................................................34
   
OBJECTIVES 
1.  To determine the extent to which hospices inappropriately billed Medicare for 
general inpatient care (GIP) in 2012.  
2.  To determine the extent to which hospices did not meet care planning 
requirements for beneficiaries receiving GIP in 2012. 
3.  To describe instances in which hospices provided poor-quality care. 
BACKGROUND  
The goals of hospice care are to help terminally ill beneficiaries with a life 
expectancy of 6 months or less to continue life with minimal disruptions and to 
support beneficiaries families and other caregivers.  The care is palliative, rather 
than curative.  In 2013, Medicare paid $15.1 billion for hospice care for  
1.3 million beneficiaries.1   
The Office of Inspector General (OIG) has had concerns about the possible 
misuse of GIP, which is the second most expensive level of hospice care.  For 
example, in 2014, the owner of a hospice chain was charged with fraud for 
engaging in a scheme to obtain higher Medicare payments by improperly billing 
GIP.  The hospice was also allegedly paying nursing facilities $250 per day for 
every patient on GIP. 2  In 2012, a former hospice owner was sentenced to  
28 months in prison for defrauding Medicare of over $3 million by billing for GIP 
but providing a lower level of hospice care. 3  In 2011, a hospice agreed to pay 
$2.7 million for billing Medicare for GIP when it was not required.4  In addition, 
previous OIG work has raised concerns about duplicate payments made by 
                        ____________________________________________________________ 
1 Medicare Payment Advisory Commission (MedPAC), Report to Congress:  Medicare Payment 
Policy, March 2015, ch. 12.  Accessed at 
http://medpac.gov/documents/reports/mar2015_entirereport_revised.pdf?sfvrsn=0 on May 11, 
2015. 
2 Federal Bureau of Investigation (FBI), Illinois Hospice Executive Charged with Federal 
Healthcare Fraud for Allegedly Falsely Elevating Level of Patients Care January 27, 2014. 
Accessed at http://www.fbi.gov/chicago/press-releases/2014/illinois-hospice-executive-charged-
with-federal-health-care-fraud-for-allegedly-falsely-elevating-level-of-patients-care on May 8, 
2015.   
3 FBI, Former Hospice Owner Sentenced for Health Care Fraud February 1, 2012. Accessed at 
http://www.fbi.gov/birmingham/press-releases/2012/former-hospice-owner-sentenced-for-health-
care-fraud on May 8, 2015. 
4 FBI, Hospice Home Care to Pay $2,700,000 Settlement in Medicare Fraud Case, December 9, 
2011.  Accessed at http://www.fbi.gov/littlerock/press-releases/2011/hospice-home-care-to-pay-2-
700-000-settlement-in-medicare-fraud-case on May 8, 2015. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  1   
Medicare Part D for prescriptions that should have been covered under the 
hospice benefit.5   
OIG also has had concerns about hospice beneficiaries receiving inadequate care 
planning and poor-quality care.  Previous OIG reports have found that hospice 
oversight is lacking and that the most common deficiencies cited for hospices 
centered on patient care planning and quality. 6   
This report is part of OIGs larger body of work on hospice care, which includes a 
companion report that describes the use of GIP in 2011.7  That report found that 
23 percent of Medicare hospice beneficiaries received GIP during the year and 
one-third of beneficiaries GIP stays exceeded 5 days, with 11 percent lasting  
10 days or more.  Another companion report will assess election statements and 
certifications of terminal illness for Medicare beneficiaries who received GIP.8 
The Medicare Hospice Benefit 
To be eligible for Medicare hospice care, a beneficiary must be entitled to 
Medicare Part A and be certified as having a terminal illness with a life 
expectancy of 6 months or less if the disease runs its normal course.9  Upon a 
beneficiarys election of hospice care, the hospice agency assumes responsibility 
for medical care related to the beneficiarys terminal illness and related 
conditions.  
Hospice care includes, among other things, nursing care, medical social services, 
hospice aide services, medical supplies (including drugs and biologicals), and 
physician services.  The beneficiary waives all rights to Medicare payment for 
services related to the curative treatment of the terminal condition or related 
conditions but retains rights to Medicare payment for services to treat conditions 
                        ____________________________________________________________ 
5 OIG, Medicare Could Be Paying Twice for Prescription Drugs for Beneficiaries in Hospice,  
A-06-10-00059, June 2012. 
6 OIG, Medicare Hospices: Certification and Centers for Medicare & Medicaid Services 
Oversight, OEI-06-05-00260, April 2007. 
7 OIG, Medicare Hospice:  Use of General Inpatient Care, OEI-02-10-00490, May 2013. 
8 OIG, Hospices Should Improve Their Election Statements and Certifications of Terminal Illness, 
OEI-02-10-00492, forthcoming. 
9 Social Security Act,  1814(a)(7)(A) and 1861(dd)(3)(A), 42 U.S.C.  1395f(a)(7)(A) and 
1395x(dd)(3)(A); 42 CFR  418.20 and 418.22.  Certification is based on the physicians or 
medical directors clinical judgment regarding the normal course of the individuals illness. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  2   
unrelated to the terminal illness. 10  Beneficiaries may revoke their election of 
hospice care and return to standard Medicare coverage at any time.11  
Hospice General Inpatient Care 
The Medicare hospice benefit has four levels of care:  routine home care, 
continuous home care, GIP, and inpatient respite care.  GIP is the second most 
expensive level of hospice care and, next to routine home care, is the most 
commonly used.   
GIP is intended to be short-term and may be provided only in three settings:  a 
hospice inpatient unit, a hospital, or a skilled nursing facility (SNF).12  A 
physicians order is not required for GIP.  GIP is for pain control or acute or 
chronic symptom management that cannot be managed in other settings, such as 
the beneficiarys home.13  These acute hospice care services are to ensure that any 
new or worsening symptoms are intensively addressed so that the beneficiary can 
return to a lower level of hospice care.14  As with all covered hospice services, 
hospices are required to provide GIP if it is needed by the beneficiary.15  Hospices 
may enter into arrangements with facilities to provide GIP.16  The hospice retains 
oversight of staff and services for all arranged services to ensure the provision of 
quality care.17  
Medicare pays hospices a daily rate from the day a beneficiary elects hospice care 
to the day of discharge.  GIP and the other levels of hospice care each has an all-
inclusive daily rate that is paid through Part A.18  Medicare pays $672 per day for 
GIP, compared to $151 per day for routine home care, which is the most common 
level of care.  The daily rate is paid to the hospice for each day that a beneficiary 
                        ____________________________________________________________ 
10 Social Security Act,  1812(d)(2)(A) and 1861(dd)(1), 42 U.S.C.  1395d(d)(2)(A) and 
1395x(dd)(1); 42 CFR  418.24(d).  CMS has developed the Medicare Care Choices Model, a 
demonstration program that will allow certain beneficiaries to receive palliative care services from 
certain hospice providers while concurrently receiving services provided by their curative care 
providers.  The model will enable CMS to study whether access to such services improves quality 
of life, increases patient satisfaction, and reduces Medicare expenditures.  See CMS, Medicare 
Care Choice Model.  Accessed at http://innovation.cms.gov/initiatives/Medicare-Care-Choices/ on 
May 18, 2015.  
11 Social Security Act,  1812(d)(2)(B), 42 U.S.C.  1395d(d)(2)(B); 42 CFR  418.28.  
12 42 CFR  418.108(a) and (b).  Note that Medicare regulations do not specify what is meant by 
short-term for GIP.   
13 42 CFR  418.302(b)(4). 
14 79 Fed. Reg. 50451, 50455 (Aug. 22, 2014).  Accessed at http://www.gpo.gov/fdsys/pkg/FR-
2014-08-22/pdf/2014-18506.pdf on June 19, 2015. 
15 Social Security Act,  1861(dd)(2)(A)(i), 42 U.S.C.  1395x(dd)(2)(A)(i).  
16 42 CFR  418.108. 
17 42 CFR  418.100. 
18 For continuous home care, the hospice is paid an hourly rate based upon the number of hours of 
continuous care furnished to the beneficiary on that day.  The daily continuous home care rate is 
divided by 24 hours to determine an hourly rate.  A minimum of 8 hours of predominantly nursing 
care must be provided.  CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 11,  30.1.   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  3   
is in hospice care, regardless of the amount of services furnished on a particular 
day.  The rates are adjusted on the basis of the beneficiarys geographic location.  
See Table 1 for the unadjusted payment rates for each level of care in fiscal year 
(FY) 2012.  Beneficiaries generally do not pay copays for hospice care.19  
 
Table 1:  Unadjusted Daily Medicare Hospice Payment 
Rates by Level of Care, FY 2012 
Routine Home Care  $151.03  
Continuous Home Care  $881.46  
General Inpatient Care  $671.84  
Inpatient Respite Care  $156.22  
Source:  CMS, Update to Hospice Payment Rates, Hospice Cap, Hospice Wage Index, 
and the Hospice Pricer for FY 2012, Transmittal 2260, Change Request 7518, July 29, 
2011.  
 
Regardless of the level of care provided, the hospice must establish an 
individualized plan of care for each beneficiary it serves.  The plan of care must 
be written by an interdisciplinary group that includes a physician, nurse, social 
worker, and pastoral or other counselor.  The plan must include all services the 
beneficiary needs in relation to the terminal illness, including interventions to 
manage pain and symptoms, and the scope and frequency of the needed services. 
The hospice interdisciplinary group must review, revise and document the 
individualized plan as frequently as the patient's condition requires, but no less 
frequently than every 15 calendar days.20   
Hospice Drugs and the Medicare Part D Benefit 
For all hospice beneficiaries, the hospice is required to provide drugs related to 
the palliation and management of the terminal illness and related conditions.21  
These drugs are used primarily for the relief of pain and symptom control.22  Their 
cost is covered by the all-inclusive daily rate paid to the hospice.  
The Medicare Part D program provides an optional prescription drug benefit to 
Medicare beneficiaries.23  Under the program, private insurance companies
referred to as sponsorsprovide drug coverage to beneficiaries who choose to 
                        ____________________________________________________________ 
19 Hospices may charge beneficiaries a 5 percent copay for inpatient respite care. See 42 CFR  
418.400. 
20 42 CFR  418.200, 418.56. 
21 42 CFR  418.106; CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 9,  
 40.5. 
22 42 CFR  418.202(f). 
23 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173; 
Social Security Act,  1860D-1 to 1860D-43, 42 U.S.C.  1395w-101 to 1395w-153. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  4   
enroll.24  When a hospice beneficiary is enrolled in Part D, Part D pays for drugs 
unrelated to the terminal illness.  The hospice is still required to provide drugs 
related to the palliation and management of the terminal illness and related 
conditions.  The hospice is allowed to charge the beneficiary a copay, not 
exceeding $5, for each prescription.25 
Because drugs related to the beneficiarys terminal illness are covered under the 
hospice benefit, they are excluded from coverage under Part D.26  In 2014, CMS 
issued guidance to Part D sponsors that focused on some commonly used hospice 
drugs.  The guidance strongly encouraged sponsors to place beneficiary-level 
prior authorization requirements on four categories of drugs that are typically 
used by hospice beneficiaries:  analgesics, antinauseants, laxatives, and 
antianxiety drugs.27  CMS expects that hospices will routinely provide these types 
of drugs so Part D sponsors are instructed to reject claims for these drugs for 
hospice beneficiaries.   
 
CMS Oversight 
Hospices must be certified to participate in the Medicare program.28  CMS 
contracts with State Survey and Certification agencies to conduct onsite surveys 
of hospices at the time of initial certification, for recertification, and in response 
to complaints.  These surveys determine whether the hospice meets Medicare 
requirements.  For example, surveyors must determine whether plans of care are 
individualized, patient-specific, and developed by all members of the 
interdisciplinary group.29   
Surveyors must cite deficiencies when hospices fail to meet requirements.  The 
only enforcement action that CMS can initiate against hospices that do not correct 
deficiencies is termination from the Medicare program.30  In contrast, CMS has a 
variety of enforcement actions available for other types of Medicare providers, 
such as nursing facilities and home health agencies.  These actions include civil 
                        ____________________________________________________________ 
24 Social Security Act,  1860D-1(a)(1)(A), 42 U.S.C.  1395 w-101(a)(1)(A) and 42 CFR  
423.104. 
25 42 CFR  418.400. 
26 Social Security Act,  1860D-2(e)(2)(B), 42 U.S.C.  1395w-102(e)(2)(B); 42 CFR  423.100, 
Part D drug, (2)(i). 
27 CMS, Part D Payment for Drugs for Beneficiaries Enrolled in Medicare Hospice.  Accessed at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/2014-
PartD-Hospice-Guidance-Revised-Memo.pdf on June 12, 2015. 
28 Social Security Act,  1814(a) and 1866, 42 U.S.C.  1395f(a) and 1395cc. 
29 CMS, State Operations Manual, Appendix M - Guidance to Surveyors:  Hospice, Tag L545. 
Accessed at http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/som107ap_m_hospice.pdf on June 19, 2015. 
30 42 CFR  488.7(d) and 42 CFR  489.53. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  5   
monetary penalties and denial of Medicare payments. 31  OIG has previously 
recommended that CMS seek legislation to establish additional enforcement 
remedies for poor hospice performance.32 
Related Work 
This report is part of OIGs larger body of work examining the Medicare hospice 
benefit.  A recent OIG report found that Medicare payments for hospice care in 
assisted living facilities (ALF) more than doubled in 5 years, totaling $2.1 billion 
in 2012.  Hospices provided care much longer and received much higher 
Medicare payments for beneficiaries in ALFs compared to beneficiaries in any 
other setting.  Hospices typically provided fewer than 5 hours of visits per week 
and were paid about $1,100 per week for each beneficiary receiving routine home 
care in ALFs.33   
In 2011, OIG issued a report that found that hospices with a high percentage of 
their Medicare beneficiaries residing in nursing facilities received more Medicare 
payments per beneficiary and served beneficiaries who spent more time in 
hospice care compared to hospices nationwide.34  In addition, a series of OIG 
reports addressing CMS oversight of hospices found that 14 percent of hospices 
were past due for certification in 2005 and that the frequency of recertification 
had not improved by 2013.35  The Improving Medicare Post-Acute Care 
Transformation Act of 2014 (IMPACT Act) mandated surveys of hospices at least 
every 3 years.36  
METHODOLOGY  
We based this study on data from a medical record review of a stratified random 
sample of 565 GIP stays in 2012.  We also used Medicare Part D data to identify 
the drugs paid for by Part D and provided to beneficiaries during GIP stays.  We 
considered a GIP stay to be claims for GIP for the same beneficiary in the same 
setting, from the same hospice, and the start date of a subsequent claim was the 
same day, or the next day, as the ending date of the previous claim.  Unless 
otherwise stated, all differences noted in the findings are statistically significant.  
See Appendix A for more detailed information about the methodology.  See 
                        ____________________________________________________________ 
31 42 CFR  488.406 and 42 CFR  488.820. 
32 OIG, Medicare Hospices: Certification and Centers for Medicare & Medicaid Services 
Oversight, OEI-06-05-00260, April 2007. 
33 OIG, Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living 
Facilities, OEI-02-14-00070, January 2015. 
34 OIG, Medicare Hospices That Focus on Nursing Facility Residents, OEI-02-10-00070, July 
2011. 
35 OIG, Medicare Hospices: Certification and Centers for Medicare & Medicaid Services 
Oversight, OEI-06-05-00260, April 2007.  OIG, Frequency of Medicare Recertification Surveys 
for Hospices is Unimproved, OEI-06-13-00130, August 2013. 
36 42 U.S.C.  1395x(dd)(4)(C). 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  6   
Appendix B for all statistical estimates and 95-percent confidence intervals and 
Appendix C for chi-square tests for statistically significant differences.  
Limitations 
This review determined whether hospice billing for GIP was appropriate.  We did 
not independently verify the beneficiarys prognosis for a life expectancy of  
6 months or less.  In addition, this review focuses on instances in which the 
beneficiary did not receive the number of services that were needed based on an 
assessment of the medical record.  It does not determine all instances of poor-
quality care.    
Standards 
This study was conducted in accordance with the Quality Standards for Inspection 
and Evaluation issued by the Council of the Inspectors General on Integrity and 
Efficiency. 
   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  7   
FINDINGS 
Hospices billed one-third of GIP stays inappropriately, 
costing Medicare $268 million in 2012  
In 2012, hospices frequently billed Medicare for providing GIP to beneficiaries 
who did not need this level of care.  GIP is solely for pain control or acute or 
chronic symptom management that cannot be provided in other settings.  For  
20 percent of GIP stays in 2012, the beneficiary did not need GIP at all during the 
stay.  See Chart 1.  For an additional 10 percent of GIP stays, the beneficiary 
needed GIP at some point, but not for the entire stay.  In these cases, the hospice 
commonly continued to bill GIP for many days after the beneficiarys symptoms 
were under control.  In 1 percent of stays, there was no evidence that the 
beneficiary elected hospice care or was even certified as having a terminal illness.   
 
Chart 1:  Percentage of Inappropriate GIP Stays, 2012 
 
 
 
 
20%Beneficiary did not need 
 
GIP at all during stay
 
69% 31%
 
  Inappropriate
   
 
  $754 million  $268 million
Beneficiary did not need 
  10%
GIP for part of the stay
 
 
  1% Noevidence that 
beneficiary elected hospice 
 
or had terminal illness
Source:  OIG analysis of medical record review results, 2015. 
 
Medicare inappropriately paid hospices $268.1 million for GIP in 2012.37  The 
inappropriate payments represent 26 percent of the $1.0 billion paid to hospices 
for GIP stays in 2012.38  For the vast majority of inappropriate GIP stays, the 
hospice should have billed for routine home care instead of GIP.  GIP is 
                        ____________________________________________________________ 
37 For stays in which there was no evidence that the beneficiary elected hospice care or was 
certified as having a terminal illness, we considered the entire amount Medicare paid for the GIP 
stay to be inappropriate.  For other stays, we considered inappropriate the difference between the 
amount Medicare paid for GIP and the amount Medicare would have paid had the hospice billed 
for the level of care that the beneficiary needed.  
38 These numbers and others presented in the report are rounded.  They cannot always be used to 
recreate percentages and totals presented in the report because our calculations for these figures 
are based on unrounded numbers. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  8   
reimbursed at a much higher rate than routine home care.  In 2012, hospices were 
paid $672 per day for GIP whereas they were paid $151 per day for routine care.39   
Hospices commonly billed for GIP when the beneficiary did not have 
uncontrolled pain or unmanaged symptoms 
In 89 percent of inappropriate GIP stays, the hospice billed for GIP even though 
the beneficiary did not have uncontrolled pain or unmanaged symptoms or the 
beneficiary received care that could have been provided at home.  For example, 
one hospice billed GIP for 29 days for a beneficiary who was in no apparent 
distress and whose symptoms were managed with oral medications.  The hospice 
received almost $21,000 from Medicare for this inappropriate GIP stay.  In 
another example, a hospice billed for 6 days of GIP for an 85-year-old beneficiary 
with dementia.  The hospice placed the beneficiary in GIP and did not change her 
plan of care or order new medications.  The hospice received just over $3,700 
from Medicare for this GIP stay.  
Hospices sometimes billed inappropriately for GIP because of caregiver issues.  
This occurred in 15 percent of the inappropriate GIP stays.  Such issues include 
the caregiver being overwhelmed.  GIP is not intended to be used in these 
situations.  A different level of hospice careinpatient respite careis designed 
to provide relief to caregivers.  The GIP daily rate is typically four times greater 
than the inpatient respite care daily rate.  In 2012, hospices were paid a base rate 
of $672 per day for GIP and $156 per day for inpatient respite care.40   
Examples of inappropriate billing related to caregiver issues include a hospice 
billing for GIP when a beneficiarys wife was exhausted, and a hospice billing for 
GIP when a beneficiarys son needed a break.  In the latter case, the physician had 
noted in the medical record that the beneficiary needed inpatient respite care, not 
GIP. 
Some States had many inappropriate GIP stays 
Some States stand out for the number of inappropriate GIP stays found in our 
sample.41  For example, our sample included 99 GIP stays in Florida.42  More than 
half (52) of these stays were inappropriate.  One of these inappropriate stays 
involved a 75-year-old man who had no complaints of discomfort and whose 
needs were met with basic nursing and hospice services.  He did not need, nor did 
                        ____________________________________________________________ 
39 These are the unadjusted daily payment rates for FY 2012.  CMS, Update to Hospice Payment 
Rates, Hospice Cap, Hospice Wage Index, and the Hospice Pricer for FY 2012, Transmittal 2260, 
Change Request 7518, July 29, 2011.  Accessed at http://www.cms.gov/Outreach-and-
Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM7518.pdf on 
March 25, 2015. 
40 Ibid. 
41 Because of the size of our sample, we are not able to project these numbers to the population of 
all stays but can report only on the sample. 
42 Florida hospices billed for 21 percent of all GIP stays in 2012.   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  9   
he receive, acute care during his GIP stay, yet the hospice billed 16 days of GIP 
for him, totaling more than $11,000.  
Ohio and Arizona also stood out.  After Florida, these States had the highest 
number of inappropriate stays in our sample.  In Ohio, 18 of the 33 sample GIP 
stays were inappropriate, including a six-day stay for a beneficiary with 
Alzheimers disease who did not have unmanaged symptoms.  In Arizona, 17 of 
the 31 sample stays were inappropriate.  In one inappropriate stay, the beneficiary 
requested bingo night on the first day.  The beneficiarys symptoms were 
controlled, yet she remained in GIP for 14 days, which cost Medicare more than 
$10,000.   
Hospices billed inappropriately for about half of GIP stays in 
SNFs 
Hospices were more likely to inappropriately bill for GIP provided in SNFs than 
GIP provided in other settings, namely hospitals and hospice inpatient units.  
Forty-eight percent of GIP stays in SNFs were inappropriate compared to  
30 percent in other settings.  See Chart 2.  
 
Chart 2:  Inappropriate GIP Stays by Setting, 2012 
 
60%
s 48%
ay 50%
t
s
P  40%
GI
30%
f 
o 30%
e 
g
a
t 20%
n
e
c
r 10%
e
P
0%
Other settings SNF
Setting
  Note:  The difference between SNFs and other settings is statistically significant at the 95-percent confidence level. 
    Source:  OIG analysis of medical record review results, 2015. 
 
 
 
 
 
 
 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  10   
For 39 percent of GIP stays in SNFs, the beneficiary did not need that level of 
care at all during the stay.  For an additional 9 percent, the beneficiary needed GIP 
at some point, but not for the entire stay.  For example, a hospice billed for  
13 days of GIP for a beneficiary whose symptoms were under control by the third 
day.  The hospice received about $9,300 for this stay.  
The diagnoses of beneficiaries receiving GIP in SNFs differed from those of 
beneficiaries receiving GIP in other settings.  GIP stays in SNFs were more likely 
to involve a beneficiary diagnosed with a mental disorder, ill-defined condition, or 
Alzheimers disease.  In 36 percent of the GIP stays in SNFs, the beneficiary was 
diagnosed with one of these conditions compared to 22 percent of GIP stays in the 
other settings.  Previous OIG work found that beneficiaries with these types of 
diagnoses typically receive less complex hospice care than beneficiaries with 
other diagnoses. 43  This work also raised concerns about the potential for hospices 
to target beneficiaries with conditions associated with less complex care because 
they may offer hospices the greatest financial gain. 
 
For-profit hospices were more likely than other hospices to 
bill inappropriately for GIP 
For-profit hospices billed 41 percent of their GIP stays inappropriately.  In 
comparison, other hospices, including nonprofit and government-owned hospices, 
billed 27 percent of their GIP stays inappropriately.  
For-profit hospices were more likely than other hospices to bill for GIP in the 
SNF setting.  For-profit hospices accounted for one-third of all GIP stays but two-
thirds of GIP stays in SNFs. 
 
                        ____________________________________________________________ 
43 OIG, Medicare Hospices That Focus on Nursing Facility Residents, OEI-02-10-00070, July 
2011 and Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living 
Facilities, OEI-02-14-00070, January 2015. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  11   
Examples of Inappropriate Billing by For-Profit Hospices 
 
  A hospice billed for 51 days of GIP for a beneficiary who needed only routine 
home care.  The beneficiarys symptoms were under control and she needed 
assistance only with personal care, eating, and the administration of medication.  
Medicare paid the hospice almost $30,000 for over 7 weeks of GIP.   
 
  A hospice billed for GIP for a beneficiary with a circulatory disease who had no 
unmanaged symptoms.  This beneficiary could have been cared for at home, but 
the hospice billed Medicare for 46 consecutive days of GIP in an inpatient unit.  
The hospice was paid just over $31,000 for the stay.   
 
  A hospice billed for GIP for a beneficiary in Florida who entered GIP for 
symptom management.  Her symptoms were managed within 2 days, yet she 
remained in GIP for 15 additional days.  Medicare paid close to $12,000 for this 
stay. 
 
Medicare sometimes paid twice for drugs for beneficiaries 
receiving GIP 
The Medicare Part A hospice benefit covers drugs for beneficiaries through the 
daily rate paid to hospices.  These drugs must be used primarily for the relief of 
pain and symptom control related to the hospice beneficiary's terminal illness.44  
They are supposed to be provided by the hospice.  However, our sample of GIP 
stays included many instances in which Medicare Part D paid for these drugs for 
hospice beneficiaries.   
Specifically, Part D inappropriately paid for over half (110 of 198) of the drugs 
billed to Part D that were provided to beneficiaries in our sampled GIP stays.45  
The 110 drugs were used primarily for the relief of pain and symptom control 
related to the hospice beneficiary's terminal illness, and therefore, should have 
been provided by the hospice and covered under the daily rate.  Medicare is 
paying twice when Part D pays for drugs that are already covered by the Part A 
hospice benefit.  Also, beneficiaries may be paying for copays for the Part D 
drugs.       
In recent guidance, CMS has encouraged Part D sponsors not to pay for analgesic, 
antinausea, laxative, or antianxiety drugs for hospice beneficiaries because they 
are commonly used in hospice care and hospices are expected to provide them.  
                        ____________________________________________________________ 
44 42 CFR 418.202 (f). 
45 Because of the size of our sample, we are not able to project these numbers to the population of 
all stays and report only on the sample. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  12   
Although some of the inappropriately paid drugs associated with our sample were 
in these categories, many others were not.  Of the 110 drugs, 30 were analgesic, 
antinausea, laxative, or antianxiety drugs.  The remaining 80 drugs for which  
Part D inappropriately paid were in other categories, which included diuretics and 
anticonvulsants. 
Hospices did not meet care planning requirements for  
85 percent of GIP stays 
Hospices are required to develop an individualized written plan of care for each 
beneficiary they serve.  The plan of care must meet a number of requirements.  
For instance, it must include a detailed statement of the scope and frequency of 
needed services and must be developed by an interdisciplinary group.46  Care 
plans are important because they help ensure that beneficiaries receive the care 
and attention they need and that care is coordinated effectively.    
For 72 percent of GIP stays, the hospice care plan was missing at 
least one key element 
In 72 percent of GIP stays, the hospice did not include either the frequency or the 
scope of at least one type of main service in the care plan.  These services include 
physician, nursing, and medical social services.   
In some instances, care plans included a general description of care and did not 
appear to take into account the individual needs of the beneficiary.  For example, 
a hospice billed for 4 days of GIP for a beneficiary in an inpatient unit. The plan 
of care was not individualized, lacked details, and included general language, 
such as ...to manage pain and other symptoms. 
In about half the stays, the hospice care plan was not developed by 
all the required parties 
For 49 percent of GIP stays, hospices did not involve all the required members in 
care planning.47  A pastoral or other counselor was missing in 44 percent of stays 
and a social worker was not involved in 34 percent of stays.  In 12 percent of 
stays, hospices did not involve the physician in the care planning.  A nurse was 
not involved in 5 percent of stays.  It is important for all disciplines to be involved 
in the care planning to ensure that all of the needs of the beneficiary are planned 
for and met. 
 
 
                        ____________________________________________________________ 
46 42 CFR  418.56(b) and (c)(2).     
47 A number of stays had more than one required member who was not involved in the care 
planning.  As a result, the sum of all the percentages that follow in the next few sentences does not 
equal 49 percent.   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  13   
Examples of Care Plans That Did Not Meet Requirements 
 
  The plan of care developed by a for-profit hospice for an 85-year-old beneficiary 
with a disease of the nervous system did not include drugs and treatment 
necessary to meet the beneficiarys needs.  The only problem identified in the care 
plan was weakness.  None of the required interdisciplinary team members were 
involved in developing the plan.  The hospice billed for a 10-day GIP stay in a 
hospice inpatient unit, totaling about $7,500.   
 
  A nonprofit hospice billed for 5 days of GIP for a 91-year-old beneficiary in a 
SNF but did not establish an adequate care plan.  The beneficiary was diagnosed 
with an ill-defined condition and was placed in GIP for both pain and symptom 
management.  Only the nurse and the physician developed the care plan, which 
did not include the frequency of nursing services.  The beneficiarys pain 
remained uncontrolled for the first 4 days.  Medicare paid the hospice nearly 
$3,600 for the GIP stay.   
 
   
Hospices sometimes provided poor-quality care and often 
did not provide intense services  
In 9 percent of GIP stays, the hospice did not provide enough nursing, physician, 
or medical social services.  These services are particularly important during GIP 
stays because this level of care is for pain control or acute or chronic symptom 
management that cannot be provided in other settings.  For these stays, the 
hospices did not provide as many visits as the beneficiary needed or did not 
provide the care that the beneficiary needed during the visit.  In some cases, these 
hospices were not able to effectively manage beneficiaries symptoms or 
medications. 
 
 
 
 
 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  14   
Examples of Poor-Quality Care During GIP Stays 
 
  A 101-year-old beneficiary with dementia was cared for by a for-profit 
hospice in Alabama.  His pain was never under control despite spending 16 
days in GIP in a SNF.  The beneficiary suffered significant pain during 
personal care and wound care.  The hospice did not change the pain 
medication until the last day, when the dosage was slightly increased.  In 
addition, the beneficiary needed an alternating pressure mattress at the start of 
the GIP stay, but the hospice did not order it for more than a week.  Medicare 
paid the hospice more than $9,500 for this stay.  
 
  An 86-year-old beneficiary under the care of a for-profit hospice in Arizona 
had end stage renal disease and suffered from severe pain.  He was also at 
high risk for severe respiratory distress.  The hospice did not change his 
medication for 3 days even though his symptoms had not improved.  For 
instance, the beneficiarys breathing was labored, but the hospice did not 
provide intervention or change his plan of care.  Medicare paid the hospice 
over $5,000 for the GIP stay.  
 
  A 70-year-old beneficiary who had dementia was cared for by a hospice in 
Puerto Rico.  The hospice billed Medicare for 17 days of GIP in a hospital.  
The hospice nurse did not provide any visits and instead called the patients 
family to find out how he was doing.  Medicare paid almost $8,000 for the 
stay.   
 
  An 89-year-old beneficiary was under the care of a nonprofit hospice that 
billed for 16 days of GIP in a SNF.  The beneficiarys symptoms were 
uncontrolled for 14 days during which the hospice rarely changed his 
medication dosage.  The patient continued to experience respiratory distress 
and anxiety.  The hospice did not order any medical social services although 
the beneficiary and his family could have benefited from increased hospice 
services and emotional support.  The hospice received just over $11,600 for 
this GIP stay.   
 
  A 66-year-old beneficiary with cancer was in pain throughout his GIP stay in 
a SNF.  The beneficiarys severe pain was not managed, and he did not have 
frequent assessments and adjustments of his care plan to bring the pain under 
control.  Also, more involvement from the interdisciplinary team members 
was needed during the stay.  The hospice was paid more than $2,000 for this 
patients stay. 
 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  15   
Hospices often did not provide intense services to beneficiaries in 
GIP 
Subcutaneous and intravenous treatments are not requirements of GIP stays, nor 
are they always appropriate during GIP stays.48  However, these types of services 
may be provided in many cases, given that GIP is specifically for pain control or 
acute or chronic symptom management that cannot be managed in other settings. 
Hospices did not provide any medication subcutaneously to beneficiaries in more 
than three-quarters of GIP stays.  Hospices did not provide medication, 
electrolytes, vitamins, parenteral nutrition, fluids, or infusions intravenously to 
beneficiaries in more than half of GIP stays.  Hospices did not provide treatment 
either subcutaneously or intravenously in approximately one-third of GIP stays.  
GIP stays in SNFs again stand out.  Hospices did not provide treatment 
subcutaneously or intravenously in 70 percent of GIP stays in SNFs, compared to 
32 percent in other settings.   
   
                        ____________________________________________________________ 
48 For the purpose of this finding, we refer to subcutaneous and intravenous treatments as intense 
services. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  16   
CONCLUSION AND RECOMMENDATIONS 
Hospices inappropriately billed one-third of GIP stays in 2012; this misuse of GIP 
cost Medicare $268 million dollars.  In some cases, hospices billed for GIP when 
the beneficiary did not have uncontrolled pain or unmanaged symptoms, a 
requirement of GIP.  In other cases, the care the beneficiary needed could have 
been provided at home.  Hospices were more likely to inappropriately bill for GIP 
provided in SNFs than in other settings.  Also, for-profit hospices were more 
likely than other hospices to bill inappropriately.  Medicare sometimes paid twice 
for drugs for hospice beneficiaries.  This is because Part D paid for drugs that 
were already covered by the Part A hospice benefit.  In addition, hospices did not 
meet care planning requirements for 85 percent of GIP stays.  Finally, hospices 
sometimes provided poor-quality care. 
The findings in this report make clear the need to address the misuse of GIP and 
hold hospices accountable when they bill inappropriately or provide poor-quality 
care.  The IMPACT Act of 2014 will increase the number of hospice surveys 
conducted, but more needs to be done.  This report shows that misuse of GIP has 
human costs for this vulnerable population as well as financial costs for Medicare.  
Ensuring that hospices provide the appropriate level of care in the most suitable 
setting is essential to meeting beneficiaries needs, providing them quality care, 
and protecting the integrity of Medicares hospice benefit.       
We recommend that CMS: 
Increase its oversight of hospice GIP claims and review Part D 
payments for drugs for hospice beneficiaries  
CMS should increase and better target its hospice program integrity efforts.  CMS 
should instruct its contractors to conduct more medical reviews of hospice GIP 
claims and particularly focus on GIP provided in SNFs and GIP provided by for-
profit hospices, given the higher rates at which their stays were inappropriate.  As 
part of these efforts, contractors should identify hospices with recurring problems.  
They should target these hospices in their reviews.  These efforts will help to 
ensure that hospice payments are appropriate for the level of care that the 
beneficiary needs and is receiving.   
Also, CMS should ensure that it does not pay twice for drugs that are covered 
under Part D and provided to beneficiaries in hospice care.  It should ensure that 
hospices are paying for these drugs and that they are not being billed to Part D.  
As part of its efforts, CMS should instruct its contractors to identify hospices that 
have beneficiaries with high numbers of Part D drugs and target these hospices for 
further review.  CMS could consider including measures that identify high 
amounts of Part D billing for hospice beneficiaries in its Fraud Prevention 
System. 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  17   
Ensure that a physician is involved in the decision to use GIP 
Involving physicians in the decisions to start and continue GIP would help ensure 
that GIP is used appropriately.  One way to accomplish this is to require that 
hospices obtain a physicians order to change the level of care to GIP and include 
the ordering physicians National Provider Identifier on the hospice claim.  The 
hospice should also have the physician sign off on the level of care at reasonable 
intervals during the GIP stay.  These intervals should be determined by 
CMS.  Making the physician more accountable and requiring some record of the 
physicians involvement would add another safeguard for ensuring that the 
beneficiary needs GIP.   
Conduct prepayment reviews for lengthy GIP stays 
When a beneficiary has a long stay in GIP, it raises questions about whether GIP 
is the appropriate level of care and, if it is, whether the beneficiarys symptoms 
are being effectively managed.  CMS should conduct prepayment reviews for GIP 
stays exceeding a reasonable threshold, such as 7 days.  CMS should determine 
this threshold by consulting hospice and palliative care experts and analyzing data 
on the length of GIP stays.  These reviews, based on information provided by the 
hospice, would determine whether GIP was appropriate for each day of the stay or 
if another level of care, such as routine home care or inpatient respite care, was 
more appropriate.  Conducting prepayment reviews of lengthy GIP stays would 
establish additional safeguards to ensure appropriate duration of care and help 
prevent inappropriate payments for GIP stays.  These reviews could also promote 
effective symptom management and reduce the time beneficiaries pain and other 
symptoms are unmanaged.  
Increase surveyor efforts to ensure that hospices meet care planning 
requirements 
State surveyors are CMSs primary tool to verify that hospices are meeting care 
planning requirements and to enforce these requirements.  CMS should increase 
surveyor efforts to make hospices more accountable.  It should train surveyors to 
ensure that they appropriately cite hospices with deficiencies when their care 
planning is not individualized, does not include the scope and frequency of 
services, and is not developed by the required parties.  Care planning that meets 
requirements is essential for delivering high-quality services for beneficiaries and 
their families.   
Establish additional enforcement remedies for poor hospice 
performance 
CMSs only enforcement remedy against poorly performing hospices is 
termination from the Medicare program.  Although potentially very serious, 
problems with care planning and quality may not always merit termination.  
Termination can disrupt care for beneficiaries and families.  As we have 
recommended previously, CMS should seek authority to establish less severe 
remedies to address performance problems.  A potential array of enforcement 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  18   
measures could include directed plans of correction, directed in-service training, 
denials of payment for new admissions or for all patients, civil monetary 
penalties, and imposition of temporary management. 
Follow up on inappropriate GIP stays, inappropriate Part D 
payments, and hospices that provided poor-quality care 
In a separate memorandum, we will provide CMS information about the stays that 
were inappropriate and the inappropriate Part D payments in which Medicare paid 
twice for drugs for beneficiaries receiving GIP.  CMS should review this 
information and take appropriate action.  Appropriate actions could include, but 
are not limited to: (1) recoupment of any inappropriate payments or (2) provider 
education on how to properly bill for GIP stays. 
We will also provide CMS with a list of the hospices in our sample that provided 
poor-quality care.  CMS should provide the list to State Survey and Certification 
agencies so they can prioritize these hospices for review. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  19   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
 
CMS concurred with all six of our recommendations. 
CMS concurred with our first recommendation to increase its oversight of hospice 
GIP claims and review Part D payments for drugs for hospice beneficiaries.  CMS 
stated that it is procuring a national Durable Medical Equipment and Home 
Health/Hospice Recovery Audit contractor that will conduct claim reviews and 
recoup overpayments and pay underpayments, as necessary.  
CMS concurred with our second recommendation to ensure that a physician is 
involved in the decision to use GIP.  CMS stated that it has concerns that 
requiring a physicians order for GIP could affect access for patients and will 
work with the hospice community to explore other options for expanding 
physician involvement.  OIG agrees that access to care is crucial.  However, 
requiring a physicians order for GIP should not affect access.  The hospice 
physician should already be actively involved in the care of a beneficiary, 
especially if the beneficiary has symptoms severe enough that they cannot be 
controlled at home.  In addition, hospices must make physician services routinely 
available on a 24-hour basis 7 days a week.  Requiring a physicians order for GIP 
for beneficiaries who need that level of care should not place an undue burden on 
the physician or the hospice.  It makes the physician more accountable and adds 
another safeguard for ensuring that the beneficiary needs GIP.  
CMS concurred with our third recommendation to conduct prepayment reviews 
for lengthy GIP stays.  CMS stated that it will work with its contractors to conduct 
such reviews. 
CMS concurred with our fourth recommendation to increase surveyor efforts to 
ensure that hospices meet care planning requirements.  CMS stated that it will 
revise the Basic Hospice Training for surveyors to emphasize care planning 
reviews.    
CMS concurred with our fifth recommendation to establish additional 
enforcement remedies for poor hospice performance.  CMS stated that it will 
consider submitting a proposal as part of the budget process that would seek 
authority to establish additional enforcement remedies.  
Finally, CMS concurred with our sixth recommendation to follow up on 
inappropriate GIP stays, inappropriate Part D payments, and hospices that 
provided poor-quality care.  CMS stated that it will determine an appropriate 
number of claims to review.  CMS also plans to instruct State Survey and 
Certification agencies to review the hospices identified in this report as having 
provided poor-quality care and take appropriate action.  CMS also stated that it 
will reiterate its guidance to Part D sponsors concerning prior authorization of the 
four categories of drugs.    
   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  20   
APPENDIX A 
Detailed Methodology 
Selection of Statistical Sample for Medical Record Review 
Using CMSs National Claims History file, we extracted all Medicare Part A 
hospice claims that had service dates in 2012 and were received through 
December 2012.  The claims included information about the level of hospice care, 
such as GIP, and the setting, such as a SNF.  We combined the claims to identify 
all GIP stays.  We considered a GIP stay to be claims for GIP for the same 
beneficiary in the same setting, from the same hospice, and the start date of a 
subsequent claim was the same day, or the next day, as the ending date of the 
previous claim.  We identified 282,225 GIP stays in 2012 for 252,759 
beneficiaries.  
We selected a stratified simple random sample of 570 GIP stays from this file. We 
stratified the sample by whether GIP was provided in SNFs or in other settings to 
determine whether there were any statistical differences between estimates for 
these two groups at the 95-percent confidence level.  We also stratified the sample 
by Medicare payments to enhance the precision of our statistical estimates.49  The 
sample included 5 strata.  See Table A-1. 
Table A-1:  Population, Strata, and Sample Size 
Number of Stays  Number of Stays 
Stratum 
in the Population  in the Sample 
GIP stays in SNFs  18,030  116 
GIP stays in other settings for which the paid 
152,086  120 
amount was at most $3,000 
GIP stays in other settings for which the paid 
82,096  171 
amount was more than $3,000, but at most $7,000 
GIP stays in other settings for which the paid 
26,502  120 
amount was more than $7,000, but at most $16,000 
GIP stays in other settings for which the paid 
3,511  43 
amount was more than $16,000 
Total  282,225  570 
Source:  OIG analysis of medical record review, 2015. 
                        ____________________________________________________________ 
49 The dollar amounts in each stratum were determined by the distribution of the universe of GIP 
stays. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  21   
We did not contact the hospices that billed for five of the stays in our sample 
because these hospices were under investigation by OIG.  Our final sample 
included 565 stays.   
Next, we matched the hospice provider numbers from the claims data with the 
Certification and Survey Provider Enhanced Reports to determine the ownership 
status of each hospice (e.g., for-profit or nonprofit).   
Lastly, we used the Medicare Part D data to identify the drugs paid for by Part D 
for the beneficiaries in the sampled GIP stays.  To do this, we matched each 
beneficiarys Health Insurance Claims Number to the Part D prescription drug 
event data for 2012.   
Medical Record Review 
We used a contractor to collect and review the medical records associated with 
each sampled stay.  We received a 100-percent response rate from the hospices we 
contacted.  
For each stay, we requested that the hospice provide all medical records relating 
to the hospice services provided to the beneficiary during the GIP stay identified 
for review.  The documentation included the hospice election statement, all 
certifications of terminal illness that cover the review period, clinical information 
and other documentation that support the medical prognosis, all assessments that 
cover the review period, all plans of care that cover the review period, including 
any updates or changes to the plans, and a record of all hospice services provided 
during the review period, including those provided under arrangement or contract 
with the hospice.  Hospices are required to keep all of this information in the 
clinical record that they establish for every individual receiving care and 
services.50  The contractor identified stays for which the hospice did not provide 
an election statement or certification of terminal illness.   
The contracted reviewers included four registered nurses, each of whom had 
experience providing and managing hospice care.  For each stay, they used a 
standardized instrument based on Medicare coverage requirements and CMS 
guidance to review the beneficiarys care planning and services provided by the 
hospice. 
For each day in each GIP stay, the reviewers determined whether GIP was 
appropriate for the beneficiary based on his or her needs.  GIP is solely for pain 
control or acute or chronic symptom management that cannot be provided in other 
settings.  If the reviewers determined that GIP was not appropriate, they 
determined the appropriate level of care (e.g., routine home care).  In addition, for 
stays in which Part D paid for a drug for the beneficiary, the reviewers determined 
                        ____________________________________________________________ 
50 42 CFR  418.104. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  22   
whether the drugs were related to the palliation and management of the terminal 
illness or related conditions.   
The reviewers also determined whether the physician and nursing services 
provided during the GIP claim period met the beneficiarys needs or whether the 
beneficiary needed more services or services of a higher level of intensity.  They 
also determined whether the beneficiary needed more medical social services than 
were provided.51 
Lastly, for each stay, the reviewers determined whether the plan of care met key 
Medicare requirements.52  Specifically, they determined whether it included a 
detailed scope and frequency of the services and whether the services met the 
beneficiarys needs.  The reviewers also determined whether the plan of care was 
developed by the required members of an interdisciplinary group that included a 
physician, nurse, social worker, and pastoral or other counselor.  The reviewers 
also described any instances of poor-quality care.  
Analysis 
We analyzed the results of the medical record review to estimate the percentage of 
GIP stays that were billed inappropriately.  We included stays in which the 
beneficiary did not need GIP at all, and stays in which the beneficiary did not 
need GIP for part (e.g., two or more consecutive days) of the stay.  We also 
counted as inappropriately billed all stays in which the hospice did not provide an 
election statement or certification of terminal illness. 
We estimated the amount that inappropriate stays cost Medicare.  For stays in 
which the beneficiary did not elect hospice or was not certified as having a 
terminal illness with a prognosis of 6 months or less, we considered the entire 
amount Medicare paid for the GIP stay to be inappropriate.  For stays in which the 
beneficiary elected hospice and was certified as having a terminal illness but did 
not need GIP for part or all of the stay, we considered inappropriate the difference 
between the amount Medicare paid for GIP and the amount Medicare would have 
paid had the hospice billed the appropriate level of care. 
We estimated the percentage of inappropriate stays that were in SNFs and the 
percentage that were in other settings, namely hospitals and hospice inpatient 
units.  We also estimated the percentage of inappropriate stays that were billed by 
for-profit hospices and the percentage that were billed by other types of hospices, 
such as nonprofits or those that were government owned.  We used a chi-square to 
test for statistically significant differences between GIP stays provided in SNFs 
and those provided in other settings.  We also tested for statistically significant 
differences between GIP stays in for-profit hospices and those in all other 
                        ____________________________________________________________ 
51 A service could be provided directly by hospice staff or under arrangement with the hospice.     
52 The reviewers took into account the plan of care and any updates that covered the GIP stay 
identified for review.   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  23   
hospices.  Unless otherwise stated, all differences noted in the findings are 
statistically significant at the 95-percent confidence level.   
We also analyzed the results of the medical record review to determine the 
number of drugs associated with our sample that Part D paid for inappropriately.  
We then determined how many of these drugs were included in the four categories 
addressed in CMS guidance:  analgesics, antinauseants, laxatives, and antianxiety 
drugs.53  Because of the size of our sample, we are not able to project these 
numbers to the population of all stays, so the numbers presented are solely based 
on the sample. 
We also determined whether hospices provided beneficiaries with subcutaneous or 
intravenous treatment, which we refer to as intense services.  These services are 
not required for beneficiaries receiving GIP, but are commonly provided, given 
that GIP is for pain control or acute or chronic symptom management that cannot 
be managed in settings other than inpatient. 
Lastly, we analyzed the plans of care to determine whether hospices met the 
Medicare coverage requirements.  Specifically, we analyzed the percentage of 
stays that were missing required elements in care plans.54  We also analyzed the 
percentage of stays that had plans of care that were not developed by all required 
members of an interdisciplinary group.55   
                        ____________________________________________________________ 
53 These categories were also used in a prior OIG study.  See OIG, Medicare Could Be Paying 
Twice for Prescription Drugs for Beneficiaries in Hospice (A-06-10-00059). 
54 According to Federal requirements, the plan of care must include a detailed statement of the 
scope and frequency of needed services.  See 42  418.56(c)(2). 
55 According to Federal requirements, the interdisciplinary group must include a physician, nurse, 
social worker, and pastoral or other counselor.  See 42 CFR  418.200, 418.56(a).   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  24   
APPENDIX B  
Statistical Estimates and Confidence Intervals 
Table B-1:  Sample Sizes, Point Estimates, and Confidence Intervals for Inappropriate Billing  
95-Percent Confidence Interval 
Sample 
Estimate Characteristic  Size   Point Estimate  Lower Limit  Upper Limit 
Percentage of GIP stays billed inappropriately  565  31.4%  27.0%  36.2% 
Percentage of GIP stays in which the beneficiary did 
565  20.3%  16.4%  24.8% 
not need GIP at all during the stay 
Percentage of GIP stays in which the beneficiary 
565  9.7%  7.6%  12.4% 
needed GIP at some point, but not the entire stay 
Percentage of GIP stays in which the hospice did not 
have evidence that the beneficiary elected hospice  565  1.4%  0.5%  3.6% 
care or was certified as having a terminal illness 
Percentage of GIP stays for which hospices billed 
565  68.6%  63.8%  73.0% 
Medicare appropriately 
Dollar amount paid inappropriately  565  $268,090,214  $235,669,213  $300,511,215 
Percentage of total GIP payments that Medicare 
565  26.2%  23.2%  29.3% 
inappropriately paid 
Percentage of inappropriate GIP stays for which the 
hospice should have billed some or all days as routine  233  93.0%  85.9%  96.7% 
care 
Percentage of inappropriate GIP stays in which the 
beneficiary did not have unmanaged symptoms or  233  88.6%  81.2%  93.4% 
received care that could have been provided at home 
Percentage of inappropriate GIP stays in which the 
233  14.7%  9.6%  21.8% 
beneficiary received GIP because of caregiver issues 
continued on the next page 
 
 
 
 
 
 
 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  25   
Table B-1:  Sample Sizes, Point Estimates, and Confidence Intervals for Inappropriate Billing 
(Continued) 
95-Percent Confidence Interval 
Sample  Point 
Estimate Characteristic  Size   Estimate  Lower Limit  Upper Limit 
Percentage of GIP stays in SNFs that were 
113  47.8%  38.7%  57.1% 
inappropriate 
Percentage of GIP stays in other settings that were 
452  30.3%  25.6%  35.4% 
inappropriate 
Percentage of GIP stays in SNFs in which the 
113  38.9%  30.3%  48.3% 
beneficiary did not need GIP at all during the stay 
Percentage of GIP stays in SNFs in which the 
113  8.8%  4.8%  15.8% 
beneficiary did not need GIP for part of the stay 
Percentage of GIP stays in SNFs in which the 
beneficiary was diagnosed with a mental disorder, ill- 113  36.3%  27.9%  45.6% 
defined condition, or Alzheimer's disease 
Percentage of GIP stays in other settings in which the 
beneficiary was diagnosed with a mental disorder, ill- 452  22.1%  17.7%  27.2% 
defined condition, or Alzheimer's disease 
Percentage of GIP stays in for-profit hospices that were 
200  41.4%  32.7%  50.7% 
billed inappropriately 
Percentage of GIP stays in other types of hospices, 
including nonprofit and government-owned hospices,  365  27.4%  22.4%  33.1% 
that were billed inappropriately  
Source:  OIG analysis of medical record review results, 2015. 
 
   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  26   
Table B-2:  Sample Sizes, Point Estimates, and Confidence Intervals for Care Planning 
Requirements  
95-Percent Confidence Interval 
Sample  Point 
Estimate Characteristic  Size  Estimate  Lower Limit  Upper Limit 
Percentage of GIP stays that did not meet care 
565  84.6%  80.7%  87.8% 
planning requirements 
Percentage of GIP stays that were missing at least one 
565  72.3%  67.2%  76.8% 
key element of the care plan 
Percentage of GIP stays that did not involve all the 
565  49.0%  43.6%  54.3% 
required parties in developing the care plan 
Percentage of GIP stays in which a pastoral or other 
counselor was not involved in development of the care  565  44.4%  39.1%  49.8% 
plan 
Percentage of GIP stays in which a social worker was 
565  34.4%  29.4%  39.8% 
not involved in development of the care plan 
Percentage of GIP stays in which a physician was not 
565  11.9%  8.5%  16.3% 
involved in development of the care plan 
Percentage of GIP stays in which a nurse was not 
565  5.3%  3.5%  8.0% 
involved in development of the care plan 
Source:  OIG analysis of medical record review results, 2015. 
 
   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  27   
Table B-3:  Sample Sizes, Point Estimates, and Confidence Intervals for Quality-of-Care 
Concerns  
95-Percent Confidence Interval 
Sample  Point 
Estimate Characteristic 
Size  Estimate 
Lower Limit  Upper Limit 
Percentage of GIP stays that did not provide enough 
565  9.5%1  6.8%  13.1% 
nursing, physician, or medical social services 
Percentage of GIP stays in which the hospice did not 
565  75.8%  70.9%  80.1% 
provide subcutaneous treatment 
Percentage of GIP stays in which the hospice did not 
565  50.8%  45.4%  56.1% 
provide intravenous treatment 
Percentage of GIP stays in SNFs in which the hospice did 
113  69.9%  60.7%  77.7% 
not provide subcutaneous or intravenous treatment 
Percentage of GIP stays in other settings in which the 
hospice did not provide subcutaneous or intravenous  452  32.3%  27.4%  37.7% 
treatment 
1The point estimate was 9.49 percent, which rounded to 9 percent as a whole number in the text. 
Source:  OIG analysis of medical record review results, 2015. 
 
   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  28   
APPENDIX C 
 
Chi-square Tests for Statistically Significant Differences 
Table C-1:  Chi-square Test Comparing GIP Stays in SNFs and Other Settings 
Percentage of GIP 
Percentage of GIP  Stays Provided in Other 
   Stays Provided in SNFs   Settings  P-Value1 
Percentage of GIP stays billed to Medicare 
47.8%  30.3%  0.0008 
inappropriately 
Percentage of GIP stays in which the beneficiary was 
diagnosed with a mental disorder, ill-defined condition,  36.3%  22.1%  0.0037 
or Alzheimer's disease  
Percentage of GIP stays in which the hospice did not 
69.9%  32.3%  <.0001 
provide intravenous and subcutaneous treatment 
1Differences between percentages of stays provided in SNFs and other settings were statistically significant at the 95-percent confidence 
level. 
Source: OIG analysis of medical record review results, 2015. 
 
 
 
Table C-2:  Chi-Square Test Comparing GIP stays in For-profit Hospices and all Other 
Hospices, including Nonprofit and Government Owned 
Percentage of GIP  Percentage of GIP 
Stays in For-profit  Stays in all Other 
   Hospices  Hospices  P-Value1 
Percentage of GIP stays that were billed inappropriately  41.4%  27.4%  0.0087 
1Differences between percentages of stays in for-profit hospices and all other hospices were statistically significant at the 95-percent 
confidence level. 
Source: OIG analysis of medical record review results, 2015. 
 
 
 
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Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  31   
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  32   
 
 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  33   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Jodi Nudelman, Regional 
Inspector General for Evaluation and Inspections in the New York regional office.  
Deputy Regional Inspector General Nancy Harrison and Jenell Clarke-Whyte 
served as co-team leaders for this study.  Other Office of Evaluation and 
Inspections staff from the New York regional office who conducted the study 
include Jennifer Karr, Michael Rubin, and Sarah L. Stefanski.  Central office staff 
who provided support include Kevin Farber and Berivan Demir Neubert.  
 
 
 
 
 
 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care (OEI-02-10-00491)  34   
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