Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
M   H H
EDICARE  OSPICES  AVE 
 
F   I T
INANCIAL  NCENTIVES  O 
 
PRO  VIDE CARE IN ASSISTED 
 
L F  
IVING  ACILITIES 
 
Daniel R. Levinson   
Inspector General  
 
January 2015 
OEI-02-14-00070   
   
EXECUTIVE SUMMARY:  MEDICARE HOSPICES HAVE FINANCIAL 
INCENTIVES TO PROVIDE CARE IN ASSISTED LIVING FACILITIES 
OEI-02-14-00070 
 
WHY WE DID THIS STUDY 
 
Medicare hospice care is intended to help terminally ill beneficiaries continue life with  
minimal disruption and to support families and caregivers.  Care may be provided in 
various settings, including a private home or other places of residence, such as an assisted 
living facility (ALF).  Pursuant to the Patient Protection and Affordable Care Act, the 
Centers for Medicare & Medicaid Services (CMS) must reform the hospice payment 
system, collect data relevant to revising payments, and develop quality measures.  This 
report provides information to inform those decisions and is part of the Office of 
Inspector Generals (OIG) larger body of work on hospice care.  While the report focuses 
on ALFs, many of the issues identified pertain to the hospice benefit more broadly. 
 
HOW WE DID THIS STUDY  
 
We based this study on an analysis of all Medicare hospice claims from 2007 through 
2012.  We used Certification and Survey Provider Enhanced Reports data and Healthcare 
Cost Report Information System reports for information on hospice characteristics.  
 
WHAT WE FOUND 
 
Medicare payments for hospice care in ALFs 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 than for beneficiaries in other settings.  
Hospice beneficiaries in ALFs often had diagnoses that usually require less complex care.  
Hospices typically provided fewer than 5 hours of visits and were paid about $1,100 per 
week for each beneficiary receiving routine home care in ALFs.  Also, for-profit hospices 
received much higher Medicare payments per beneficiary than nonprofit hospices.  This 
report raises concerns about the financial incentives created by the current payment 
system and the potential for hospices to target beneficiaries in ALFs because they may 
offer the hospices the greatest financial gain. Together, the findings in this and previous 
OIG reports show that payment reform and more accountability are needed to reduce 
incentives for hospices to focus solely on certain types of diagnoses or settings.   
 
WHAT WE RECOMMEND  
 
We recommend that CMS, as part of its ongoing hospice reform efforts:  (1) reform  
payments to reduce the incentive for hospices to target beneficiaries with certain 
diagnoses and those likely to have long stays, (2) target certain hospices for review, (3) 
develop and adopt claims-based measures of quality, (4) make hospice data publicly 
available for beneficiaries, and (5) provide additional information to hospices to educate 
them about how they compare to their peers.  CMS concurred with all five 
recommendations.  
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................6 

Findings........................................................................................................9 

Medicare payments for hospice care in ALFs more than doubled  
in 5 years, totaling $2.1 billion in 2012 ...........................................9 

Hospices provided care much longer and received much higher 

Medicare payments for beneficiaries in ALFs  ................................9 

Most beneficiaries in ALFs had diagnoses that typically require 
less complex care ...........................................................................12 

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 an ALF ..........................................13 

For-profit hospices received much higher Medicare payments per 

beneficiary than nonprofit hospices...............................................15 

Many for-profit hospices targeted ALFs ........................................17 

Conclusion and Recommendations ............................................................18 

Agency Comments and Office of Inspector General Response .................21 

Appendix A:  Agency Comments ..............................................................23 

Acknowledgments......................................................................................27 

 
   
   
OBJECTIVES 
1. 	  To describe the trends in Medicare payments for hospice care provided 
in assisted living facilities (ALFs). 
2.	   To describe the characteristics of beneficiaries who receive hospice 
care in ALFs. 
3.	   To determine the types and frequency of hospice services provided to 
beneficiaries residing in ALFs. 
4.	   To determine the extent to which some hospices receive a high 
percentage of their Medicare reimbursement from care provided in 
ALFs.  
BACKGROUND 
The goals of hospice care are to help terminally ill beneficiaries with a life 
expectancy of 6 months or less continue life with minimal disruption and 
to support beneficiaries families and other caregivers throughout the 
process. The care may be provided to individuals and their families in 
various settings, including a skilled nursing facility; a private home; or 
other places of residence, such as an ALF.  
Little is known about hospice care provided in ALFs; however, some  
concerns exist. According to the Medicare Payment Advisory 
Commission (MedPAC),1 long hospice stays among ALF residents are not 
understood and bear further monitoring and examination.2 MedPAC also 
found that, under the current payment system for Medicare hospice, very 
long stays in hospice care are more profitable for providers than shorter 
stays.3  Hospices are paid a daily rate for every day a beneficiary is in 
hospice care, regardless of whether services are provided on a particular 
day. Therefore, a hospice stands to gain financially if it provides minimal 
services to a beneficiary over a long period of time.   
Pursuant to the Patient Protection and Affordable Care Act (ACA), the 
Centers for Medicare & Medicaid Services (CMS) must reform the 
hospice payment system, collect data relevant to revising hospice 
payments, and develop quality measures for hospices.4 This report 
provides data that will help inform CMSs decisions as it fulfills these 
ACA requirements. 
____________________________________________________________ 
 
1 MedPAC is an independent Congressional agency that advises Congress on issues 

affecting the Medicare program. 
 
2 MedPAC, Report to the Congress: Medicare Payment Policy, March  2012, ch. 11. 

3 MedPAC, Report to the Congress: Reforming the Delivery System, June 2008, ch. 8. 
 
4 ACA, P.L. 111-148,  3004(c) and  3132. 

Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  1 
   
   
This report is part of the Office of Inspector Generals (OIGs) larger body 
of work on hospice care. While it focuses on ALFs, many of the issues in 
this report pertain to the hospice benefit more broadly.  They are similar to 
those that both OIG and MedPAC have identified in other hospice 
settings, such as nursing facilities.5    
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.  Upon 
a beneficiarys election of hospice care, the hospice agency assumes the 
responsibility for medical care related to the beneficiarys terminal illness  
and related conditions. This care is palliative, rather than curative.  It 
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 unrelated to the terminal illness.6 Beneficiaries 
may revoke their election of hospice care and return to standard Medicare 
coverage at any time.7  
Beneficiaries are entitled to receive hospice care for two 90-day periods, 
followed by an unlimited number of 60-day periods.8  The benefit periods 
need not be consecutive.   At the start of each period of care, a hospice 
physician must certify that the beneficiary is terminally ill and has a life 
expectancy of 6 months or less.  Beginning in 2011, for the third and all 
subsequent benefit periods, a hospice physician or hospice nurse 
practitioner must perform a face-to-face visit and explain why the clinical 
____________________________________________________________ 
   
5 OIG,  Medicare Hospices That Focus on Nursing Facility Residents, OEI-02-10-00070, 
July 2011; MedPAC, Report to the Congress: Medicare and the Health Care Delivery 
System, June 2013, ch. 5.  
6 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.  
7  Social Security Act,   1812(d)(2), 1814(a)(7)(A) and 1861(dd)(1), 42 U.S.C.   
1395d(d)(2),  1395f(a)(7)(A),  and 1395x(dd)(1); 42 CFR  418.20, 418.22,  418.24(d)  
and 418.28.  
8 Social Security Act,   1812(a)(4), 42 U.S.C.  1395d(a)(4); 42 CFR   418.21.  Prior to  
1990, Medicare provided  hospice coverage for a maximum  of 210  days. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  2 
   
   
findings support a life expectancy of 6 months or less.9 For care to be 
covered under Part A, hospices must be certified by Medicare.10    
The Medicare hospice benefit has four levels of care:  routine home care, 
continuous home care, general inpatient care, and inpatient respite care.  
Not all levels of care are allowed in all settings.  For instance, routine 
home care and continuous home care are allowed in ALFs, but general 
inpatient care and inpatient respite care are not. 
Each level has an all-inclusive daily rate that is paid through Part A.  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.11  For all other levels of care, the daily rate is paid to the hospice for 
each day that a beneficiary 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.  
 
Table 1: Unadjusted Daily Medicare Hospice Payment  
Rates by Level of Care, FY 2012  
Unadjusted  
Level of Care  
FY 2012 Rate  
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. 
 
Routine home care is the most common level of hospice care provided.  
Medicare reimburses the hospice at this rate for each day that the 
beneficiary is under the care of the hospice and is not receiving one of the 
other levels of care. Continuous home care is allowed only during brief 
periods of crisis (i.e., when a beneficiary requires continuous home care to 
achieve palliation or management of acute medical symptoms) and only as 
necessary to maintain the individual at home.  General inpatient care is for 
pain control or symptom management that cannot be managed in other 
____________________________________________________________ 
9  Social Security Act,  1814(a)(7)(D),  42 U.S.C.  1395f(a)(7)(D);  
42 CFR  418.22(a)(4) and  (b)(3)(v).   
10 Social Security Act,  1814(a) and  1866, 42  U.S.C.  1395f(a) and  1395cc. 
11 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. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  3 
   
   
settings, such as the beneficiarys home.12 Inpatient respite care is short-
term inpatient care provided to the beneficiary when necessary to relieve 
the beneficiarys caregiver(s).13  
Some physician services relating to the terminal illness are paid separately, 
in addition to the daily rate.14  If the beneficiarys attending physician is an 
employee of or is under contract with the hospice provider, Medicare pays 
the hospice for physician services under Part A and the hospice 
compensates the physician through salary or some other arrangement.15 In 
these instances, the Part A hospice claim will include a code for physician  
services in a line item separate from the daily rate.   
Hospice Utilization in ALFs  
ALFs cover a wide range of facility types and care types and are typically  
for seniors who need some assistance with daily living.  No Medicare 
standards for ALFs exist; each State defines and regulates ALFs 
differently.  Some  ALFs may be referred to as adult foster homes or 
residential care facilities.  ALFs generally provide housekeeping 
services, meals, and assistance with activities of daily living.   
Given the lack of consistent terminology, policymakers have had difficulty 
identifying the number of ALFs and the total number of beds in ALFs.  A  
report by the  AARP Public Policy Institute estimated the number of beds 
in these types of facilities in 2010 to be 1.2 million.16  AARP also cited an 
earlier study by the Assistant Secretary for Planning and Evaluation that 
reported almost 1 million  ALF beds in 2007.  
Many Medicare beneficiaries reside in  ALFs, but Medicare does not pay 
for ALF services.  However, Medicaid may pay for ALF services for 
Medicaid beneficiaries under certain circumstances, such as a home and 
community-based waiver.17  
____________________________________________________________ 
12 42 CFR   418.302(b)(4).  It is intended to be short-term and may be provided in one of  
three settings:  a Medicare-certified hospice inpatient  unit, a hospital, or a skilled nursing  
facility. See 42 CFR   418.108. 
13 42 CFR   418.302(b); 42 CFR   418.204(a) (defining periods of crisis); and CMS, 
Medicare Claims Processing  Manual, Pub. 100-04, ch. 11,  30.1. 

14 42 CFR   418.304.   While the daily rate includes hospice physicians medical director 
 
supervisory services and administrative services, including plan of care services, other 

physician services are billed separately.  

15 A  nurse practitioner can be designated as the attending physician. See 42 CFR  
418.304(e)(1). 
 
16 Robert Mollica, Ari Houser, and Kathleen  Ujvari, AARP Public Policy Institute, 

Insight on the Issues: Assisted Living and Residential Care in the States in 2010, July 

2012, p.  1. Accessed  at 

http://www.aarp.org/content/dam/aarp/research/public_policy_institute/ltc/2012/residenti 
al-care-insight-on-the-issues-july-2012-AARP-ppi-ltc.pdf on August 7, 2014. 
17 For information on Medicaid  reimbursement to  ALFs, see  OIG, Home and Community-
Based  Services in Assisted Living  Facilities, OEI-09-08-00360, December 2012. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  4 
   
   
Medicare pays hospices for certain levels of hospice care provided in 
ALFs.  The hospice agency is responsible for providing the hospice care.  
Medicare currently pays hospices the same rate for those levels of care 
provided in ALFs as it does for other settings, such as private homes.  
Changes to Hospice Benefit 
ACA requires CMS to reform the hospice payment system no earlier than 
October 2013.18  CMS is gathering information and conducting studies as 
it considers payment reform options.  Also, ACA  established a quality 
reporting program for hospices.19  CMS must develop quality measures for 
hospices, and hospices must report these data to CMS.  Hospices began 
using the Hospice Item Set (HIS) in July 2014 to collect and submit 
standardized data on each patient they admit and discharge.  The HIS will 
be used to calculate quality measures involving pain management and 
other treatment issues.  In addition, CMS will begin implementing the 
hospice Experience of Care Survey in 2015 to gather information on the 
experiences of hospice patients and their caregivers with hospice 
services.20    
Related Work 
This report is part of OIGs continuing work on Medicare hospice care.  In 
2013, OIG found that more than 900 hospices did not provide any general 
inpatient care to Medicare beneficiaries and more than 400 hospices did 
not provide any level of hospice care other than routine home care.21  
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.22  Another report determined that 
Medicare paid an average of $960 per week for hospice care for each 
beneficiary in a nursing facility in 2006.23  This care most commonly 
included nursing, home health aide (also known as hospice aide), and 
medical social services.  Hospices provided an average of 4.2 visits per 
week for these three services combined.   
____________________________________________________________ 
   
18 ACA, P.L. 111-148  3132.   

19 ACA, P.L. 111-148  3004(c). 

20  78  Fed.  Reg. 48234, 48257-62 (Aug. 7, 2013).  CMS plans to develop additional 

measures to  be used in future years. 
21 OIG,  Medicare Hospice:   Use of  General  Inpatient Care, OEI-02-10-00490, May 

2013. 

22 OIG,  Medicare Hospices That Focus on Nursing Facility Residents, OEI-02-10-00070, 

July 2011. 

23 OIG,  Medicare Hospice Care:  Services Provided to Beneficiaries Residing in Nursing  

Facilities, OEI-02-06-00223, September  2009.  Payment for physician services was not 
 
included in the analysis.   

Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  5 
   
   
OIG also has conducted several studies identifying inappropriate Medicare 
payments in hospice.  In 2009, OIG found that 82 percent of hospice 
claims for beneficiaries in nursing facilities did not meet Medicare 
coverage requirements.24  In addition, in a 2008 report, OIG identified a 
number of cases in which the use of inpatient respite care for beneficiaries 
in nursing facilities may have been inappropriate.25    
METHODOLOGY 
We used data from three sources:  (1) National Claims History file for 
Medicare hospice claims, (2) Certification and Survey Provider Enhanced 
Reports (CASPER) data to describe hospice characteristics (e.g., for-profit 
or nonprofit), and (3) Healthcare Cost Report Information System reports 
for supplementary information on hospice characteristics (e.g., when 
CASPER did not indicate a hospices ownership status).   
We analyzed all Medicare hospice claims from 2007 (the first year that 
hospice claims indicated place of service) through 2012.  We used the 
Healthcare Common Procedure Coding System (HCPCS) codes on the 
claims to identify the setting where the care was provided, such as an 
ALF, private home, or nursing facility.  We determined total Medicare 
spending on hospice and the amount and percentage of Medicare spending 
for hospice care provided in ALFs for each year.  We compared the 
increase in and total spending on hospice care provided in ALFs to 
hospice care provided in all other settings.    
Next, we identified the beneficiaries who received care in ALFs in 2012.  
We used the claims from 2007 through 2012 to determine their total time  
in hospice care. We used the HCPCS codes on the claims to identify the 
primary settings where the beneficiaries received hospice care.  The 
primary setting is where the beneficiary spent more of his or her time from 
2007 through 2012. For the purposes of this report, we refer to 
beneficiaries who spent more of their time in hospice care in ALFs than in 
any other setting as beneficiaries in ALFs.  We determined the median 
amount Medicare paid and the median number of days in hospice care per 
beneficiary for each of the main settings in which hospice care was 
provided. These settings include:  ALFs, nursing facilities, private homes, 
and skilled nursing facilities. 
We then determined the extent to which beneficiaries in ALFs (those 
beneficiaries whose primary setting was an ALF) had long lengths of stay 
____________________________________________________________ 
 
24 OIG,  Medicare Hospice Care for Beneficiaries in Nursing Facilities:  Compliance 
With Medicare Coverage Requirements, OEI-02-06-00221, September  2009.  
25 OIG,  Hospice Beneficiaries Use of  Respite Care, OEI-02-06-00222, March 2008. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  6 
   
   
on hospice care. We calculated the percentages of these beneficiaries who 
received care between 180 and 365 days and more than 365 days.  We  
compared these results to results for beneficiaries in other settings.  We  
also determined how the most common terminal illnesses of beneficiaries 
in ALFs differed from those of beneficiaries in other settings and which 
illnesses were associated with less complex care.26    
Next, we determined the percentage of days that hospices provided routine 
home care and continuous home care in ALFs.  We then analyzed the 
number of visits that hospices provided in ALFs in 2012 to beneficiaries 
receiving routine home care. These visits were for nursing, hospice aide, 
and medical social services.  We determined the average number of hours 
of visits provided to beneficiaries per week, as well as the way in which 
these hours were distributed on different days of the week.  We also 
determined what percentage of beneficiaries received visits while in ALFs 
from hospice physicians and how many hospices provided these types of 
visits. 
We analyzed the extent to which hospice care provided in ALFs differed 
on the basis of the ownership status of the hospice.  We used CASPER to 
determine the ownership status of the hospice.27  When CASPER did not 
indicate the hospices ownership status, we used Healthcare Cost Report 
Information System reports.  For hospices that provided care in ALFs, we 
analyzed payments and days on hospice by ownership status.  
Lastly, we determined the extent to which some hospices received a high  
percentage of their Medicare reimbursement from care provided in ALFs.  
This analysis was limited to hospices that provided care in ALFs to at least 
10 beneficiaries in 2012. We identified the hospices that had more than 
half of their Medicare payment amounts from care provided in ALFs as 
those targeting ALFs.  We then described the characteristics of these 
hospices, including their ownership status, their locations, and their sizes.28   
We also grouped these hospices into national chains on the basis of the 
hospice names and information on their public Web sites. 
Limitations 
Medicare hospice claims do not include any information about the ALFs 
where services were provided. Also, information about ALFs, such as the 
____________________________________________________________ 
   
26 On the basis of their terminal illnesses, we compared the complexity of  hospice care 
that beneficiaries received.  We considered hospice care less complex if beneficiaries 
were less likely to have received the general inpatient or continuous home levels of care. 
27 For beneficiaries who received care from  more  than one  hospice, we used  the  
ownership status of the hospice that provided most of the beneficiarys care.  
28  We considered a hospice to  be large if it provided care to more than 320 Medicare 
beneficiaries in 2012, medium if it provided care to between 91 and 320 Medicare 
beneficiaries, and small if it provided care to 90  or fewer beneficiaries. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  7 
   
   
name, size, and services available, is  not available on a national basis.  For 
this reason, we could not make any statements about the characteristics of  
ALFs where hospice care was provided. 
For this report, we present information on the types and frequencies of 
services provided by hospices in ALFs.  We did not assess eligibility status 
for the hospice benefit or assess whether services were appropriate. 
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. 
   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  8 
   
   
FINDINGS 
Medicare payments for hospice care in ALFs more 
than doubled in 5 years, totaling $2.1 billion in 2012  
Medicare paid $2.1 billion for hospice care provided in ALFs in 2012, an 
increase of 119 percent since 2007. See Figure 1. During that time, 
Medicare spending for hospice care provided in settings other than ALFs 
increased 38 percent, from $9.3 billion to $12.9 billion.29 Overall, 
Medicare spending for all hospice care increased 46 percent, from $10.3 
billion to $15.0 billion. 
 
Figure 1: Medicare Hospice Spending in ALFs, 2007-2012  
ALF Dollars  ALF Percentage 
$2,500  15% 
P
e
r
c
s)  $2,000  12% enta
n g
o e
milli $1,500  9%   of A
g (in  ll Ho
ndin $1,000  6%  spic
pe e S
S p
$500  3%  e
n
d
in
g
 
$0  0% 
2007  2008  2009  2010  2011  2012 
 
Source:  OIG analysis of CMS data, 2013 
 
In 2012, Medicare payments for care in  ALFs accounted for 14 percent of 
total Medicare spending on hospice care.  Ten percent of Medicare hospice 
beneficiaries received at least some  care in ALFs.  Seventy-three percent 
of Medicare hospices provided care in ALFs during the year.  
Hospices provided care much longer and received 
much higher Medicare payments for beneficiaries in 
ALFs 
Of those who received hospice care in 2012, a total of 
120,444 beneficiaries received care primarily in ALFs.  That is, they spent 
more of their time in hospice care in ALFs than in any other setting from  
____________________________________________________________ 
29Medicare spending for hospice care provided in settings other than  ALFs increased  
from $9,293,069,781 in 2007 to  $12,868,920,994 in  2012.  
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  9 
   
   
2007 through 2012.30   The vast majority of these beneficiaries were in 
ALFs for at least 90 percent of their time in hospice care.  
Hospices provided care to beneficiaries in ALFs much longer than to 
beneficiaries in any other setting. Beneficiaries in ALFs received hospice 
care for a median of 98 days, which is almost twice as long as that 
received by beneficiaries in nursing facilities and more than twice as long 
as that received by beneficiaries at home.  See Figure 2. 
 
Figure 2: Median Days  in Hospice Care per Beneficiary, by  Setting  
120 
re  98 
Ca 100 
e 
c
pi 80 
s
o
H
n  60 
 s i 50  45 
y
Da 40 
n  30 
a
di 20 
e
M
0 
ALF  Nursing Facility  Home  Skilled  Nursing 
Facility 
Primary  Setting of Hospice Care 
Source:  OIG analysis of CMS data, 2013. 

Note: Includes beneficiaries who received hospice  care in 2012. 

           Includes beneficiaries total time  in hospice care from  2007 through 2012 
Over one-third of beneficiaries in ALFs received hospice care 
for more than 180 days  
Beneficiaries in ALFs were the most likely to have very long stays in 
hospice care. Thirty-six percent of beneficiaries in ALFs spent more than 
180 days in hospice care, compared to 28 percent of beneficiaries in 
nursing facilities and 22 percent of beneficiaries at home.  See Figure 3.   
 
____________________________________________________________ 
 
30 Hereafter, we refer to these beneficiaries as  beneficiaries in  ALFs.   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  10 
   
   
Figure 3: Percentage of Beneficiaries With Long Lengths of Stay, by  
Setting  
181-365 days  >365 days 
20% 
18% 
18% 
s 16% 
e 14% 
ari 13% 
ci
nefi12%  12%  12% 11% 
e 10% 
B
of 
e 
g 8% 
a
nt
e
c
r
e
P 4% 
0% 
ALF  Nursing Facility  Home  Skilled  Nursing 
Facility 
Primary  Setting of Hospice Care 
Source:  OIG analysis of CMS data, 2013. 
Note: Includes beneficiaries who received hospice  care in 2012. 
           Includes beneficiaries total time  in hospice care from  2007 through 2012. 
           Because of rounding, the percentages in  the  table do not sum to  the percentages referenced in the  text. 
 
Eighteen percent of beneficiaries in ALFs received hospice care for more 
than a year.  In comparison, 14 percent of beneficiaries in nursing facilities 
and 10 percent of beneficiaries at home received hospice care for more 
than a year.  Five percent of beneficiaries in ALFs received hospice care 
for 2 years or more. 
Medicare paid twice as much for care for beneficiaries in ALFs  
than for beneficiaries in other settings   
Medicare paid much more for hospice care provided to beneficiaries in 
ALFs than for hospice care provided to beneficiaries in other settings.  
The median amount Medicare paid for hospice care provided from 2007 
through 2012 to beneficiaries in ALFs was $16,195, more than twice as 
much as the median amounts for beneficiaries in nursing facilities and 
beneficiaries at home.  See Table 2.  
  
 
 
 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  11 
   
   
 
Table 2: Medicare Payments per Beneficiary, by  Setting  
Primary  Setting of   Number of  
Median Payment per Beneficiary 
Hospice Care   Beneficiaries  
ALF  120,444   $16,195  
Nursing Facility   195,820   $8,077  
Home  673,312   $7,526  
Skilled Nursing Facility   87,282  $5,635 
Source:  OIG analysis of CMS data, 2013. 

Note: Includes beneficiaries who received hospice  care in 2012. 

           Includes payments made during beneficiaries total time in hospice care from 2007  through 2012. 
 
The long lengths of stay in hospice care for beneficiaries in ALFs explain 
the higher Medicare payments for these beneficiaries.  Medicare payments 
are a function of time spent in hospice care.  Medicare pays a hospice for 
every day starting from the day a beneficiary elects hospice care and 
ending with the day of discharge, regardless of the amount of services 
furnished on a particular day.     
Most beneficiaries in ALFs had diagnoses that 
typically require less complex care 
Sixty percent of beneficiaries who received care primarily in ALFs had 
diagnoses of ill-defined conditions, mental disorders, or Alzheimers 
disease as their terminal illness.31  Mental disorders include dementia.  Ill-
defined conditions include, among other things, adult failure to thrive, 
senility without psychosis, and unspecified debility.32 Beneficiaries with 
these types of diagnoses typically receive less complex hospice care than 
beneficiaries with other diagnoses. 
Beneficiaries in ALFs were six times more likely to have these diagnoses 
than a diagnosis of cancer.  Beneficiaries with cancer often require 
complex care and receive hospice care for substantially fewer days than 
beneficiaries with diagnoses such as ill-defined conditions.  
____________________________________________________________ 
 
31 The International Classification of Diseases, 9th Revision, Clinical Modification, 
categorizes several diagnoses as symptoms, signs, or ill-defined conditions.  This report 
refers to all diagnoses listed  under symptoms, signs, or ill-defined conditions as ill-
defined  conditions.   
32 Beginning  on  October 1, 2014, hospices are no longer allowed to  report debility or  
adult failure to  thrive as a beneficiarys principal diagnosis.  Hospices will be able to  
indicate these diagnoses as secondary, but CMS will require hospices to identify a more 
definitive principal diagnosis.  See 78  Fed. Reg.  48234, 48246 (Aug. 7, 2013). 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  12 
   
   
Beneficiaries in ALFs were more likely than beneficiaries in any other 
settings to have diagnoses of ill-defined conditions, mental disorders, or 
Alzheimers disease.  The largest difference was between beneficiaries in 
ALFs and beneficiaries in the home.  Beneficiaries in ALFs were more 
than twice as likely as beneficiaries in the home to have one of these 
diagnoses. They were also far less likely than beneficiaries in the home to 
have a diagnosis of cancer.  See Table 3.  
 
Table 3: Medicare Beneficiaries Terminal Illness Diagnoses, by Setting 
 
Percentage of Beneficiaries 
Percentage of  
Primary  Setting of   With Diagnoses of Ill-Defined 
Beneficiaries With 
Hospice Care   Conditions, Mental Disorder, or  
Diagnosis of Cancer  
Alzheimers Disease 
ALF  60%   10%  
Nursing Facility   54%  13% 
Skilled Nursing Facility   52%  15% 
Home  27%   38%  
Source:  OIG analysis of CMS data, 2013. 

Note: Includes beneficiaries who received hospice  care in 2012. 

 
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 an 
ALF 
Routine home care accounted for nearly all the care hospices provided in 
ALFs in 2012. Hospices billed for routine home care for 99 percent of the 
days they provided care in ALFs during the year.33 Medicare paid an 
average of $156 per day for this care, amounting to $1,091 per week for a 
beneficiary receiving routine home care in an ALF. Hospices provided an 
average of 4.8 hours of visits per week to these beneficiaries.  These visits 
ranged from 0 to 66 hours per week. 
In addition to covering visits and services such as care planning, the daily 
payment covers medical appliances and supplies, including drugs that are 
used primarily for the relief of pain and symptom control related to the 
individual's terminal illness or related conditions.  Hospices are required to 
provide these services as needed.  A hospice is paid for every day a 
beneficiary is under its care, regardless of how many services it provides.   
____________________________________________________________ 
 
33  Hospices billed for continuous home care for the remaining 1 percent of days. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  13 
   
   
Twenty-five hospices did not report making any visits to their 
beneficiaries receiving routine care in ALFs in 2012.  This involved 210 
beneficiaries.   The hospices received a total of $2.3 million from Medicare 
for these beneficiaries.  
Hospices provided mostly aide visits  
Most hospice visits were from aides. On average, of the 4.8 hours of visits 
per week to beneficiaries, 2.8 hours were for hospice aide services, 1.7 
hours were for nursing services, and 0.3 hours were for medical social 
services. See Figure 4. Nursing and medical social services are core 
hospice services.34  Hospice aide services include personal care services, 
such as bathing, and household services, such as light cleaning and 
laundering. 
 
Figure 4: Average Hours per Week of Hospice Visits Provided to 
Beneficiaries Receiving Routine Home Care in ALFs, 2012  
Medical Social 
Service Visits 
0.3 hours  Aide Visits 
per week 
2.8 hours 
per week 
Nursing Visits 
1.7 hours 
per week 
Source:  OIG analysis of CMS data, 2013. 
 
Hospice physicians rarely saw beneficiaries who received care 
in ALFs 
The daily rate Medicare pays to hospices includes general supervisory 
services and plan of care services by hospice physicians.  Other services 
by hospice physicians are billed separately.  In 2012, hospices billed 
physician services for 20 percent of the beneficiaries they served in ALFs.  
Therefore, 80 percent of beneficiaries were not provided hospice physician 
services while they were in ALFs other than supervisory and/or care 
____________________________________________________________ 
 
34 A hospice must routinely provide substantially all core services directly by hospice 
employees.  42 CFR  418.64. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  14 
   
   
planning services. Two-thirds of hospices did not provide other physician 
services to any of the beneficiaries they served in ALFs in 2012.   
Hospices seldom provided services in ALFs on weekends    
Hospices must make services available, as needed, on a 24-hour basis.35   
In 2012, hospices provided the great majority of their visits in ALFs 
during the workweek and rarely on weekends.  Specifically, between 18 
and 20 percent of visit hours in ALFs were provided on each of the 
weekdays. In contrast, only four percent of the hours were provided on 
Saturdays and three percent on Sundays.  See Figure 5. 
 
Figure 5: Percentage of Visit-Hours Provided to Beneficiaries Receiving 
Routine Home Care in ALFs by Day  of the Week, 2012  
25% 
urs  20%  19%  18%  18%  19% 
o 20% 
H
sit 
Vi
All  15% 
of 
e 
g
nta 10% 
e
c
r
e
P 4%  3% 
5% 
0% 
Monday  Tuesday  Wednesday  Thursday  Friday  Saturday  Sunday 
Days  of the Week 
Source:  OIG analysis of CMS data, 2013. 

Note: Totals do not sum to 100 percent because of rounding. 

 
For-profit hospices received much higher Medicare 
payments per beneficiary  than nonprofit hospices  
In 2012, there were 2,709 Medicare hospices that provided care in ALFs.  
Of these, 62 percent were for-profit and 33 percent were nonprofit.36   
For-profit hospices received a total of $1.4 billion for care in ALFs in 
2012. 
____________________________________________________________ 
 
35  Social Security  Act,  1861(dd)(2)(A)(i),  42 U.S.C.  1395x(dd)(2)(A)(i).  
36 The remaining hospices either were Government owned or were categorized as  
Other. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  15 
   
   
For-profit hospices received thousands of dollars more than nonprofits per 
beneficiary in ALF.   The median amount Medicare paid for-profit hospices 
was $18,261 per beneficiary in ALF for care from 2007 through 2012.  In 
comparison, the median for nonprofits was $13,941.   
Beneficiaries in ALFs who were served by for-profit hospices were in 
hospice care longer than those who were served by nonprofit hospices.  
The median time in hospice care for the for-profit hospices beneficiaries 
was almost 4 weeks longer than the median for nonprofit hospices.  The 
median for for-profit hospices was 111 days, in contrast to the median of 
85 days for nonprofit hospices. See Table 4.  
 
Table 4: Median Days in Hospice per Beneficiary  in ALF by Hospice  
Ownership 
Hospice Ownership   Number of Beneficiaries   Median Days in  Hospice  
For Profit  72,627   111 
Nonprofit  44,238   85 
Government  2,317   67 
Other  1,097   71 
Source:  OIG analysis of CMS data, 2013. 
Note: Includes beneficiaries who received hospice  care in 2012 and were primarily in ALFs. 
           Includes beneficiaries total time  in hospice care from  2007 through 2012. 
           We were unable to determine the hospices ownership for 165 beneficiaries in ALFs. 
 
In addition, for-profit hospices received a higher percentage of their 
Medicare reimbursement from care in ALFs.  In 2012, for-profit hospices 
received a median of 11 percent of their Medicare reimbursement for care 
provided in ALFs, compared to 7 percent for nonprofit hospices. 
Some for-profit hospices stand out for their use of the most 
expensive level of hospice care   
Continuous home care is the most expensive level of hospice care and is 
rarely provided in ALFs.  However, one large national for-profit chain 
stands out for its use of continuous home care in ALFs.  In 2012, hospices 
in this chain received far more Medicare payments for continuous home 
care in ALFs than all other hospices combined.  Hospices in this chain 
received a total of $41.7 million for continuous home care in ALFs, which 
is 64 percent of all Medicare payments for this level of care in ALFs 
during the year.  In comparison, the hospices in this chain received 
11 percent of Medicare payments for all routine home care provided in 
ALFs during the year. 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  16 
   
   
Many for-profit hospices targeted ALFs  
Ninety-seven hospices relied on ALFs for most of their Medicare 
payments.  For these hospices, care provided in ALFs accounted for more  
than half of the Medicare payments they received in 2012.  The majority 
of these (90 of 97) were for-profit hospices.   
Medicare paid these for-profit hospices $193 million in 2012 for care 
provided in ALFs.  Most of the hospices were medium or large in size, 
serving at least 150 Medicare hospice beneficiaries during the year.     
Almost half of the 90 hospices were part of hospice chains.  Notably, eight 
of the nine hospices with the highest Medicare payment amounts for care 
provided in ALFs were part of hospice chains.  In 2012, Medicare paid 
each of these hospices between $4.6 million and $12.2 million for care 
provided in ALFs.     
   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  17 
   
   
CONCLUSION AND RECOMMENDATIONS 
While the growth in ALFs in general appears limited, Medicare spending 
for hospice care in ALFs more than doubled over 5 years to $2.1 billion in 
2012. Hospices provided care much longer and received much higher 
Medicare payments for beneficiaries in ALFs than for beneficiaries in 
other settings. Hospice beneficiaries in ALFs often had diagnoses that 
usually require less complex care.  Hospices typically provided fewer than 
5 hours of visits per week and were paid about $1,100 per week for each 
beneficiary receiving routine home care in ALFs.  Also, for-profit hospices  
received much higher Medicare payments per beneficiary than nonprofit 
hospices, and many for-profit hospices targeted ALFs.   
This report raises concerns about the financial incentives created by the 
current payment system and the potential for hospices to target 
beneficiaries in ALFs who have long lengths of stay or have certain 
diagnoses because they may offer the hospices the greatest financial gain.  
It also raises questions about whether Medicare is paying appropriately for 
hospice care in ALFs and whether beneficiaries are receiving the services 
they need during their last months of life.  We have identified similar 
concerns in other parts of the benefit.  Notably, a previous OIG report 
raised these concerns regarding beneficiaries in nursing facilities.  
Previous OIG reports also have found that hospices often did not provide 
the number of services outlined in the plans of care they established and 
that several hundred hospices did not provide any level of hospice care 
other than routine home care.  
Together, the findings in this and previous OIG reports show that payment 
reform and more accountability are needed to reduce incentives for 
hospices to focus solely on certain types of diagnoses or settings and 
ensure that hospices are providing quality care to those who are eligible.  
Hospice is an important benefit for Medicare beneficiaries and should be 
appropriately safeguarded. 
We recommend that CMS, as part of its ongoing hospice reform efforts:   
Reform payments to reduce the incentive for hospices to 
target beneficiaries with certain diagnoses and those likely to  
have long stays   
Under ACA, CMS is required to reform the hospice payment system.  
These reforms should be structured to reduce the incentive for hospices to 
target certain beneficiaries and ensure that hospices are providing high 
quality care to those who are eligible.  One way to do this is to tie payment 
rates to beneficiaries needs.   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  18 
   
   
Currently, hospices must conduct for each beneficiary a comprehensive 
assessment that identifies the beneficiarys need for hospice care and 
services and the need for physical, psychosocial, emotional, and spiritual 
care. These needs and others that affect the care a beneficiary requires 
could be considered in setting payment rates. 
Target certain hospices for review    
CMS should focus its reviews on certain hospices. These should include 
hospices that receive a high percentage of their payments from providing 
care to beneficiaries in ALFs, hospices with a high percentage of 
beneficiaries receiving care for over 180 days, hospices with a high 
percentage of beneficiaries with certain diagnoses, and hospices with a 
high percentage of beneficiaries who rarely receive hospice visits.  
CMS should include these measures in its Fraud Prevention System to 
identify these hospices for further review.   
Develop and adopt claims-based measures of quality   
To meet ACA requirements, CMS has adopted several quality measures 
that will be calculated using data collected and reported by hospices.  
Currently, these measures address pain management and other treatment 
matters.  In addition, CMS should develop and adopt measures that 
address issues raised in this report.  These additional measures would be 
based on information obtained from claims submitted by hospices for 
Medicare payment.  As discussed in MedPACs report to Congress, 
hospice experts have also supported a claims-based approach.  Claims-
based measures could include the average number of services the hospice 
provides, the types of services, how often physician visits are provided, 
and how often a hospice provides services on the weekend.   
Make hospice data publicly available for beneficiaries 
For a variety of other types of providers, CMS provides information to 
beneficiaries and the public on the Medicare.gov Web site.  CMS should 
do the same for hospices.  While CMS continues to develop and test 
quality measures, it should take the interim step of making other hospice 
data available through a Hospice Compare feature on the Medicare.gov 
Web site.  This could include information similar to the information 
included in this report, but for individual hospices.  For example, it could 
include information on the services provided, such as the average number 
of services the hospice provided, the types of services, how often 
physician visits are provided, and how often a hospice provided services 
on the weekend. 
This information would enable beneficiaries, their caregivers, and the 
public to compare hospices. It also would educate them about the benefit 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  19 
   
   
and help them make informed choices about which hospices best meet 
their needs.  
Provide additional information to hospices to educate them 
about how they compare to their peers 
CMS provides hospices with comparative information annually in its 
Program for Evaluating Payment Patterns Electronic Reports.  The goal of 
these reports is to help hospices guide their internal auditing and 
monitoring activities.  Currently, however, CMS includes only two target 
areas in these reports: live discharges and long lengths of stay.   
CMS should provide hospices with additional information to further 
educate them about how they compare with other Medicare hospices.  
CMS could include other target areas in these reports, such as the 
percentage of beneficiaries in specific settings or with certain diagnoses 
and the percentage of beneficiaries receiving higher levels of hospice care. 
   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  20 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In comments on our draft report, CMS concurred with all five of our 
recommendations.   
CMS concurred with our first recommendation, to reform payments to 
reduce the incentive for hospices to target beneficiaries with certain 
diagnoses and those likely to have long stays.  CMS stated that it is 
analyzing possible reform options that focus on new payment models as a 
result of recommendations from MedPAC.  MedPAC has recommended a 
model in which the per diem rates would be higher at the beginning and 
end of a beneficiarys time in hospice care and lower in the middle.  In 
addition, we encourage CMS to consider other options, particularly those 
that tie the specific needs of the beneficiaryas identified in the 
beneficiarys comprehensive assessmentto payment rates and take into 
account the number and types of hospice visits and services needed, 
regardless whether they are at the beginning or end of the beneficiarys 
time in hospice care.   
CMS concurred with our second recommendation, to target certain 
hospices for review.  It stated that it supports the development of Fraud 
Protection System models targeting hospices that have a high percentages 
of beneficiaries who rarely receive visits, as well as considering hospices 
that provide high percentages of their beneficiaries at the continuous care 
level. 
CMS concurred with our third recommendation, to develop and adopt 
claims-based measures of quality.  CMS stated that it will consider 
including claims-based measures as part of its measure development, such 
as the average number of services the hospice provides, the types of 
services, how often physician visits are provided, and how often a hospice 
provides services on the weekend. 
CMS concurred with our fourth recommendation, to make hospice data 
publicly available for beneficiaries. CMS stated that it plans to publicly 
report data from the Hospice Item Set as well as any future measures to be 
developed in the Hospice Quality Reporting Program.   We support these 
plans and reiterate that while CMS continues to develop and test quality 
measures, it should take the interim step of making available to the public 
claims-based hospice data regarding the number and types of services a 
hospice provides, including physician services and services on the 
weekend. 
Lastly, CMS concurred with our fifth recommendation, to provide 
additional information to hospices to educate them about how they 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  21 
   
   
compare to their peers.  CMS stated that the development and 
implementation of a standardized data set for hospices must precede 
providing information to hospices about how they compare to their peers  
or for public reporting of hospice quality measures.  CMS said that 
hospice review and public reporting may occur during the FY 2018 
Annual Payment Update  Year.  We urge CMS to consider analyzing and 
making available measures based on the claims data as a first step so that 
hospices have some ability to see how they compare to their peers more 
immediately.  
The full text of CMSs comments is provided in Appendix A. 
 
   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  22 
  APPENDIX A 
Agency Comments 
(~4""'"'~~ 
DEPARTMENT OF HEALTH & HUMAN SERVfCES  Centers for Medicare & Medicaid Services 
'"t;,, 
Administrator 
'J'<~r~o.,.,o 	
Washington, DC 20201 
DATE:  OCT 27  2014 
TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Marilyn Tavenner 

Administrator 

SUBJECT: 	 Office ofinspector General (OIG) Draft Report: Medicare Hospices Have Financial 
Incentives to Provide Care in Assisted Living Facilities (OEI-02-14-00070) 
Thank you for the opportunity to review and comment on the above-subject OIG draft. The 

objective ofthis study was to describe the trends in Medicare payments for hospice care 

provided in assisted living facilities (ALFs), to describe the characteristics ofbeneticiaries who 

receive hospice care in ALFs, to determine the types and frequency ofhospice services provided 

to beneficiaries residing in ALFs, and to determine the extent to which some hospices receive a 

high percentage oftheir Medicare reimbursement from care provided in ALFs. 

The OIG recommendation and the Centers for Medicare & Medicaid Services' (CMS) response 

are discussed below. 

OIG Recommendation 

The OIG recommends that CMS reform payments to reduce the incentive for hospices to target 

beneficiaries with certain diagnoses and those likely to have long stays. 

CMS Response 

The CMS concurs with the recommendation, which directly aligns with CMS' charge under the 

Affordable Care Act, to retorm the hospice payment system, collect data relevant to revising 

hospice payments, and develop quality measures for hospices. OIG's report provides useful data 

and related recommendations that will help inform CMS' decisions as it fulfills these Affordable 

Care Act requirements. 

As part ofits hospice payment reform efforts, CMS is working with several research contractors 

conducting comprehensive data analysis on hospice utilization trends. As a part of this analysis, 

our contractor developed a technical report titled, "Medicare Hospice Payment Reform: 

Analyses to Support Payment Reform", dated May 1, 2014 (hereafter, referred to as the May 

2014 Technical Report). The May 2014 Technical Report, and an updated literature review, is 

available on our hospice center web page at http://www.cms.goc!Center/Provider-Tvoe!Hospice

Ccnter.html in the "Research and Analyses" section. 

Medicare Hospices Have Financial incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  23   
   
 
   
 
 
   
   
 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  24 
   
   
 
 
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  25 
   
   
   
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  26 
   
   
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 served as the team  
leader for this study.  Other Office of Evaluation and Inspections staff 
from the New York regional office who conducted the study include Jenell 
Clarke-Whyte, Jennifer Karr, and Michael Rubin.  Central office staff who 
provided support include Heather Barton, Berivan Demir Neubert, and 
Christine Moritz.  
Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities (OEI-02-14-00070)  27 
   
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.