DEPARTMENT OF HEALTH &. HUMAN SERVICES 	 Office of Inspector General 

Washington, D.C. 20201 

SIP 222010 

TO: 	 Donald M. Berwick, M.D. 

Administrator 

Centers for Medicare & Medicaid Services 

FROM: Stuat1 Wright 

Deputy Inspector General 

for Evaluation and Inspections 

SUBJECT: 	 Memorandum Report: Questionable Billingfor Physician Services for Hospice 

Beneficiaries,OEI-02-06-00224 . 

This memorandum report determines the extent of questionable hilling for physician services 

under both Medicare Part A and Medicare Part B for hospice heneficim-ies in 2009. The 

Medicare hospice benefit allows a beneficiary with a terminal illness to forgo curative treatment 

for the illness and instead receive pa:1lIative c'are,which is thereliefofpain and other 

uncomfortable symptoms. The number ofMedicare beneficiaries receiving hospice care has 

increased significantly in recent years, from 729,000 in 2003 to over 1 million in 2008,1 In 

addition, concerns about the benefit have been raised, including a recent Office ofInspector 

General (OIG) repOlt that found that 82 percent of hospice claims for beneficiaries residing in 

nursing facilities did not meet Medicare coverage requirements,2 

In addition, during meetings with 010, CMS raised concerns specificalIy about physician billing 

for hospice benefIciaries. It listed Part B billing for physician services as one ofthe top hospice 

issues that should he addressed. CMS noted that physician billing for hospice services is a 

potential vulnerability, given that Medicare pays for physician services through Part A or Part B, 

depending on the physician's relationship with the hospice. CMS also noted that physicians may 

be billing for services related to the terminal illness under Part B that hospices are also billing for 

under Part A. 

We found that questionable billing for Prot B physiCian services provided to hospice 

beneficiaries amounted to nearly $566,000 in 2009. This meaiisthat Medicare paid this amount 

to physicians directly through Part B ror services related to a beneficiaris terminal illness, while 

1 Centers for Medioare & Medicaid Services (CMS) analysis ofMedicare Health Cate Infonnation System data for 

2008 claims. Accessed at httl'2:l/www;cmsJjbs;gQv/center/hospice.asp on July 16, 2010. At: the time (lfthe Writing 

ofthis rCpolt, the most recent aVaile;ibledataiwere for 2008. 

2 OIG, MedicareHospice CarejorBenejicial'ies ihNur~ingFacilities: Compliance With MediCal'e Coverage 

Requirements, OEI-02-06-00221., Septempe~ 2009. 

OEH2-06-00224 Questionabfe BilHng fQr PhySician Services for Hospice Beneficiaries 
Page 2 – Donald M. Berwick, M.D. 

Medicare also paid for services from the same physician for the terminal illness under Part A. 

One-third of these questionable claims were from Florida. 

Although we did not find that this problem is widespread, billing for physician services for 

hospice care is a potential program vulnerability given that Medicare may be billed under Part A 

and Part B. As such, we encourage CMS to continue to monitor this issue. In addition, we will 

refer all of the questionable claims to CMS for appropriate action. We will provide this 

information in a separate memorandum. 

BACKGROUND 

The goals of hospice care are to help terminally ill beneficiaries 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 the home or other places of 

residence, such as a skilled or other nursing facility. In 2008, over 1 million beneficiaries 

received Medicare hospice care at a cost of $11.2 billion.3

 

To be eligible for Medicare hospice care, a beneficiary must be entitled to Part A of Medicare 

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 beneficiary’s election of hospice care, the hospice agency 

assumes the responsibility for medical care related to the beneficiary’s terminal illness and 

related conditions. This care is palliative, rather than curative. It includes, among other things, 

nursing care, medical social services, home health aide (sometimes referred to as hospice aide) 

services, medical supplies, and physician services. The beneficiary waives all rights to Medicare 

payment for services related to the curative treatment of the terminal condition or a related 

condition but retains rights to Medicare payment for services to treat conditions unrelated to the 

terminal illness.4 

The Medicare hospice benefit has four levels of care, and each level has an all-inclusive, daily 

rate that is paid through Part A. The rate is paid to the hospice for each day that a beneficiary is 

in hospice care, regardless of the number of services furnished. The four levels of care are 

routine home care, continuous home care, inpatient respite care, and general inpatient care. 

Routine home care is the most common level of care. Appendix A provides detailed information 

on hospice services, the four levels of care, and the payment rates. 

Some physician services relating to the terminal illness are paid separately, in addition to the 

daily rate.5 Medicare pays for these services through Part A or Part B, depending on the 

 

3

 CMS analysis of Medicare Health Care Information System data for 2008 claims. Accessed at 

http://www.cms.hhs.gov/center/hospice.asp on July 16, 2010. At the time of the writing of this report, the most 

recent available data were for 2008. 

4

 42 CFR § 418.24(d). 

5 42 CFR § 418.304. While the daily rate includes hospice medical director supervisory services and plan of care 

services performed by the physician member of the hospice’s interdisciplinary group, other physician services are 

billed separately. 

OEI-02-06-00224 Questionable Billing for Physician Services for Hospice Beneficiaries 
Page 3 – Donald M. Berwick, M.D. 

physician’s relationship with the hospice. If the beneficiary’s attending physician is an employee 

of or 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. In these instances, the Part A hospice claim will include a code for physician 

services in a line item separate from the daily rate. 

If the beneficiary’s attending physician is not an employee of or under contract with the hospice 

provider, Medicare pays the physician for physician services under Part B.6 In these instances, 

the physician bills Medicare Part B directly for the physician services provided to the hospice 

beneficiary. Physicians can include modifiers on their Part B claims. The GV modifier indicates 

that the attending physician is not employed or paid under agreement by the patient’s hospice 

provider. The GW modifier indicates that the service is not related to the hospice patient’s 

terminal condition.7 In 2009, Medicare paid $165 million for Part B physician services for 

hospice beneficiaries.8 

This memorandum report is part of OIG’s continuing work on Medicare hospice care. A series 

of previous OIG reports have focused on hospice care for beneficiaries residing in nursing 

facilities. OIG found that 31 percent of Medicare hospice beneficiaries resided in nursing 

facilities in 2006 and that 82 percent of hospice claims for these beneficiaries did not meet 

Medicare coverage requirements.9 OIG also found that hospices most commonly provided 

nursing, home health aide, and medical social services to beneficiaries in nursing facilities, 

furnishing an average of 4.2 visits per week for these 3 services combined.10 Another report 

found that, on average, beneficiaries in nursing facilities spent more time in hospice and were 

associated with higher Medicare reimbursements than beneficiaries in other settings.11 Lastly, a 

fourth OIG report found a number of cases in which the use of respite care for beneficiaries in 

nursing facilities may have been inappropriate; these cases were referred to CMS for corrective 

action.12

METHODOLOGY 

We based this memorandum report on an analysis of Part A and Part B claims for physician 

services provided to hospice beneficiaries. To accomplish this, we extracted all Medicare Part A 

 

6 42 CFR § 418.304(c). 

7 CMS, Medicare Claims Processing Manual, ch. 11 - Processing Hospice Claims, sections 40.1.3 and 50. Accessed 

at https://www.cms.gov/manuals/downloads/clm104c11.pdf on August 31, 2010. 

8 OIG analysis of 2009 Part B physician service claims for hospice beneficiaries. This amount includes 

reimbursements for Part B physician services unrelated to hospice beneficiaries’ terminal diagnoses. 

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

OEI-02-06-00223, September 2009; OIG, Medicare Hospice Care for Beneficiaries in Nursing Facilities: 

Compliance With Medicare Coverage Requirements, OEI-02-06-00221, September 2009. 

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

OEI-02-06-00223, September 2009. 

11 OIG, Medicare Hospice Care: A Comparison of Beneficiaries in Nursing Facilities and Beneficiaries in Other 

Settings, OEI-02-06-00220, December 2007. 

12 OIG, Hospice Beneficiaries’ Use of Respite Care, OEI-02-06-00222, March 2008. 

OEI-02-06-00224 Questionable Billing for Physician Services for Hospice Beneficiaries 
Page 4 – Donald M. Berwick, M.D. 

hospice claims from CMS’s National Claims History file (NCH) that included physician service 

dates in 2009. These services were provided by a physician who was an employee or under 

contract with the hospice provider. The services were indicated by a code on the claim that was 

listed separately from the daily hospice rate. Part A hospice claims typically cover a 1-month 

period but could be for shorter periods of time. 

We identified the beneficiaries’ Health Insurance Claim Numbers for each Part A claim and 

extracted these beneficiaries’ Part B physician claims for 2009 from the NCH. For each 

beneficiary, we compared the dates of service on the Part B claims to the time periods covered 

by the Part A hospice claims. We included in our analysis Part B claims with a date of service 

that fell within the time period covered by a Part A hospice claim. We excluded from our 

analysis any Part B claims that occurred on the beneficiary’s first day in hospice care because the 

services on these Part B claims may have been provided before the beneficiary’s election of 

hospice care. For instance, a beneficiary may receive Part B physician services for a terminal 

illness in the morning, elect hospice care in the afternoon, and receive physician services under 

the Part A hospice benefit later in the day. In this case, both physician services may be 

appropriate. 

We then compared the physician and diagnosis of each Part B physician claim and its 

corresponding Part A hospice claim by using the National Provider Identifiers and diagnosis 

codes included on the claims. We excluded from our analysis claims in which the physician 

used the GW modifier indicating that the service provided was not related to the hospice 

beneficiary’s terminal condition and provided a diagnosis specific to the service billed which 

differed from the beneficiary’s terminal diagnosis. We excluded these claims because physicians 

are allowed to bill Part B for services that are not related to a hospice beneficiary’s terminal 

condition.13 

We identified instances in which a physician billed Part B for services provided to a hospice 

beneficiary for his or her terminal illness while a hospice billed Part A for services by that same 

physician for the same beneficiary and illness. In other words, the service date on the Part B 

claim fell within the time period covered by the Part A claim and the physician and diagnosis on 

the Part B physician claim matched the physician and diagnosis on the Part A claim. We 

considered these claims to be questionable.14 

We identified the physicians and hospices associated with these questionable claims. We also 

determined how often physicians included a GV modifier on the questionable claims. This 

modifier is used to indicate that the attending physician is not employed or paid under agreement 

by the patient’s hospice provider. In addition, we determined the reimbursement amounts of the 

 

13 We also excluded claims that had a Q5 or Q6 modifier, which indicates that the service was provided by a 

physician substituting for the beneficiary’s attending physician. 

14 Note that we considered Part B claims to be questionable when they fell within the same time period covered by 

the Part A claim, not just the same date of the Part A line item. Physicians bill Part A or Part B based on their 

relationship with the hospice, which is unlikely to change during the claim period. 

OEI-02-06-00224 Questionable Billing for Physician Services for Hospice Beneficiaries 
Page 5 – Donald M. Berwick, M.D. 

questionable claims. We analyzed the claims to identify any discernable patterns in terms of 

geography and diagnosis. 

Limitations 

For a given beneficiary, we considered Part B claims to be questionable if they were from the 

same physician, during the same time period, and for the same diagnosis as Part A claims. Based 

on our analysis, we could not determine whether the questionable billing was the result of the 

physician inappropriately billing Part B or the hospice inappropriately billing Part A. We based 

our results on the Part B claims, as this is the more conservative approach. Part B claims are for 

one date of service while Part A claims usually cover a 1-month period. Part A claims often 

include more than one physician service per claim and therefore have higher reimbursement 

totals per claim than Part B claims. We did not conduct a medical record review and did not 

determine whether services provided were medically necessary. 

RESULTS

Questionable Billing for Physician Services Provided to Hospice Beneficiaries Amounted to 

Nearly $566,000 in 2009 

We identified 9,272 questionable Part B claims for physician services provided to hospice 

beneficiaries in 2009. These Part B claims are for services provided by the same physician for 

the same time period as billed on the Part A claims. In addition, the Part B services are for the 

same diagnosis, which is the terminal diagnosis on the corresponding Part A claim. Medicare 

pays for physician services through Part A or Part B, depending on the physician’s relationship 

with the hospice. Medicare, however, should not pay a physician for services related to a 

hospice beneficiary’s terminal diagnosis through Part A and Part B at the same time. In almost 

70 percent of the questionable claims, the physician indicated that he or she was not employed or 

paid under agreement by the patient’s hospice provider. It is not clear in these cases whether the 

physician used the modifier incorrectly or the hospice billed inappropriately. 

In 2009, questionable Part B claims totaled $565,666 for 4,280 Medicare beneficiaries. The 

most common diagnoses for these questionable claims were lung cancer, followed by chronic 

airway obstruction and congestive heart failure. The most common services were for patient 

evaluation and management. Notably, one-third of the questionable claims were from Florida. 

Florida claims amounted to $199,613, which is 35 percent of the total reimbursement for 

questionable Part B claims in 2009. North Carolina had the next highest amount, with $63,027 

in questionable claims, which is 11 percent of the total. In 2008, 9 percent of hospice 

beneficiaries lived in Florida and 3 percent lived in North Carolina.15 

The questionable Part B claims were submitted by 3,116 physicians in 2009. The 10 physicians 

with the highest questionable Part B billing each received more than $3,700 from such claims in 

 

15 CMS, Number of Hospices, Number of Persons, Covered Days of Care, Total Charges, and Program Payments 

for Hospice Services Used by Medicare Beneficiaries, by Area of Residence: Calendar Year 2008, Table 8.3, data 

from the Medicare Data Extract System. Accessed at 

www.cms.gov/Medicaremedicaidstatsupp/downloads/09hospices.zip on August 31, 2010. 

OEI-02-06-00224 Questionable Billing for Physician Services for Hospice Beneficiaries 
Page 6 – Donald M. Berwick, M.D. 

 

2009. Six of the ten physicians resided in Florida. Three of the ten had the same mailing 

address. These three physicians were reimbursed a total of $22,916 for the questionable Part B 

claims. Another 2 of the 10 also shared a billing address. They were reimbursed a total of 

$15,505 for questionable Part B claims. A total of 664 hospices were associated with Part B 

questionable claims for physician services. Of the 10 hospices associated with the highest 

questionable Part B billing, 8 were in Florida. 

CONCLUSION 

We found that questionable billing for Part B physician services provided to hospice 

beneficiaries amounted to nearly $566,000 in 2009. This means that Medicare paid this amount 

to physicians directly through Part B for services related to a beneficiary’s terminal illness, while 

Medicare also paid for services from the same physician for the terminal illness under Part A. 

One-third of these questionable claims were from Florida. 

Although we did not find that this problem is widespread, billing for physician services for 

hospice care is a potential program vulnerability given that Medicare may be billed under Part A 

and Part B. As such, we encourage CMS to continue to monitor this issue. In addition, we will 

refer all of the questionable claims to CMS for appropriate action. We will provide this 

information in a separate memorandum. 

This report is being issued directly in final form because it contains no recommendations. If you 

have comments or questions about this report, please provide them within 60 days. Please refer 

to report number OEI-02-06-00224 in all correspondence. 

OEI-02-06-00224 Questionable Billing for Physician Services for Hospice Beneficiaries 
Page 7 – Donald M. Berwick, M.D. 

APPENDIX A

HOSPICE SERVICES, LEVELS OF CARE, AND PAYMENT RATES 

The Medicare hospice benefit covers nursing care, medical social services, hospice aide and 

homemaker services, physician services, counseling, physical therapy, occupational therapy, and 

speech-language pathology services. It also includes short-term inpatient care, medical supplies 

(including drugs and biologicals), and the use of medical appliances. In addition, the hospice 

benefit covers any other service that is specified in the plan of care as reasonable and necessary 

for the palliation and management of the terminal illness and related conditions and for which 

payment may otherwise be made under Medicare.16

The Centers for Medicare & Medicaid Services (CMS) publishes general hospice payment rates 

annually to be used for each level of care.17 The rates are adjusted based on the beneficiary’s 

geographic location. The levels of care and the fiscal year 2009 Medicare unadjusted daily rates 

for each are as follows: 

 Routine Home Care ($139.97): The routine home care rate is paid to the hospice for each 

day that the beneficiary is under the care of the hospice and is not receiving one of the 

other categories of care. Routine home care includes, but is not limited to, nursing and 

hospice aide services. Routine home care may be provided in the home or other places of 

residence, such as a nursing facility. 

 Continuous Home Care ($816.94): Continuous home care is allowed only during periods 

of crisis in which a beneficiary requires continuous care to achieve palliation or 

management of acute medical symptoms. It is covered only as necessary to maintain the 

terminally ill beneficiary at home. The care must be predominantly nursing care. 

Continuous home care may be provided in the home or other places of residence, such as 

a nursing facility. The continuous home care rate is divided by 24 hours to determine an 

hourly rate. A minimum of 8 hours must be provided. 

 Inpatient Respite Care ($144.79): Respite care is short-term inpatient care provided to 

the beneficiary when necessary to relieve the beneficiary’s caregiver(s). Respite care 

may be provided only on an occasional basis and is not reimbursed for more than 

5 consecutive days. Respite care may be provided in a Medicare- or Medicaid-certified 

hospice inpatient facility, hospital, skilled nursing facility, or nursing facility.

 

16 42 CFR § 418.202(i). 

17 CMS, Update to Hospice Payment Rates, Hospice Cap, Hospice Wage Index, and the Hospice Pricer for 

FY 2009, Transmittal 1570, Change Request 6155. Accessed at 

http://www.cms.gov/transmittals/downloads/R1570CP.pdf on July 15, 2010. 

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OEI-02-06-00224 Questionable Billing for Physician Services for Hospice Beneficiaries 

 General Inpatient Care ($622.66): General inpatient care is for pain control and symptom 

management that cannot feasibly be provided in other settings. General inpatient care 

may be provided in a Medicare- or Medicaid-certified hospice inpatient facility, hospital, 

or skilled nursing facility.