Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

Medicare Hospice Beneficiaries: 

Services and Eligibility 

JUNE GIBBS BROWN 

Inspector General 

APRIL 1998 

OEI-04-93-00270 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI’s Atlanta Regional Office prepared this report under the direction of Jesse J. Flowers, 

Regional Inspector General, and Christopher Koehler, Deputy Regional Inspector General. 

Principal OEI staff included: 

REGION 

Betty Apt, Project Leader 

Jackie Watkins, Program Analyst 

Joe Townsel, Program Analyst 

Paula Bowker, Program Analyst 

Greg Jones, Program Analyst 

Jason Stanfield, Program Analyst 

HEADQUARTERS 

Stuart Wright, Program Specialist 

Brian Ritchie, Technical Support 

Barbara Tedesco, Statistician 

To obtain copies of this report, pleasecall the Atlanta Regional Office at (404) 562-7743. 

Reports are also available on the World Wide Web at our home page address: 

http :llwww. dhhs.gov/progorgloei 
EXECUTIVE SUMMARY 

PURPOSE 

To describe services for and eligibility status of Medicare hospice beneficiaries. 

BACKGROUND 

Hospice is an approach to caring for a person who is diagnosed as terminally ill. Hospice services 

are intended to provide comfort and relief from pain, as opposed to curative care. To elect 

hospice care under Medicare, a beneficiary must be eligible for Part A Medicare. Beneficiaries 

must also be certified by a physician as being terminally ill, with a life expectancy of 6 months or 

less if an illness runs its normal course. 

Medicare payments for hospice care are based on a capitated amount per day. In 1994, Medicare 

hospice payments to 1,445 hospice agencies totaled over $1.3 billion. In 1995, 1,726 Medicarecertified hospice agencies received $1.8 billion--a 38 percent increase in funding and a 19 percent 

increase in agencies. Prior Office of Inspector General (OIG) studies indicated that some hospice 

agencies may be enrolling beneficiaries who do not meet Medicare’s eligibility requirements at the 

time they are enrolled in hospice. 

FINDINGS 

Hospice agencies seemed to plan for and provide appropriate services 

The hospice agencies that treated the beneficiaries we sampled had developed formal plans of care 

for 96 percent of the beneficiaries and 93 percent of beneficiary families. In 99 percent of the 

patient records examined by our medical reviewer, the documentation showed that beneficiaries 

and their families received services as indicated by the plans of care. Hospice services for both the 

patient and their family were provided continuously, allowing agency personnel to remain close to 

a beneficiary and the family on a regular basis throughout the entire course of treatment. 

A significant portion of hospice patients in nursing homes were ineligible 

We found a significant association between living in a nursing home and being ineligible for the 

hospice benefit. Twenty-nine percent of sampled hospice beneficiaries in nursing homes were 

ineligible. However, only 2 percent of beneficiaries not residing in nursing homes were ineligible. 

Overall, 7 percent of beneficiaries in our sample were ineligible for hospice care, and 81 percent 

were eligible. We could not determine eligibility for 12 percent of the beneficiaries. 

i 
CONCLUSION 

Overall, the Medicare hospice program seems to be working as intended. However, recent OIG 

work indicated problems regarding eligibility of beneficiaries in specific hospices and raised 

questions more generally about hospice provided to nursing home beneficiaries. This study adds 

to our concern about the Medicare hospice program in the nursing home setting. We have no 

further recommendations to make at this time, but refer the reader to our other reports, which are 

mentioned in the background section. 

AGENCY COMMENTS 

The HCFA Administrator reviewed our draft report, and agreed that problems exist with the 

hospice benefit provided to beneficiaries in nursing homes. She stated that HCFA staff are 

currently studying the issues involved and working to identify appropriate ways to correct the 

problems. 

The President of the National Hospice Association (NHO) and the Executive Director of the 

Hospice Association of America (HAA) also commented on our draft report. Both agreed with 

our finding that, overall, the program seemed to be working well, but some problems exist with 

hospice care in nursing home settings. 

The NH0 President expressed concern about the study’s description of patients as being ineligible 

when our reviewers and the patient’s attending physician differed in their medical opinions about 

prognosis of death. He was also concerned that, as a result of continuing OIG scrutiny, hospice 

services may be underutilized, and hospices may not be enrolling eligible beneficiaries. While we 

recognize the difficulty of making prognosis of death, we believe that, overall, our study correctly 

describes both the general success of hospices in service delivery and the program vuneralability in 

the nursing home area. We certainly do not condone depriving any beneficiary of services to 

which they are entitled. 

The HAA Executive Director requested that we compare the findings of this report to previous 

OIG audits. Previous OIG audits focused on specific providers. Such results cannot be used to 

make national projections, and hence cannot be compared to those of our nationally 

representative sample. However, all previous OIG work has noted special problems with hospice 

care in nursing homes. 

ii 
’ TABLE OF CONTENTS 

EXECUTIVE SUMMARY 

INTRODUCTION . . . . . . . . . . . . . . . . . . . ..................................... 

FINDINGS . . . . . . . . . . . . . . . ..................................... 

Services Seemed Appropriate . . . . . . . . . . ..................................... 

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

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

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

PAGE 

1 

4 

4 

4 

4 

.4 

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

CONCLUSION.. ........................................................... . 

AGENCYCOMMENTS ................................................... ...8 

APPENDICES 

Variances, Confidence Intervals, and 

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

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

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

l 
INTRODUCTION 

PURPOSE 

To describe services for and eligibility status of Medicare hospice beneficiaries. 

BACKGROUND 

Hospice Care 

Hospice is an approach to caring for a person who is diagnosed as terminally ill. Hospice services 

are intended to provide comfort and relief from pain, as opposed to curative care. Services are 

usually rendered in a beneficiary’s home. 

To elect hospice care under Medicare, a beneficiary must be eligible for Part A Medicare. 

Beneficiaries must also be certified by a physician as being terminally ill, and have a life 

expectancy of 6 months or less should a disease runs its normal course. A Medicare hospice 

beneficiary waives the right to receive curative treatment for their terminal illness, and elects to 

receive palliative care. A beneficiary selects a Medicare-approved hospice agency to provide 

medical care and social services. The beneficiary signs a statement choosing hospice benefits in 

lieu of fee-for-service Medicare benefits. Medicare payments for hospice care is based on a 

capitated amount per day. 

Services provided by hospice agencies include (1) physician services, (2) nursing care, (3) medical 

appliances, (4) medical supplies, (5) drugs for symptom management and pain relief, (6) shortterm inpatient care, (7) home health aide and homemaker services, (8) physical and occupational 

therapy (9) speech pathology services, (10) medical social services, (11) counseling, (12) 

bereavement services, and (13) volunteer services. Interdisciplinary teams at hospice agencies 

plan and monitor beneficiary plans of care. That team typically includes a physician, nurse, home 

health aide, social worker, and a pastoral counselor. 

In 1994, Medicare hospice payments to 1,445 hospice agencies totaled about $1.3 billion. In 

1995, 1,726 Medicare-certified hospice agencies received $1.8 billion--a 38 percent increase in 

funding and 19 percent increase in agencies. 

Hospice Benefit Periods, Revocation, and Resumption 

Hospice eligibility is divided into benefit periods. The first two benefit periods are go-days each. 

Effective with the Medicare Hospice Benefit Amendments of 1997, signed into law on August 5, 

1997, the first two benefit periods are followed by an unlimited number of 60-day periods. After 

each benefit period, a hospice physician assessesa beneficiary’s condition to determine if hospice 

care is still appropriate. 

1 
Beneficiaries can revoke their hospice benefits at any time, and return to curative treatment. A 

hospice agency may discharge a beneficiary if they determine that a beneficiary’s condition has 

stabilized or improved, and the eligibility criteria are no longer met. 

Beneficiaries who leave hospice care, by their decision or an agency’s decision, and later wish to 

return to hospice care are admitted into the benefit period following the one they were in at 

revocation or discharge. For example, beneficiaries who leave in the second benefit period are 

admitted into the third period if they return to hospice care. 

Prior Office of Inspector General Work 

In 1994, the Office of Inspector General (OIG) examined medical records of hospice beneficiaries 

in Puerto Rico to determine eligibility for hospice. We found significantly high eligibility errors. 

Based on this, the audit effort was expanded to in-depth audits of 12 selected large hospice 

providers in the Continental United States who had higher than average numbers of long-term 

patients. The audits found high ineligibility rates among the long-term patients. A 

disproportionate number of these ineligible patients resided in nursing homes. Findings of those 

audits are contained in a summary report (A-05-96-00023). 

In conjunction with those targeted hospice reviews, additional OIG studies have been conducted 

in an effort to obtain national data concerning the hospice benefit. One such study examined 

eligibility, services, and growth in the number of hospice patients living in nursing homes (OEI05-95-00250). Another report examines contractual relationships between hospices and nursing 

homes (OEI-05-95-0025 1). Both studies revealed problems related to hospice care in nursing 

homes. 

METHODOLOGY 

Medical Review 

We contracted with a medical consulting agency with hospice experience to review medical 

records of 236 beneficiaries who were enrolled in hospice on June 14, 1996. 

First, we used a stratified cluster sample to select 36 hospice agencies. We identified hospices 

that were Medicare-certified before July 1, 1995. We eliminated hospices from our universe 

where there was continuing OIG work. In selecting the 36 hospice agencies, we used six strata. 

One stratum was created for each of the five Operation Restore Trust States’. The sixth stratum 

contained all of the remaining States. From each stratum, we selected six hospice agencies. 

‘In 1995 and 1996, ajoint initiative referred to as Operation RestoreTrust (ORT) was conductedbetweenOIG, 

the Health Care Financing Administration (HCFA) and the Administration on Aging. Among its objectives, 

Project ORT sought to identify vulnerabilities in the Medicare program and develop solutions that would reduce 

Medicare’sexposureto fraud, abuseand waste. Project ORT targetedlive States(California, Florida, Illinois, New 

York and Texas) that account for approximately 40 percent of Medicare expenditures and beneficiaries. ORT 

projectsfocusedon home health care, nursing home care, durable medical equipment and hospice care. 

2 
We asked each of the 36 agencies in our sample for their enrollment roster for June 14, 1996, 

which was a date approximately 2 weeks prior to our request. From those rosters, we randomly 

selected the names of up to seven beneficiaries per agency. Some agencies did not have seven 

beneficiaries enrolled on the specified day. In such instances, we selected all beneficiaries 

enrolled. Cumulatively, we selected and collected copies of medical records for 243 selected 

beneficiaries. All agencies responded to our request. However, one agency sent their seven 

records too late to be reviewed by our medical contractor. Thus, our contractor reviewed a total 

of 236 records. 

The contractor’s registered nurses reviewed the 236 records for evidence of the existence of plans 

of care, of services provided to beneficiaries and their families, continuity of care, and for 

eligibility and appropriateness of services. The nurses referred 102 of the 236 records for the 

contractor’s physician to review. Those were for beneficiaries that were either in nursing homes 

or the reviewing nurses had questions about their eligibility. 

The physicians examined the services provided, comparing them to the plans of care, and 

reviewed the medical information to determine if patients were eligible for hospice benefits. To 

determine eligibility for patients with non-cancer diseases, our contractor used guidelines 

developed by the National Hospice Organization. The guidelines are to help hospice agencies 

determine if a non-cancer illness has progressed to within 6 months of death. 

We sent the medical records of beneficiaries that the contractor determined ineligible to Regional 

Home Health Intermediaries @HI-I&) for a second medical opinion on hospice eligibility. RHHIs 

process Medicare claims for hospice. In this report, we counted as ineligible only those cases 

where the RHHI agreed with the medical contractor’s decision that the patient was ineligible. 

All percentages in the report were properly weighted according to each hospice agency’s 

proportion to the universe. Appendix A shows the variance, confidence intervals, and &i-square 

values. Appendix B shows the unweighted numbers of beneficiaries. 

Site Visits 

We conducted site visits at 13 of the 36 randomly selected hospice agencies. The agencies were 

chosen because of their location and ownership. We selected agencies in close proximity to 

facilitate visiting as many as possible. We also selected a sample of both for-profit and not-forprofit agencies. We visited agencies in each of the five ORT States. 

During the site visits, we used a standardized questionnaire. We interviewed hospice directors 

and other staff about operating practices, staffing, referral sources, and marketing strategies. 

We conducted this inspection in accordance with the Quality Stanahds for Inspections issued by 

the President’s Council on Integrity and Efficiency. 

3 
FINDINGS 

HOSPICE AGENCIES SEEMED TO PLAN FOR AND PROVIDE APPROPRIATE 

SERVICES 

Hospices Made Plans of Care for Both Beneficiaries and Families 

Our medical contractor found formal plans of care developed by the hospices for 96 percent of 

the beneficiaries and 93 percent of the families. 

Typically, when a patient enrolls in hospice, the hospice agency assigns a team of individuals to 

provide care required by the terminal condition. After a preliminary examination of a patient by a 

nurse, all members of the team meet to outline a plan of care to specifically meet the physical, 

emotional, spiritual, and other needs that a patient or family may require. 

Services Provided Were Consistent with Plans of Care 

In 99 percent of the patient records reviewed by the contractor’s physician, there was 

documentation that showed beneficiaries and their families received services as indicated by the 

plans of care. The medical contractor’s review also showed that in 92 percent of all the sample 

cases, there was documentation of a periodic re-evaluation of the patient’s plan of care by hospice 

agencies’ multidisciplinary teams. In 6 1 percent of those cases, beneficiary needs did change. In 

every case except one, the hospice team responded appropriately to the change. The medical 

reviewers were unable to determine from the other record if the hospice team responded 

appropriately to the change. 

Most Services Were Provided on a Continuing Basis 

Hospice regulations require that care to beneficiaries and their families be continuous, or 

uninterrupted. This requirement recognizes the need for agency personnel to remain close to a 

beneficiary and the family on a regular basis throughout the entire course of treatment. The 

medical contractor’s review found that hospice agencies provided most services on a continuing 

basis. However, some beneficiaries do not want all services offered by the hospice agency. For 

example, a beneficiary who has his own minister may decline spiritual counseling. 

A SIGNIFICANT PORTION OF HOSPICE PATIENTS IN NURSING HOMES WERE 

INELIGIBLE FOR THE MEDICARE HOSPICE BENEFIT 

We found a significant association between living in a nursing home and being ineligible for the 

hospice benefit.2 Of the 19 beneficiaries found to be ineligible, 10 resided in nursing homes. Of 

all sampled beneficiaries in nursing homes, 29 percent were ineligible. However, only 2 percent of 

‘Appendix A contains details about statistical testsused. 

4 
beneficiaries not in nursing homes were ineligible. The chi-square test shows this difference to be 

statistically significant. (See appendix A for the confidence intervals.) 

Another OIG report (OEI-05-95-000250) discusses in more detail eligibility, services, and growth 

in the number of hospice patients living in nursing homes. In that study, we found the eligibility 

error rate for hospice patients in nursing homes to be 19 percent. The confidence intervals of that 

estimate overlap those of this study, thus confirming a substantial error rate for those patients. 

Our medical contractor’s physician reviewed records of all 39 beneficiaries in our sample who 

were living in nursing homes. Table 1 shows the primary diagnosis of each of the 10 ineligible 

beneficiaries living in a nursing home. 

Table 1 

INELIGIBLE BENEFICIARIES IN NURSING HOMES 

Patient Primary Diagnosis 

1 Paget’s Disease 

(Chronic Inflammation of Bones) 

1 2 Senile Dementia 

3 Prostate Cancer 

4 Lung Cancer 

5 Lung Cancer 

6 Anemia. Dementia 

7 Congestive Heart Failure 

8 Heart Disease 

9 Alzheimer 

10 Cognitive Dementia 

Patient records showed that, overall, 7 percent of beneficiaries were ineligible. Based on 2 

different medical reviews, 19 patients, or 7 percent of the beneficiaries in our sample, were 

ineligible. Our medical contractor found that 8 1 percent of the beneficiaries were eligible, i.e. had 

terminal illnesses, and it was reasonable to expect they would die within 6 months. Eligibility for 

the remaining 12 percent of the beneficiaries could not be determined because beneficiary records 

did not have sufficient documentation to determine eligibility. 

5 
Directors of the hospices we visited said their patients are referred to them by hospitals, 

physicians, and beneficiary family members. None of the hospices had sales staff, and the hospice 

directors told us they do not solicit patients. To advertise their services, they have booths at 

health fairs, and they visit or write hospitals and physicians--primarily oncologists. 

6 
CONCLUSION 

Overall, the Medicare hospice program seems to be working as intended. However, recent OIG 

work indicated problems regarding eligibility of beneficiaries in specific hospices and raised 

questions more generally about hospice provided to nursing home beneficiaries. This study adds 

to our concern about the Medicare hospice program in the nursing home setting. We have no 

further recommendations to make at this time, but refer the reader to our other reports, which are 

mentioned in the background section. 

7 
AGENCY COMMENTS 

The HCFA Administrator reviewed our draft report, and agreed that problems exist with the 

hospice benefit provided to beneficiaries in nursing homes. She stated that HCFA staff are 

currently studying the issues involved and working to identify appropriate ways to correct the 

problems. 

The President of the National Hospice Association (NHO) and the Executive Director of the 

Hospice Association of America (HAA) also commented on our draft report. Both agreed with 

our finding that, overall, the program seemed to be working well, but some problems exist with 

hospice care in nursing home settings. 

The NH0 President expressed concern about the study’s description of patients as being ineligible 

when our reviewers and the patient’s attending physician differed in their medical opinions about 

prognosis of death. He was also concerned that, as a result of continuing OIG scrutiny, hospice 

services may be underutilized, and hospices may not be enrolling eligible beneficiaries. While we 

recognize the difftculty of making prognosis of death, we believe that, overall, our study correctly 

describes both the general success of hospices in service delivery and the program vuneralability in 

the nursing home area. We certainly do not condone depriving any beneficiary of services to 

which they are entitled. 

The HAA Executive Director requested that we compare the findings of this report to previous 

OIG audits. Previous OIG audits focused on specific providers. Such results cannot be used to 

make national projections, and hence cannot be compared to those of our nationally 

representative sample. However, all previous OIG work has noted special problems with hospice 

care in nursing homes. 

We have made the technical changes suggested by HCFA, NHO, and HAA. The full text of their 

comments can be found in appendix C. 

8 
APPENDIX A 

VARIANCE, CONFIDENCE INTERVALS 

AND CHI-SQUARE VALUES 

A-l 
VARIANCE AND CONFIDENCE INTERVALS 

The tables below contain estimates, corresponding standard error, and 90 percent confidence 

intervals for the findings section of this report. 

Hospices Made Plans of Care for Both Beneficiaries and Families 

Standard Boundaries for 90% 

&scription Estimate 

Formal Plans of Care developed for 

* 

Formal Plans of Care developed for 

ServicesProvided WereConsistent With Plans of Care 

Description Estimate 

Beneficiaries received services as I 98.72% 

indicated in plan of care I 

Documentation of periodic re- 92.09% 

evaluation of nlan of care I 

Beneficiary needs changed during 61.25% 

hosnice care I 

Error Confidence, jcnterv@s 

3.24 I +I- 5.32% 

+I- 5.20% 

~ +I- 4.56% 

4.99 +/- 8.21% 

A-2 
Most Services Were Provided on a Continuing Basis 

‘0 Patients-­

Description 

Nursing 

Aide 

Social Work 

Spiritual 

Grief Counseling 

To Families-­

Description 

Nursing 

Aide 

Social Work 

Spiritual 

Grief Counseling 

Estimate Standard Error Boundaries for 9@% Confidence Intervals 

Yes No UTD’ Yes No UTD* Yes No UTD 

94.87% 4.17% .96% 3.02 3.29 1.04 +I- 4.97% +/- 5.41% +/- 1.71% 

84.29% 6.99% 8.73% 8.39 4.48 4.40 +/- 13.80% +I- 7.37% +I- 7.24% 

92.34% 5.69% 1.97% 2.91 3.30 1.33 +I- 4.79% +-I- 5.43% -+-I-2.19% 

83.27% 7.11% 9.62% 5.88 3.23 3.31 +I- 9.67% +/- 5.3 1 +-I- 5.44% 

70.44% 10.82% 18.74% 3.27 5.54 5.45 +I- 5.38% +/- 9.11% +I- 8.97% 

Estimate Standard Error Boundaries for 90% Confidence Intervals 

Yes No UTD’ Yes No VP Yes NO UTD 

92.73% 4.88% 2.39% 2.78 3.22 1.53 +/- 4.57% +I- 5.30% +I- 2.52% 

82.01% 8.78% 9.21% 8.29 4.57 4.40 +I- 13.64% +I- 7.52% +I- 7.24% 

91.84% 5.99% 2.17% 2.86 3.31 1.40 +/- 4.70% +I- 5.44% +I- 2.30% 

83.29% 7.61% 9.09% 5.78 3.12 3.25 +/- 9.5 1% +I- 5.13% +I- 5.35% 

75.76% 9.03% 15.22% 4.35 5.24 4.88 +/- 7.16% +I- 8.62% +I-8.03% 

*Unable to Determine 

A-3 
Ineligibles Likely to Reside in Nursing Homes 

DescriDtion 

Eligible 

Ineligible - Overall 

- In Nursing Home 

- Not in Nursing Home 

Could Not Be Determined 

Estimate Standard Boundaries for 90% 

Error Confidence Interval 

80.89% 4.92 +/- 8.09% 

7.21% 3.81 +I- 6.27% 

29.3 1% 9.93 +I- 16.33% 

2.01% 1.30 +/- 2.14% 

12.10% 2.47 +I- 4.06% 

A-4 
CHI-SQUARE VALUES 

We computed &i-square values to determine if there was a significant association between living 

in a nursing home and being ineligible for the hospice benefit. The &i-square values in the table 

below show that the association between living in a nursing home and ineligibility was significant 

at the 92 percent confidence level. 

ConfidenceLevel Degrees of Freedom Chi-Square 

92% 2 5.42 

A-5 

I 
----------------------------------------- ------------------------------------------------------------------------- 

APPENDIX B 

UNWEIGHTED NUMBERS AND WEIGHTED PERCENTAGES 

Numbers and percentages are based on number of responses to each question. 

Description Number of Weighted Percent 

Beneficiaries 

Formal Plans of Care 

Beneficiary: 

Yes 

No 

Unable to Determine 

Family: 

Yes 

No 

Unable to Determine 

Services Documented in Record3 

Yes 

No 

Unable to Determine 

Periodic Review Documented 

Yes 

No 

Unable to Determine 

Change in Patient’s Needs 

Yes 

No 

Unable to Determine 

233 96.51 

2 4.39 

0 

223 93.46 

5 5.50 

2 1.03 

99 98.72 

1 .31 

2 .97 

215 92.09 

11 7.02 

3 .89 

137 61.25 

91 37.34 

5 1.41 

This question was only askedabout casesthat went to the contractor’sphysician 

B-l 
----------------------------------------- 

Description Number of Weighted Percent 

Beneficiaries 

____________________----------------------------------------------------

Overall Eligibility of Beneficiaries 

Eligible 

Ineligible 

Unable to Determine 

Beneficiaries in Nursing; Homes 

Eligible 

Ineligible 

Unable to Determine 

Beneficiaries Not in Nursing; Homes 

Eligible 

Ineligible 

Unable to Determine 

196 80.69 

19 7.21 

21 12.10 

23 45.21 

10 29.3 1 

6 25.48 

169 86.65 

9 2.01 

19 11.33 

B-2 
APPENDIX C 

AGENCY COMMENTS 

. HCFA 

b National Hospice Organization 

b Hospice Association of America 

C-l 
-- 

DEPARTMENT OF HEALTH & HUMAN SERVICES Health Care Financing Administration 

The Administrator 

Washington, D.C. 20201 

MAR231998 

DATE: 

TO: June Gibbs Brown 

Inspector General 

FROM: Administrator 

EN3 

Et! 

DIG-AS 

DIG-EC 

DIG-01 

DIG-Q ZE

DIG-MI’ 

AIG-LC 

OGC2Id 

Ikccscc 

Dltcsull 

Health Care Financing Administration . G _. 

_. Cl 

SUBJECT: Office of Inspector General (OIG) Draft Report, “Medicare Hospice -’ 

Beneficiaries: Servicesand Eligibility,” (OEI-O4-93-00270) 

We reviewed the subject draft report on servicesand eligibility of Medicare hospice 

beneficiaries. We recognize the problems with the Medicare hospicebenefit provided to 

beneficiaries in nursing homesdiscussedin this and severalother OIG reports. The 

Health Care Financing Administration (HCFA) is currently studying the issuesinvolved 

and we are working to identify the most appropriate way to addresstheseconcerns. 

We would like to take this opportunity to provide severaltechnical comments: 

In your report, you statethat 29 percent of all hospicebeneficiaries in nursing 

homes were in fact ineligible for the benefit. Basedon the discussionon page 6, it 

seemsyou found 29 percent of those hospice beneficiariesin nursing homes 

included in the study to be ineligible, as opposedto 29 percentof the entire 

Medicare hospice population residing in nursing homes. If this is the case,it is not 

clear in the Executive Summary. We would askthat you provide clarification of 

this statistic in the Executive Summary. 

Current Federal regulations at 42 CFR 418.3 define terminally ill as meaning that 

the individual has a medical prognosis that his or her life expectancyis 6 months 

or less should the illness run its normal course. Pleasemakethis clarification in 

the secondparagraphunder the section entitled, “Hospice Care” on page 1. 

Also, page 1 of the report lists a minister astypically being a memberof the 

interdisciplinary team. We note that other types of counselorscan participate in 

the interdisciplinary team. Federalregulations, at 42 CFR 4 18.68,require that 
2 

either a pastoral or other counselor be a memberof the interdisciplinary team. 

Pleaseclari& that either a pastoral or other counseloris required to participate on 

the interdisciplinary team. 

0 On page 2, secondparagraph,pleaseadd the phrase,“or discharge.” at the end of # the first sentence. 

Thank you for the opportunity to provide commentson this draft report. 
January 29,1998 

The Honorable June Gibbs Brown 

Inspector General 

Department of Health and Human Services 

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

Washington, DC 2020l-000 1 

Dear Inspector General Brown: 

Thank you for the opportunity to review andrespondto a draft of the Office of the Inspector 

&meral report, Medicare HospiceBeneficiaries: Servicesand Eligibility asdevelopedby the 

OfTice of Evaluation and Inspections(OEI). We would also like to expressour appreciation 

for the cooperativeefforts of OEI staffprovided our office during the developmentof this 

report. 

The National HospiceOrganization(NHO) is pleasedthat after almost four yearsof auditsand 

evaluations of hospicecarein the LJnitedStatesthe Office of the InspectorGeneralhas 

concluded that “Overall, the Medicarehospiceprogram seemsto be working asintended.” 

NH0 is encouragedby the findings that suggestthat hospicesplan for andprovideappropriate 

semi-, and was alsopleasedto seethe OIG reportthat the servicesprovidedby hospices 

were consistentwith the plan of care,andthat hospicesrespondedappropriatelywhenthe 

patient’s condition changed. 

NH0 was also encouragedby findings showingthat hospiceserviceswereprovidedon a 

continuing basis. Suchfindings suggesthat hospicesareestablishingcloseandongoing 

relationships with patientsandfamilies which canbe critical to the transitionprocessthat 

patients and ihmilies experiencewhen coping with term&l illness. This finding alsostrongly 

suggeststhat hospicescontinueto provide appropriatelevelsof servicesregardlessof the 

iinancial incentivesto providefewer or lessexpensiveservices. 

The National HospiceOrganization,however,continuesto be distressedby theOK’s . c-on of patientsbeingineligible for the Medicarehospicebenefitwheredifferences 

in medical opinion relatedto theprognosisof a patientexist betweenOIG reviewersandthe 

patient’s attending physicianandhospicemedicaldirector. The well-regardedInstituteof 

Medicine hasvery clearly warnedthe OIG not to draw conclusionsabouttheveracityof 

hospice programsbasedon thesedifferencesof medical opinion 

The National HospiceOrganimtion encouragesall hospiceprograms,thephysiciansworking 

with them asmedical directorsandattendingphysiciansto establishthe mostaccurate 

prognosis possible,and to not acceptpatientsinto the Medicarehospicebenefitwho&arly 

have a prognosisof six monthsor more if theprognosisrunsits normal course.However, 

NH0 will not, asadvocatesfor the needsof the terminally ill, encouragehospicesand 

National Hospice Organization, 1901 North Moore Street, Suite 901, Arlington, VA 22209 

7031243-5900 7031525-5762 fax hcrp://m.nho.org 
lhe HonorableJuneGibbs Brown 

January29,1998 

-Page2-

physiciansto aspireto a standardwherethey admit ody those@kd~ who they canbe 100 

percentcertain will die within six months. To do sowill createanenvironmentin which tens 

of thousandsof peoplewill be deniedfor daysandweeksthe caretheyrequireandareentitled 

to asMedicare beneficiaries,andNH0 will resistattemptsto createsuchanenvironment 

NH0 believesthat an unintentional wnsequenceof the OIG’s intensescrutinyof hospices 

overthe past few years,togetherwith anever-changingandchaotic healthcareenvironment 

hasresulti in an undemtihzation of hospicecare. As such, Wminally ill Medicare 

beneficiariesarenot receiving the hospiceservicesthey needandareentitledto aswell as 

increasingcoststo the Medicare Trust Fund NH0 wasdisappointedthatthe OIG report did 

not usethis opportunity to commenton the underutilizationof hospicecareand its harmful 

impact on beneficiariesandthe Trust Fund As notedin the report: ‘Yhe mission of the 

OfEm of the hqector General,asmandatedby Public Law 95-452,is to protectthe integri~ 

of the Departmentof Health andHuman Se&ces programsaswell asthehealth andwelfare 

of beneficiariesservedby them.” Surely,this mandatemustextendto as&stingbeneficiaries 

to identify andreceivethe servicesthey need,becauseto do otherwiseonly servesto diminish 

their health and welfare. 

NH0 recommendsthat the industry, the OIG andHCFA work togetherto determinea 

methodology for identifying truly aberrantbehavioron the part of hospicesandphysiciansin 

establishingeligibility for the Medicarehospicebenefit,andto vigorouslypursueany 

wrongdoers. In this way, the important goalof ferretingout fraud,ahuseandwastein the 

Medicare systemcanbe achieved,but the concernraisedby the OIG canbemore correctly 

focusedon thosethat would abusethe systemratherthanon dif%rencesin medical opinion. 

The National HospiceOrganizationalsOmakesthe following specificcomments: 

As noted,NH0 is generallyencornagedby the report’sfindings;however,it must be 

statedthat while the finclingsmay be representativeof thepopulation,the readerof this 

and ~IGOUS OIG reportsshouldbe cautionedto resistacceptingthefindings of thesevery 

limited studiesasa perfidy accumteportrayalof the hospicecommunityandexpending 

the conclusionsof thesereportsto a broaderpopulationshouldhedonewith an 

understandingof thoselimitations. 

In the ExecutiveSummaryunder“Background” the statementshouldreflect that 

“Beneficiaries must alsobe certified by a physicianasbeingterminauyill, andhavea life 

expectancyof 6 months or lessifthe diseaserunsits normalcourse.” 

In the Imoduction sectionunder Servicesprovided...volunteersshouldbe addedasa 

covefed senice. Number (11) shouldbechanged to “counseling”asdietarywmsding is 
The Honorable JuneGibbs Brown 

January29,1998 

-Page3-

only one of the requiredcounselingservices.The team typically includesa “pastoral 

counselor” ratherthan a ‘Snister.” 

l The statementis maderegardingthe growth of hospicecarein a mannerthat leavesthe 

impression that suchgrowth is not appropriate. On the contmry,suchgrowth is not only 

appropriate,it shouldbe expectedin a still emergingbenefitprogram. According to 

HCFA datathe increasein expendituresrelatedto this programarebeing drivenprimarily 

by the increasein patientsserved,not by increasedcostperpatient. Additionally, this 

report suggeststhat hospicepatientsaregenerallyeligible for the benefitsthey are 

receiving andthat hospicesdeliver the servicesthey areobligatedto provide.. 

l In the sameintroductory sectionof the reportthe statementis madethat a hospiceagency 

can also revokecareby determiningthat a beneficiary’s condition stabilizesor improves, 

and hospicecareis no longer appropriate. This statementis not altogetheraccurate.The 

hospicemay dischargea patient tirn the Medicarehospicebenefit if eligibility criteriaare 

no longer met. 

l Table 1 of the report identifies theten ineligible beneficiariesliving in nursinghomes,and 

their primary diagnoses.From the report’s findings we areunableto detexmineif 

comorbidities were consideredwhen the medical contractorde&mined prognosis.The 

absenceof considerationof theseadditional factorscould havean impact on final 

determinationsof prognosis. 

l The final pamgraphof the report on page8 states:‘None of the hospiceshadsalesstaff, 

and the hospicedirectorstold usthey do not solicit patients. To advertisetheir services, 

they haveboothsat healthfairs, andthey visit or write hospitalsandphysiciprimarily oncologists.” NH0 would objectto this statementifit is meantto imply thata 

“good hospice” is onethat limits servicesto patientswith canceror doesnot makeall 

reasonableand appropriateefforts to respondto its community’s needfor accessto 

hospicecare. 

Respondingto issuesraisedby previousOIG reports,NH0 hastakenthe following actionsto 

improve the delivery of hospicecare: 

0 In the absenceof a governmentor medical community initiative NH0 hasspent 

significant resourcesdevelopingguidelinesfor establishingterminal prognosesto 

encouragethe referralof patientsto hospicecare,and to provideattendingphysiciansand 

hospicephysiciansthe tools to increasetheir certainty that only appropriatepatientsare 

admitted to hospicecare. 
The HonorableJuneGibbs Brown 

January29,1998 

-Page4-

NH0 hasalso spentconsiderableresourcesandalmosta decadein an effort to improve 

the quality of hospicecareprovided in the nursinghome,andto improvethe relationship 

betweenthe hospiceand the nursinghomewhile r&imZng thepotential for abusive 

behavior. Theseefforts havebeenmadewith minimal governmentassistanceto clarify 

the rulesgoveming theserelationships. 

NH0 hasestablishedaNursing Home TaskForcethatcontinuesto identify problemsand 

solutionsto this complex issue. 

Despiteour di&rences, NH0 hasworked closelywith theOIG to identify problemsand 

to communicatetheseissuesto hospices. 

NH0 is alsoworking closely with HCFA to developnew MedicareConditionsof 

Participation,including new provisionsconcerninghospicecareprovidedin the nursing 

home. We haveworked with HCFA andthe RegionalHomeHealthIntem~~Earieson 

focusedmedical review, andwe arealsoworking with theRHHI Medical Directorsto 

design‘Local Medical Review Policies.” 

NH0 is working with HCFA to developnew costreportsfor hospices,andwe arehopefbl 

that thesenew tools will assistthe hospicecommunity andthe governmentin making 

soundpolicy decisionsaboutthe ti of the Medicarehospicebenefit, 

NH0 thanksyou for your considerationof our comments,andwe look forward to working 

with your office in the finthemnceof our commongoals. 
228SevcnthScnxt,SE 

was&ton, DC 

moo3-4306 

(202B46-4759 

Fax 002B47-9559 

R--YJ. Ha?air 

Diam H. Jones 

-Dirwctor 

February lo,1998 

The Honorable June Gibbs Brown 

Inspector General 

Department of Health and Human Services 

330 Independence Ave., SW 

Room 5246 

Washington, DC 2020 l-0001 

Dear Inspector General Brown: 

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

comment on the draft report, “Medicare Hospice Beneficiaries: Services and‘Eligibility.” 

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

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

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

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

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

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

and are being used by the industry. 

INTRODUCTION 

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

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

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

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

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

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

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

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

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

to those reports for recommendations. 
The Honorable June Gibbs Brown 

February lo,1998 

Page 2 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

conjunction with OIG. 

COMMENTS 

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

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

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

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

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

There were specific recommendations addressing these identified problems, including: 

*. Reinforcing the six-month prognosis requirement; 

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

receive from Medicaid; 

-. Ensuring that hospice marketing materials prominently feature Medicare eligibility 

requirements; monitoring the use of sales commissions as incentives for patient recruiting; 

-. Requiring physician certification forms contain a statement concerning the penalties for false 

claims; 

-. Requiring RHl-lls to place more focus on front-end reviews and nontraditional, suspect, or 

exceedingly vague diagnoses; 

-. Seeking legislative change to the hospice cap; requiring RHHIs to establish audit procedures 

for cap reports; and 

-. Seeking legislative amendment to change the reimbursement for dually eligible hospice 

nursing home patients. 

This draft report, “Medicare Hospice Beneficiaries: Services and Eligibility,” which reviewed 

medical records of beneficiaries who were enrolled in hospice on June 14,1996, reflects an apparent 

increased sophistication on the part of hospices in terms of enrollment practices, documentation, and 

provision of services. It would be helpful for the report to comment on the earlier concern of high 

eligibility errors for hospice patients not living in nursing homes and if OIG believes this continues 

to be problematic. 

, 
The Honorable June Gibbs Brown 

February 10,199s 

Page 3 

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

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

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

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

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

operational improvements within the hospice industry. 

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

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

appropriately documented in the patient’s medical record. It would be helpful for the report to 

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

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

hospice patients residing in nursing homes. 

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

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

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

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

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

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

nursing facility rather than passing through the hospice. 

CONCLUSION 

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

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

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

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

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

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

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

services provided to hospice patients residing in nursing homes. 

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

pilot study in 1997 using HAA’s HospiceFinancial RecordKeepingManual,which is a hospice cost 

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

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

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

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

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

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

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

On another, more global note, we would like to comment on the statutory requirement for a sixmonth prognosis. 
-+T iK\ 1 * 

. 1’ 

The Honorable June Gibbs Brown v 

February lo,1998 

Page 4 

The hospice industry, along with hundreds of other interested organizations, foundations, and 

individuals, are committed to continuing the quest of improving care at the end of life. The Medicare 

hospice benefit by statute can only provide services for those who have a certifiable prognosis of six 

months or less, which in reality translates to the last few days or weeks of life. Hospice care is 

therefore a relatively small part of the continuum of care required by seriously ill people to ensure 

that the last chapter of their lives is free from pain and can be lived to its fullest. 

The latest HCFA statistics report the national average length of stay for a Medicare beneficiary has 

dropped and is now under 54 days. Our experience of the last few years tells us that the “art” and 

“science” of prognostication are not exact and prone to a high rate of error. It would seem to be 

unwise and even inhumane to support a system that focuses on error-free prognoses of six months or 

less to allow access to the holistic, patient and family-centered care hospice provides. We are 

striving to find a better indicator to trigger hospice care and at the same time find ways to work with 

other providers so that those in need of end-of-life care will not be lost. We will also continue to 

educate hospices about the law as it exists today, encourage the implementation of CCPs, and work 

to eliminate fraud, waste, and abuse. 

Thank you again for allowing HAA to comment on this draft report. We look forward to continuing 

our work with your offtce. 

sinYy&& u ‘;3u-wDiane H. Jones 

Executive Director 

DHJ:lj 

cc: George F. Grob 

Deputy Inspector General 

Offtce of Evaluations and Inspections