Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

 

MEDICARE HOSPICE CARE 

FOR BENEFICIARIES 

IN NURSING FACILITIES: 

COMPLIANCE WITH MEDICARE 

COVERAGE REQUIREMENTS 

 

Daniel R. Levinson 

Inspector General 

September 2009 

OEI-02-06-00221 
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 OIG’s 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. 
 

ΔEXECUTIVE SUMMARY EXECUTIVE SUMMARY 

OBJECTIVES 

To determine the extent to which hospice claims for beneficiaries in 

nursing facilities in 2006 met Medicare coverage requirements. 

BACKGROUND 

The Medicare hospice benefit allows a beneficiary with a terminal 

illness to forgo curative treatment for the illness and instead receive 

palliative care. The number of beneficiaries receiving hospice care has 

increased significantly in recent years, and some studies suggest that 

the use of hospice care has grown most rapidly in nursing facilities. In 

addition, previous Office of Inspector General work has raised questions 

about the hospice benefit for nursing home residents. However, little 

subsequent research has been done to examine hospice care for these 

beneficiaries, and almost no beneficiary-specific data exist. 

This report determines the extent to which hospice claims for 

beneficiaries in nursing facilities in 2006 met Medicare coverage 

requirements. We based this study on data from a medical record 

review of a stratified random sample of hospice claims for beneficiaries 

in nursing facilities in 2006. A companion report, “Medicare Hospice 

Care: Services Provided to Beneficiaries Residing in Nursing 

Facilities,” determines the nature and extent of hospice services 

provided to beneficiaries in nursing facilities. 

FINDINGS 

Eighty-two percent of hospice claims for beneficiaries in nursing 

facilities did not meet at least one Medicare coverage requirement. 

Eighty-one percent of claims did not meet at least one Medicare 

coverage requirement pertaining to election statements, plans of care, 

services, or certifications of terminal illness. An additional 1 percent of 

claims were undocumented. Medicare paid approximately $1.8 billion 

for these claims. 

Claims from not-for-profit hospices were less likely to meet Medicare 

coverage requirements than those from for-profit hospices. Specifically, 

89 percent of claims from not-for-profit hospices did not meet Medicare 

requirements, compared to 74 percent of claims from for-profit hospices. 

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EXECUTIVE SUMMARY 

Thirty-three percent of claims did not meet election requirements. 

For 4 percent of claims, there were no election statements. For another 

29 percent of claims, the election statements did not meet one or more 

regulations. Most commonly, the statements did not explain that 

hospice care was palliative rather than curative or that the beneficiaries 

waived Medicare coverage of certain services related to their terminal 

illnesses. 

For another 9 percent of claims, the election statements contained 

misleading language about the beneficiaries’ right to revoke the election 

of hospice care. 

Sixty-three percent of claims did not meet plan of care 

requirements. For 1 percent of claims, the hospices did not establish 

plans of care for the beneficiaries. For another 62 percent of claims, the 

plans did not meet at least one Federal requirement. These plans of care 

were not established by an interdisciplinary group; they did not include 

necessary components, such as a detailed description of the scope and 

frequency of services; or they did not specify intervals for review, as 

required. 

For 31 percent of claims, hospices provided fewer services than 

outlined in beneficiaries’ plans of care. For 31 percent of claims, the 

hospices did not provide the number of services outlined in the plans of 

care that they established. Most commonly, the hospices provided 

services to the beneficiaries but not as frequently as called for in the 

plans of care. In the most extreme cases, there was no documentation 

in the medical records of any visits for a particular service. 

Four percent of claims did not meet certification of terminal illness 

requirements. For 4 percent of claims, the certifications were missing 

or did not meet one or more Federal requirements. For these claims, 

the certifications did not specify that the individuals’ prognoses were for 

life expectancies of 6 months or less if the terminal illness ran its 

normal course; they were not supported by clinical information and 

other documentation in the medical records; or they were not signed by 

physicians. 

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EXECUTIVE SUMMARY 

RECOMMENDATIONS 

Based on the findings in this report, we recommend that the Centers for 

Medicare & Medicaid Services (CMS): 

Educate hospices about the coverage requirements and their 

importance in ensuring quality of care. CMS should educate hospices 

about the coverage requirements, particularly for election statements, 

plans of care and their review, and certifications of terminal illness. It 

should pay particular attention to not-for-profit hospices, given the higher 

rate at which their claims did not meet requirements. 

Provide tools and guidance to hospices to help them meet the 

coverage requirements. These tools should include clear and specific 

instructions, such as model text for election statements, a checklist of 

items that must be in the plans of care, and guidance on complying with 

the certification of terminal illness regulations. 

Strengthen its monitoring practices regarding hospice claims. CMS 

should effectively use targeted medical reviews and other oversight 

mechanisms to improve hospice performance and compliance with 

Medicare requirements, especially with respect to establishing plans of 

care and providing services that are consistent with these plans of care. 

Additionally, as we recommended in a previous report, CMS should 

conduct more frequent certification surveys of hospices as a way to 

enforce the requirements. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

CMS concurred with all three of our recommendations. In response to 

our first recommendation, CMS stated that it has made presentations at 

industry conferences and participated in other events with hospice 

associations. CMS also noted that its Web site has a training broadcast 

for State surveyors that is available to hospice providers. CMS stated 

that it has educated providers about the requirements of the new 

Conditions of Participation (CoP), issued June 5, 2008. These CoPs 

address patient care planning and the care of patients who reside in 

nursing facilities. 

In response to our second recommendation, CMS stated that it has issued 

new Hospice Program Interpretive Guidance, a tool used by providers 

and State Survey agencies to determine compliance with the CoPs. CMS 

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EXECUTIVE SUMMARY 

also stated that it held three satellite training sessions to educate 

stakeholders on the new requirements. We encourage CMS to continue 

educating providers and to give them detailed instructions that 

encompass the new requirements as well as existing requirements that 

have not been revised but are equally important. We also encourage 

CMS to augment these efforts with specific tools that address the 

problems outlined in this report, such as model text for election 

statements. 

In response to our third recommendation, CMS stated that it will 

instruct Medicare contractors to consider the issues in this report when 

prioritizing its medical review strategies or other interventions. CMS 

also stated that it will share this report and relevant claim information 

from OIG with the Recovery Audit Contractors. 

We have made changes to the final report based on CMS’s technical 

comments, as appropriate. 
Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY .....................................i

INTRODUCTION ........................................... 1

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

 Eighty-two percent of hospice claims for beneficiaries in 

nursing facilities did not meet at least one Medicare 

coverage requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

 Thirty-three percent of claims did not meet election 

requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

 Sixty-three percent of claims did not meet plan of care 

requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

 For 31 percent of claims, hospices provided fewer services 

than outlined in beneficiaries’ plans of care. . . . . . . . . . . . . . . . . . 15

 Four percent of claims did not meet certification of 

terminal illness requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Agency Comments and Office of Inspector General Response . . . 18

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

 A: Hospice Payment Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

 B: Confidence Intervals for Selected Estimates . . . . . . . . . . . . . . 21

 C: Weighted Chi-Square Test Comparing Not-For-Profit 

and For-Profit Hospices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

D: Agency Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

 

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
 

Δ INTRODUCTION 

OBJECTIVE 

To determine the extent to which hospice claims for beneficiaries in 

nursing facilities in 2006 met Medicare coverage requirements. 

BACKGROUND 

The Medicare hospice benefit allows a beneficiary with a terminal 

illness to forgo curative treatment for the illness and instead receive 

palliative care, which is the relief of pain and other uncomfortable 

symptoms. The number of beneficiaries receiving hospice care has 

increased significantly in recent years. In fiscal year 2001, 

580,000 Medicare beneficiaries received hospice care. In 2006, this 

number increased by 62 percent to 939,000 beneficiaries. Medicare 

spending on hospice care rose from $3.6 billion in 2001 to $9.2 billion in 

2006.1 

Some studies suggest that the use of hospice care has grown most 

rapidly in nursing facilities.2 In addition, previous Office of Inspector 

General (OIG) work has raised questions about the hospice benefit for 

nursing home residents. For example, OIG reported that in 1995, 

payment levels for hospice care in nursing homes may have been 

excessive.3 However, little subsequent research has been done to 

examine hospice care for these beneficiaries, and almost no 

beneficiary-specific data exist.4 

1 Centers for Medicare & Medicaid Services (CMS), “Medicare Hospice Expenditures and 

Units of Care.” Available online at 

http://www.cms.hhs.gov/ProspMedicareFeeSvcPmtGen/downloads/FY05update_hospice_exp

enditures_and_units_of_care.pdf. Accessed on March 27, 2009. CMS analysis of Medicare 

Health Care Information System data for calendar year 2006 claims. Provided by CMS on 

May 5, 2009. 

2 Office of the Assistant Secretary for Planning and Evaluation (ASPE), “Use of 

Medicare’s Hospice Benefit by Nursing Facility Residents,” March 2000; Medicare Payment 

Advisory Commission, “Report to the Congress: Medicare Beneficiaries’ Access to Hospice,”

May 2002, p. 5. 

3 OIG, “Hospice Patients in Nursing Homes,” OEI-05-95-00250, September 1997. 

4 Government Accountability Office (GAO), “Medicare Hospice Care: Modifications to 

Payment Methodology May Be Warranted,” GAO-05-42, October 15, 2004, pp. 4 and 20; 

ASPE, “Synthesis and Analysis of Medicare’s Hospice Benefit,” March 2000. 

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INTRODUCTION 

This report is one in a series of four reports conducted by OIG that 

examine the hospice benefit for nursing facility residents. This report 

determines the extent to which hospice claims for beneficiaries in 

nursing facilities met Medicare coverage requirements. A companion 

report determines the nature and extent of hospice services provided to 

beneficiaries in nursing facilities.5 

An earlier report in this series found that 28 percent of Medicare 

hospice beneficiaries resided in nursing facilities for at least some time 

while they received hospice care in 2005.6 These beneficiaries were 

more than twice as likely as beneficiaries in other settings to have 

terminal diagnoses of ill-defined conditions, mental disorders, or 

Alzheimer’s disease. Finally, another report in the series found a 

number of cases in which the use of respite care for nursing facility 

beneficiaries may have been inappropriate; these cases were referred to 

CMS for corrective action.7 

The Medicare Hospice Benefit 

The Tax Equity and Fiscal Responsibility Act of 1982 created the 

Medicare hospice benefit for eligible beneficiaries under Medicare 

Part A.8 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. The care provided 

to families and other caregivers includes counseling, training to provide 

care for the individual, and bereavement counseling. 

To be eligible for Medicare hospice care, a beneficiary must be entitled 

to Part A of Medicare and be certified as having a terminal prognosis 

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 

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

Facilities,” OEI-02-06-00223. 

6 OIG, “Medicare Hospice Care: A Comparison of Beneficiaries in Nursing Facilities and 

Beneficiaries in Other Settings,” OEI-02-06-00220, December 2007. 

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

8 The Tax Equity and Fiscal Responsibility Act of 1982, § 122, P.L. No. 97-248 § 122, 

96 Stat. 324, 356, 42 U.S.C. § 1395x(dd). 

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INTRODUCTION 

assumes the responsibility for medical care related to the beneficiary’s 

terminal illness and related conditions. This care is palliative, rather 

than curative. The beneficiary waives all rights to Medicare payment 

for services related to the 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.9 

Beneficiaries are entitled to receive hospice care for two 90-day periods 

and unlimited 60-day election periods.10 The periods need not be 

consecutive.11 At the start of each period of care, a physician must 

certify that the beneficiary is terminally ill and has a life expectancy of 

6 months or less.12 Beneficiaries may revoke their election of hospice 

care and return to standard Medicare coverage at any time.13 Hospice 

care is provided by Medicare-certified hospice agencies, hereinafter 

referred to as hospices. 

Medicare coverage requirements for hospice services. Pursuant to 

regulations, hospice services must be reasonable and necessary for the 

palliation or management of the terminal illness as well as related 

conditions. Hospice services must also meet the following requirements 

to be covered by Medicare:14

• The individual must elect hospice care in accordance with 

regulations. 

• A plan of care must be established as set forth in regulation before 

services are provided. 

• The services must be consistent with the plan of care. 

• A certification that the individual is terminally ill must be 

completed as set forth in regulation. 

9 42 CFR § 418.24. 

10 Before 1990, hospice beneficiaries who were in hospice care for more than 210 days 

and still required such care were provided care by the hospices without charge to Medicare 

or the beneficiaries. 

11 42 CFR § 418.21. 

12 42 CFR § 418.22. 

13 42 CFR § 418.28. 

14 42 CFR § 418.200.

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INTRODUCTION 

The election statement must explain the palliative rather than curative 

nature of hospice care, acknowledge that coverage of certain Medicare 

services are waived with the election, and include the signature of the 

beneficiary or representative.15 The plan of care must include an 

assessment of the patient’s needs, address the management of 

discomfort and symptom relief, and state in detail the scope and 

frequency of services needed. The plan must be established by the 

attending physician, the medical director or physician designee, and an 

interdisciplinary group and be reviewed and updated at intervals 

specified in the plan.16 In addition, the services provided to the hospice 

beneficiary must be consistent with the plan. Finally, the certification 

of terminal illness must specify that the individual’s prognosis is for a 

life expectancy of 6 months or less if the terminal illness runs its normal 

course, must be supported by clinical information and other 

documentation in the medical record, and must be signed by a 

physician.17

Hospice services. The Medicare hospice benefit covers nursing care, 

medical social services, home health 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.18 

Levels of care. The Medicare hospice benefit has four levels of care, and 

each level has an all-inclusive, prospectively determined daily rate. 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, respite care, and 

general inpatient care. Routine home care is the most common level of 

15 42 CFR § 418.24(b). 

16 42 CFR § 418.200. 

17 42 CFR § 418.22. 

18 42 CFR § 418.202(i). 

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INTRODUCTION 

care and includes, but is not limited to, nursing and home health aide 

services. Appendix A provides detailed information on the four levels of 

care and the payment rates. 

Hospice care in nursing facilities. When a beneficiary resides in a nursing 

facility, the hospice is responsible for providing the hospice services to 

the beneficiary. The nursing facility provides room and board and care 

unrelated to the terminal illness. Medicare reimburses the hospice 

according to the level of care provided, and the beneficiary or a third 

party payer pays the nursing facility for room and board costs.19 In the 

case of a nursing facility resident who is eligible for Medicaid, Medicaid 

pays the hospice, and the hospice pays the nursing facility. 

Related Work 

A 2007 OIG report reviewed the hospice survey and certification 

process.20 It found that Federal oversight of hospices was limited. 

Between FY 2000 and FY 2005, CMS required that hospices undergo 

certification every 6 years. By contrast, nursing facilities and home 

health agencies must undergo certification at least every 15 months and 

36 months, respectively. OIG determined that State agencies certified 

86 percent of hospices within the required timeframe, while 14 percent 

averaged 3 years past due. In addition, 46 percent of hospices surveyed 

were cited with health deficiencies, a substantial proportion of which 

related to patient care planning and quality issues. The report also 

found that CMS and State agencies rarely used methods other than 

certification surveys and complaint investigations to monitor or enforce 

hospice performance. 

METHODOLOGY 

We based this study on data from a medical record review of a stratified 

random sample of hospice claims for beneficiaries in nursing facilities. 

19 CMS, “Medicare Benefit Policy Manual,” Pub. No. 100-02, ch. 9, § 20.3. Available 

online at http://www.cms.hhs.gov/manuals/Downloads/bp102c09.pdf. Accessed on 

February 10, 2009. 

20 OIG, “Medicare Hospices: Certification and Centers for Medicare & Medicaid Services 

Oversight,” OEI-06-05-00260, April 2007. 

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INTRODUCTION 

Sample Selection 

Using the National Claims History file, we extracted all Medicare 

hospice claims that had service dates in 2006 and were received through 

December 2006. Hospice claims typically cover a 1-month period but 

could be for shorter periods of time. We matched the claims data to the 

Medicare Enrollment Database by health insurance claim number to 

identify the Social Security number for each beneficiary. 

Because hospice claims in 2006 did not include place of service, we used 

the Minimum Data Set (MDS) to identify nursing facility stay dates. 

The MDS includes assessments on all residents in Medicare- or 

Medicaid-certified nursing facilities. We used the MDS assessments 

received from January 2004 through December 2006 to create a record 

for each beneficiary of the dates when he or she resided in a nursing 

facility. 

We matched the hospice claims to these nursing facility stay dates by 

the beneficiaries’ Social Security numbers to identify claims for 

beneficiaries while they resided in nursing facilities. We created a file 

that included all hospice claims that corresponded to beneficiaries’ 

nursing facility stays. This file included 812,668 hospice claims for 

231,978 beneficiaries. 

We selected a stratified random sample of 470 hospice claims from this 

file. We stratified the sample to ensure that we included claims for 

beneficiaries who had high-dollar amount claims and had received 

hospice care while in nursing facilities for an extended period of time. 

This stratum comprised all claims for hospice beneficiaries with an 

average hospice reimbursement of $400 or more per day for at least 

60 days while in nursing facilities during 2006. The other two strata 

comprised claims for all remaining beneficiaries who received hospice 

care while in nursing facilities: one stratum included all claims for 

beneficiaries with maximum claim amounts of $3,000 or less, and the 

other included all claims for beneficiaries with maximum claim amounts 

of more than $3,000. We then selected a random sample of claims from 

each stratum. See Table 1 for more details. 

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Table 1: Sample Selection 

 Description of Strata Population Initial 

Sample 

Final 

Sample 

Claims for beneficiaries with high 

average daily claim amounts and 

extended nursing home stays 

Average claim 

amount > $400/day 

for at least 60 days 

1,441 35 33 

Maximum claim 

amount < $3,000 279,697 85 82 

Claims for all other beneficiaries 

with nursing home stays Maximum claim 

amount > $3,000 531,530 350 335 

 Total claims 812,668 470 450 

We excluded 12 claims from our sample because the hospices were 

currently under investigation by OIG. We excluded an additional claim 

because the beneficiary’s nursing facility stay information was 

incomplete and an additional three claims because we were unable to 

locate the hospices. 21 We also excluded another four claims because the 

contractor erred in record collection.22 Our final sample included 

450 claims. 

As a last step, we identified the names and addresses of the hospices 

associated with each sampled claim by using the Online Survey and 

Certification Reporting System (OSCAR). We matched the hospice 

provider numbers in the claims file with the OSCAR data. We also 

identified hospices that were for-profit and those that were not-for-profit 

using a variable that indicated the type of provider ownership. In total, 

43 percent of claims were from not-for-profit hospices and 53 percent of 

claims were from for-profit hospices. The remaining 4 percent were for 

services provided by government hospices. 

Medical Record Review 

We used a contractor to collect and review the medical records 

associated with each sampled claim. For each claim, we requested that 

the hospice provide the relevant hospice election statement, plan(s) of 

21 The hospices’ telephone numbers were disconnected and the hospices could not be 

reached by certified mail. We have referred these cases to CMS for appropriate action. 

22 The contractor collected records for the wrong claim period in three cases and 

contacted the wrong provider in one case. 

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INTRODUCTION 

care,23 record of services provided (including those furnished under 

arrangement or contract with the hospice), certification(s) of terminal 

illness, and clinical information and other documentation that 

supported the medical prognosis. Hospices are required to keep all of 

this information in the clinical record that they establish for every 

individual receiving care and services.24 We requested these records for 

the claim period and, if possible, for the 30 days preceding and the 

30 days following the claim period. 

The contracted reviewers included two registered nurses, each of whom 

had experience with hospice care. For each claim, they used a 

standardized instrument to review the beneficiary’s plan(s) of care, the 

services provided by the hospice, and the beneficiary’s certification(s) of 

terminal illness. As part of their review, they recorded the scope and 

frequency of the services outlined in the plan of care, identified the 

members of the interdisciplinary group who signed the plan, and noted 

the intervals for review specified in the plan. Using the medical 

records, the reviewers also recorded all hospice services provided to the 

beneficiary during the claim period, with the exception of physician 

services.25 Finally, the reviewers determined whether the certification 

of terminal illness specified a prognosis for a life expectancy of 6 months 

or less, whether it was signed by a physician, and whether clinical 

information and other documentation in the record supported the 

medical prognosis. 

The contractor reviewed a total of 447 claims. For the other three 

claims, the hospices did not provide any documentation to review.26 We 

included these three claims when determining the total percentage of 

claims that did not meet at least one Medicare coverage requirement. 

We did not include them when determining the percentages of claims 

that failed to meet each specific coverage requirement. 

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23 Although only one plan of care is in effect at any given time, some beneficiaries had 

more than one plan of care during the claim period. 

24 42 CFR § 418.74, Condition of Participation – Central Clinical Records. 

25 Services provided by the beneficiary’s attending physician are not always included in 

the hospice record. 

26 We contacted the hospices by telephone and certified mail, but they did not provide the 

requested records. We have referred these cases to CMS for appropriate action. 

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INTRODUCTION 

Analysis 

Based on the results of the medical record review, we determined 

whether the frequency of hospice services provided to the beneficiary 

was consistent with the frequency called for in the plan of care. If the 

record indicated that services were missing because the beneficiary 

refused treatment, we considered the frequency of services provided to 

be consistent with the plan of care. 

We reviewed the hospice election statements associated with the sample 

claims. We determined whether the statements addressed the 

palliative rather than curative nature of hospice care and whether 

certain Medicare services were waived by election. We also determined 

whether the beneficiary or representative signed the statement. 

We compared the percentages of claims from not-for-profit and for-profit 

hospices that met the Medicare coverage requirements for election 

statements, plans of care, services, and certifications of terminal illness. 

We tested for statistically significant differences and noted in our 

findings when these differences occurred. 

See Appendixes B and C for the results of our statistical tests. 

Limitations 

This review determined whether hospice claims for beneficiaries in 

nursing facilities met key Medicare coverage requirements. We did not 

determine whether the claims met every requirement. For example, we 

did not analyze whether plans of care were reviewed within specified 

timeframes. Also, we did not report on specific levels of care, such as 

general inpatient, because the results could not be projected to the 

universe. 

In addition, as part of the study, medical record reviewers determined 

whether each beneficiary associated with the sample claims had a 

certification of terminal illness and documentation supporting the 

medical prognosis in his or her medical record. The reviewers did not 

assess eligibility status for the hospice benefit or independently verify 

the beneficiary’s prognosis for a life expectancy of 6 months or less. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” approved by the Council of the Inspectors General on 

Integrity and Efficiency.

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Eighty-two percent of hospice claims for 

beneficiaries in nursing facilities did not meet at 

least one Medicare coverage requirement 

Δ FINDINGS 

Hospices must meet certain 

Federal requirements for their 

services to be covered by Medicare. 

In 2006, 82 percent of Medicare 

hospice claims did not meet one or more coverage requirements. 

Medicare paid approximately $1.8 billion for these claims. 

Eighty-one percent of claims did not meet at least one Medicare 

coverage requirement pertaining to election statements, plans of care, 

services, or certifications of terminal illness. An additional 1 percent of 

claims were undocumented. For these claims, the hospices did not 

submit any records to support the claims, as required. Figure 1 and the 

following findings address the percentage of claims that did not meet 

each of the coverage requirements. 

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FIGURE 1: 

Percentage of 

Hospice Claims 

That Did Not 

Meet Specific 

Medicare 

Coverage 

Requirements 

Source: OIG analysis of medical record review results, 2008. 

Note: Percentages are not mutually exclusive. 

meet plan of ca er

requirements

Claims that did not

meet service 

Claims that did not

meet certification

of terminal illness

requirements

requirements 

Claims that did not Claims that did not 

meet election

requirements

33%

0%

20%

40%

60%

80%

31%

63%

4%

Claims from not-for-profit hospices were less likely to meet Medicare 

coverage requirements than those from for-profit hospices. Specifically, 

89 percent of claims from not-for-profit hospices did not meet Medicare 

requirements, compared to 74 percent of claims from for-profit hospices. 

This difference was statistically significant at the 95-percent confidence 

level. 

 MEDICARE C OVERAGE REQUIREMENTS
 

FINDINGS 

Individuals who are terminally 

ill and entitled to Medicare 

Part A may elect hospice care by 

filing election statements.27 For hospice services to be covered by 

Medicare, election statements must meet certain Federal regulations.28 

These regulations help to ensure that beneficiaries understand the 

types of services they will be receiving as well as forgoing under the 

hospice benefit. Ensuring informed consent for hospice election is 

especially important as beneficiaries may be forgoing potentially 

life-saving therapies. 

Thirty-three percent of claims did not meet 

election requirements 

For 4 percent of claims, there were no election statements. For another 

29 percent of claims, the election statements did not comply with one or 

more regulations. Most commonly, the statements did not explain that 

hospice care was palliative rather than curative or that the beneficiaries 

waived Medicare coverage of certain services related to their terminal 

illnesses. In a few instances, the election statements were not signed by 

the beneficiaries or representatives. 

In addition, a greater percentage of claims from not-for-profit hospices 

did not meet election requirements compared to claims from for-profit 

hospices. Thirty-nine percent of claims from not-for-profit hospices did 

not meet election requirements, compared to 25 percent of claims from 

for-profit hospices. This difference was statistically significant at the 

95-percent confidence level. 

Some election statements misrepresented regulations 

For another 9 percent of claims, the election statements contained 

misleading language. The following excerpts provide examples of such 

language: 

“If I choose care or treatment that has not been preauthorized by 

the hospice team or included in the plan, I understand that I have 

removed myself from the hospice benefit effective immediately 

upon my action.” 

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27 42 CFR 418.24(a). Physically or mentally incapacitated individuals may have their 

representatives file the election statements. 

28 42 CFR §§ 418.200 and 418.24. 

 MEDICARE C OVERAGE REQUIREMENTS
 

FINDINGS 

“If I choose to be admitted to a hospital that does not have a 

contract with [named hospice], that admission will be considered a 

decision to revoke my Medicare/Medicaid hospice benefit election.” 

Pursuant to Federal regulations, a beneficiary does not revoke the 

hospice benefit simply by entering a hospital without authorization from 

his or her hospice. Rather, the individual must file a signed statement 

with the hospice that revokes the election for the remainder of that 

election period.29 Further, to discharge a patient for cause, the hospice 

must follow a number of steps outlined in Federal regulations, which 

include making a serious effort to resolve the problem.30

For hospice services to be covered by 

Medicare, a plan of care must be 

established pursuant to Federal 

regulations for each hospice beneficiary.31 The plan of care helps to 

ensure that those involved in hospice care know precisely “what is 

supposed to be done, by whom, at what time, and for what purpose.”32 

For 1 percent of claims, the hospices did not establish plans of care for 

the beneficiaries. For another 62 percent of claims, the plans did not 

meet at least one Federal requirement. As discussed in more detail 

below, these plans of care were not established by interdisciplinary 

groups; they did not include necessary components, such as detailed 

descriptions of the scope and frequency of services; or they did not 

specify intervals for review, as required. See Table 2. 

Sixty-three percent of claims did not meet 

plan of care requirements 

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29 42 CFR § 418.28. 

30 42 CFR § 418.26. 

31 42 CFR § 418.200. 

32 73 Fed. Reg. 32088, 32115 (June 5, 2008). 

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FINDINGS 

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Table 2: Percentage of Claims That Did Not Meet Plan of Care 

Requirements 

Percentage 

of Claims* 

Hospice did not establish plan of care 1% 

Plan of care was not established by an interdisciplinary group 34% 

Plan of care was missing a necessary component 31% 

Plan of care did not specify intervals for review 22% 

Plan of care did not meet at least one requirement listed above 63% 

Source: OIG analysis of medical record review results, 2008. 

*Percentages are not mutually exclusive.

In addition, a higher percentage of claims from not-for-profit hospices 

did not meet plan of care requirements compared to claims from 

for-profit hospices. Seventy-five percent of claims from not-for-profit 

hospices did not meet plan of care requirements, compared to 

52 percent of claims from for-profit hospices. This difference was 

statistically significant at the 95-percent confidence level. 

For 34 percent of claims, the plans of care were not established by 

interdisciplinary groups 

Federal regulations require that the plan of care be established by the 

attending physician, the medical director or physician designee, and an 

interdisciplinary group prior to providing care.33 The interdisciplinary 

group must include at least a doctor of medicine or osteopathy, a 

registered nurse, a social worker, and a pastoral or other counselor.34 

For 34 percent of claims, the plans of care were not established by all of 

the required members of the interdisciplinary groups. Most commonly, 

pastoral or other counselors and social workers did not participate in 

the plans’ establishment (for 31 percent and 22 percent of claims, 

respectively). Registered nurses did not participate for 5 percent of 

claims and physicians for 2 percent of claims. 

33 42 CFR § 418.58(a). 

34 42 CFR § 418.68(a). 

 MEDICARE C OVERAGE REQUIREMENTS
 

FINDINGS 

For 31 percent of claims, the plans of care were missing a necessary 

component 

The plan of care must include an assessment of the patient’s needs; 

identification of services, including the management of discomfort and 

symptom relief; and a detailed statement of the scope and frequency of 

needed services. 35 

For 1 percent of claims, the plans of care were missing assessments of 

the patients’ needs; for 1 percent of claims, the plans were missing the 

management of discomfort and symptom relief; for 29 percent of claims, 

the plans were missing the scope of at least one service; and for 

1 percent of claims, the plans were missing the frequency of at least one 

service.36 

Most commonly, plans of care were missing the scope of services for 

home health aide and nursing services. For 24 percent of claims, the 

plans of care called for home health aide services but did not include 

any details about the scope of this care. Plans that provided the scope 

listed specific home health aide tasks, such as feeding and bathing the 

patient, helping with ambulation, and changing incontinence pads. 

Similarly, for 17 percent of claims, the plans of care called for nursing 

services but did not include any information about their scope. Plans 

that included the scope described particular nursing duties, such as 

assessing and monitoring patients for various issues, including 

depression, anxiety, neuro-sensory status, pain type, and respiratory 

status. 

As noted earlier, the plans of care were missing the frequency of 

services for 1 percent of claims. Other plans of care included 

frequencies but were somewhat vague. For example, they called for 

certain services to be provided as needed or included a range as wide as 

one to seven visits per week or zero to five visits per month.37 

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35 42 CFR § 418.58(c). 

36 These percentages are not mutually exclusive. 

37 For 8 percent of claims, the plans of care called for services to be provided as needed. 

 MEDICARE C OVERAGE REQUIREMENTS
 

FINDINGS 

For 22 percent of claims, the plans of care did not specify intervals for 

review 

The plan of care must be reviewed and updated at intervals specified in 

the plan.38 Frequent reviews and updates are especially important among 

the terminally ill population, given the potential for rapid changes in their 

conditions. 

However, for 22 percent of the claims, the plans of 

care did not include any such interval. See 

Table 3. For another 37 percent of claims, the 

plans specified an interval of 90 days. It should 

be noted that hospice beneficiaries are expected to 

live for 6 months or less. Therefore, beneficiaries 

who have plans with 90-day intervals could 

anticipate only one review during their expected 

time in hospice care. 

For 21 percent of claims, the plans of care had an 

interval of 14 or fewer days. These would be the 

only claims that would comply with a new rule, 

effective December 2008, mandating that the plan 

be reviewed and revised as frequently as the patient’s condition 

requires, but no less than every 15 days.39 

Table 3: Length of Intervals for Review 

in Plans of Care 

Length of Intervals Percentage of Claims* 

7 days <1% 

14 days 20% 

60 days 17% 

90 days 37% 

Other intervals 1% 

No interval specified 22% 

No plan of care 1% 

Source: OIG analysis of medical record review results, 2008. 

*Percentages do not sum to 100 percent because of 

rounding.

To be covered by Medicare, 

hospice services must be 

consistent with the plan of 

care.40 For 31 percent of claims, the hospices did not provide the 

number of services outlined in the plans of care they established. Most 

commonly, the hospices provided services to the beneficiaries but not as 

frequently as called for in the plans of care. In the most extreme cases, 

there was no documentation of any visits for a particular service. 

For 31 percent of claims, hospices provided fewer 

services than outlined in beneficiaries’ plans of care 

Failure to provide home health aide services was the most frequent 

error, but nursing and medical social services were also not provided as 

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38 42 CFR § 418.58(b). 

39 73 Fed. Reg. 32088, 32206 (June 5, 2008). 

40 42 CFR § 418.200. 

 MEDICARE C OVERAGE REQUIREMENTS
 

FINDINGS 

often as the plans of care specified. For 8 percent of claims, the plans 

called for home health aide services, but no services were documented 

during the claim period. For another 12 percent of claims, the hospices 

provided fewer home health aide services than specified in the plans. 

For 9 percent of claims, the hospices provided fewer nursing services 

than called for in the plans, and for 7 percent of claims, they provided 

fewer medical social services. As mentioned earlier, hospices set their 

own standards for the number of services that beneficiaries needed, and 

these standards were, at times, quite broad. 

A certification that the 

individual is terminally ill 

must be completed pursuant 

to regulations in order for hospice services to be covered by Medicare.41 

For 4 percent of claims, the certifications were missing or did not meet 

one or more Federal requirements. For these claims, the certifications 

did not specify that the individuals’ prognoses were for life expectancies 

of 6 months or less if the terminal illness ran its normal course, they 

were not supported by clinical information and other documentation in 

the medical record, or they were not signed by physicians. 

Four percent of claims did not meet certification 

of terminal illness requirements 

A greater percentage of claims from not-for-profit hospices failed to 

meet certification of terminal illness requirements compared to claims 

from for-profit hospices. Six percent of claims from not-for-profit 

hospices failed to meet these requirements, compared to 2 percent of 

claims from for-profit hospices. This difference was statistically 

significant at the 95-percent confidence level.

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41 42 CFR § 418.200. 

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Δ RECOMMENDATIONS 

We found that 82 percent of hospice claims for beneficiaries in nursing 

facilities in 2006 did not meet Medicare coverage requirements. 

Medicare paid approximately $1.8 billion for these claims. The extent to 

which hospices did not meet coverage requirements raises concerns 

about the services that Medicare is paying for and the quality of care 

that hospices are providing to beneficiaries during their last months of 

life. The results of our review also indicate that CMS’s current 

oversight procedures are inadequate and that it must do more to ensure 

that hospices deliver care that meets Medicare requirements. Given 

the nature of hospices’ noncompliance—which does not appear to be 

related to the beneficiaries’ setting—these concerns extend to all 

Medicare beneficiaries receiving hospice care. 

Based on the findings in this report, we recommend that CMS: 

Educate Hospices About the Coverage Requirements and Their Importance 

in Ensuring Quality of Care 

Our findings raise questions about whether hospices are providing 

accurate information to individuals about the benefit upon election and 

whether they are furnishing needed services to beneficiaries at an 

especially vulnerable time in their lives. CMS should educate hospices 

about the coverage requirements, particularly for election statements, 

plans of care and their review, and certifications of terminal illness. It 

should pay particular attention to not-for-profit hospices, given the 

higher rate at which their claims did not meet requirements. 

Provide Tools and Guidance to Hospices To Help Them Meet the Coverage 

Requirements 

These tools should include clear and specific instructions, such as model 

text for election statements, a checklist of items that must be in the 

plans of care, and guidance on complying with the certification of 

terminal illness regulations. 

Strengthen Its Monitoring Practices Regarding Hospice Claims 

CMS should effectively use targeted medical reviews and other 

oversight mechanisms to improve hospice performance and compliance 

with Medicare requirements, especially with respect to establishing 

plans of care and providing services that are consistent with these plans 

of care. Additionally, as we recommended in a previous report, CMS 

should conduct more frequent certification surveys of hospices as a way 

to enforce the requirements. 

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R ECOMMENDATIONS 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with all three of our recommendations. In response to 

our first recommendation, CMS stated that it has made presentations 

at industry conferences and participated in other events with hospice 

associations. CMS also noted that its Web site has a training 

broadcast for State surveyors that is available to hospice providers. 

CMS stated that it has educated providers about the requirements of 

the new Conditions of Participation (CoP), issued June 5, 2008. These 

CoPs address patient care planning and the care of patients who 

reside in nursing facilities. 

In response to our second recommendation, CMS stated that it has 

issued new Hospice Program Interpretive Guidance, a tool used by 

providers and State Survey agencies to determine compliance with 

the CoPs. CMS also stated that it held three satellite training 

sessions to educate stakeholders on the new requirements. We 

encourage CMS to continue educating providers and to give them 

detailed instructions that encompass the new requirements as well as 

existing requirements that have not been revised but are equally 

important. We also encourage CMS to augment these efforts with 

specific tools that address the problems outlined in this report, such 

as model text for election statements. 

In response to our third recommendation, CMS stated that it will 

instruct Medicare contractors to consider the issues in this report 

when prioritizing its medical review strategies or other interventions. 

CMS also stated that it will share this report and relevant claim 

information from OIG with the Recovery Audit Contractors. 

We have made changes to the final report based on CMS’s technical 

comments, as appropriate. For the full text of CMS’s comments, see 

Appendix D. 

 MEDICARE C OVERAGE REQUIREMENTS
 

Δ APPENDIX~A 

Hospice Payment Rates

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

hospice payment rates annually to be used for each level of care.42 The 

rates are adjusted based on the beneficiaries’ geographic locations. The 

levels of care and the fiscal year 2006 Medicare unadjusted daily rates 

for each are as follows: 

• Routine Home Care ($126.49): 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 home 

health aide services. Routine home care may be provided in the 

home or other places of residence, such as a nursing facility. 

• Continuous Home Care ($738.26): 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. 

• Respite Care ($130.85): 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. 

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42 CMS, “Medicare Claims Processing Manual,” Pub. No. 100-04, ch. 11, Transmittal 663, 

Change Request 3977. Available online at 

http://www.cms.hhs.gov/transmittals/downloads/R663CP.pdf. Accessed on February 10, 

2009. 

 MEDICARE C OVERAGE REQUIREMENTS
 

APPENDIX~A 

• General Inpatient Care ($562.69): 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. 

 

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 Confidence Intervals for Selected Estimates 

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Estimate Description n Point Estimate 95-Percent Confidence 

Interval 

Percentage of hospice claims that did not 

meet Medicare coverage requirements 450 82% 77% – 85% 

Dollar amount paid by Medicare for claims 

that did not meet Medicare coverage 

requirements 

450 $1.8 billion $1.7 billion – $1.9 billion 

Percentage of undocumented claims 450 0.6% 0.2% – 1.8% 

Percentage of claims that did not meet at 

least one Medicare coverage requirement 

pertaining to election statements, plans of 

care, services, or certifications of terminal 

illness 

450 81% 77% – 85% 

Percentage of claims that did not meet 

election requirements 447 33% 28% – 38% 

Percentage of claims that did not meet plan 

of care requirements 447 63% 58% – 68% 

Percentage of claims for which 

interdisciplinary groups did not establish the 

plans of care 

447 34% 29% – 39% 

Percentage of claims for which the plans of 

care were missing a necessary component 447 31% 27% – 36% 

Percentage of claims for which the plans of 

care did not specify the interval for review 447 22% 18% – 27% 

Percentage of claims for which the hospices 

provided fewer services than outlined in the 

plans of care 

447 31% 26% – 36% 

Percentage of claims that did not meet 

certification of terminal illness requirements 447 4% 2% – 6% 

Source: Office of Inspector General analysis of medical record review results, 2008. 

Δ APPENDIX~B APPENDIX~B 

 MEDICARE C OVERAGE REQUIREMENTS
 

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Δ APPENDIX~C 

 

 Weighted Chi-Square Test Comparing Not-For-Profit and For-Profit Hospices 

Percentage of Claims 

From Not-For-Profit 

Hospices 

Percentage of Claims 

From For-Profit 

Hospices 

P-Value 

Percentage of claims that did not meet 

Federal requirements* 89% 74% 0.0002 

Percentage of claims that did not meet 

election requirements* 39% 25% 0.009 

Percentage of claims that did not meet 

plan of care requirements* 75% 52% <0.0001 

Percentage of claims for which the 

hospices provided fewer services than 

outlined in the plans of care 

31% 32% 0.91 

Percentage of claims that did not meet 

certification of terminal illness 

requirements* 

6% 2% 0.007 

Source: Office of Inspector General analysis of medical record review results, 2008. 

*Differences between percentages of claims from not-for-profit hospices and those from for-profit hospices were statistically significant 

at the 95-percent confidence level.

 
.. A P PEN D x D

Agency Comments

.,"'~'''''C'''.''. . ~'

( E ,.,;~

DEPARTMENT OF HEALTH & HUMAN SERVICES

ôenters for Medicare & Medi~aid SelVices

. ---~~:-i~: .... /-:

u Administrator

Washington, DC, 2020'1

2009 AUG .. 7 PH 3: 0 S¡

..., ;c

GENEI,A L

DATE: 'AUG 0 ß 2009

TO: Daniel R. Levinson

liispector Gen~ral

FROM: 'Chãrlene Frizzerá

Acting Administrator

SUBJECT: Offçe ofInspector General's Draft Report: "Medicare Hospice Care for

Bendìciaries in Nursing Facilities: Compliance with Medicare Coverage

Requirements" (0 EI ~02-06-00221)

Thank you for the oppottiinity to review and comment on the Offce of inspector General's

(OlG) draft report entitled, "Medicare Hospice Care for Beneficiaries in Nursing Facilities:

Compliance with Medicare Coverage Requirements."

The objective of the report was to determine the extent to. which hospice claims for beneficiaries

in nursing íacilitìes in 2006 met Medicare coverage requirements. As noted in the report, the

number of Medicare beneíìciaries receiving hospice care has increased significantly in recent

years and some studies suggest that the, number of beneficiaries receiving hospice care while

residing in a nursing facility is also growing rapidly. This report found that 82 percent of

hospice claims for beneficiaries in nursing facilities in 2006 did not meet at least one Medicare

scope of benefìt or coverage requirement pertaining to election statements, plans of care,

p1'vision of services, and certification ofterminal illness.

OIG Recommendation

Educate hospices about the coverage requirements and their impo11ance in ensuring quality of

care.

CMS Response

The Centers for Medicare & Medicaid Services (CMS) concurs with this recommendation,

When ejecting the Medicare hospice benefit, a Medicare beneficiary waives his/her right to have

Medicare pay for services related to the treatment of the terminal condition for which hospice

was elected (or a related condition), except when provided or arranged for by the Medicare

hospice. Therefore, it is critically important that Medicare beneficiaries are certified

appropriately and understand the implications of electing to receive hospice care.

o EI. 02.06. 00 221 MEDICARE HOSPICE CARE FOR BENEFICIARIES IN NURSING FACILITIES: COMPLIANCE WITH

MEDICARE COVERAGE REQUIREMENTS

23
 

APPENDIX ~ D 

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APPENDIX ~ D 

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APPENDIX ~ D 

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Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Jodi Nudelman, 

Regional Inspector General for Evaluation and Inspections in the 

New York regional office, and Meridith Seife, Deputy Regional Inspector 

General. 

Nancy Harrison served as the team leader for this study. Other 

principal Office of Evaluation and Inspections staff from the New York 

regional office who contributed to the report include Olivia Herman, 

Michelle McInnis, and Bailey Orshan; central office staff who 

contributed include Rob Gibbons and Sandy Khoury.