The Office of Inspector General (OIG) has issued a report on the growth of the Medicare hospice benefit in nursing facilities from 2005 to 2009. The Medicare hospice benefit allows a beneficiary with a terminal illness to forgo curative treatment for the illness and instead receive palliative care. OIG has recently raised a number of concerns about Medicare hospice care for nursing facility residents. OIG found that 31 percent of Medicare hospice beneficiaries resided in nursing facilities in 2006 and that 82 percent of hospice claims for these beneficiaries did not meet Medicare coverage requirements. Also, the Medicare Payment Advisory Commission (MedPAC) noted in a report to Congress in 2009 that hospices and nursing facilities may be involved in inappropriate enrollment and compensation.

This report is the first in a series by OIG that addresses the concerns identified by OIG and MedPAC. This first report (you can read the full report here under the Medicare A & B heading) describes the growth in hospice care from 2005 to 2009, and focuses on hospices that served a high percentage of nursing facility residents in 2009. It is based primarily on the minimum data set (MDS) and the hospice 100-percent standard analytical file from the Centers for Medicare & Medicaid Services (CMS). Companion reports will assess the marketing practices of a sample of these hospices, as well as their business relationships with nursing facilities.

Here is a brief summary of the OIG findings:

Medicare spending on hospice care for nursing facility residents has grown nearly 70 percent since 2005. Total Medicare spending for hospice care for nursing facility residents grew by 69 percent from 2005 to 2009, increasing from $2.55 billion to $4.31 billion. At the same time, the number of hospice beneficiaries in nursing facilities increased by 40 percent. The total number of hospices providing care to Medicare beneficiaries also grew, with a continuing trend toward for-profit hospices. In 2009, for-profit hospices were reimbursed, on average, 29 percent more per beneficiary than nonprofit hospices and 53 percent more per beneficiary than government-owned hospices.

Hundreds of hospices had more than two-thirds of their beneficiaries in nursing facilities in 2009; most of these hospices were for-profit. Almost 8 percent of hospices had two-thirds or more of their Medicare beneficiaries residing in nursing facilities. In total, there were 263 such hospices, hereinafter referred to as high-percentage hospices. Seventy-two percent of high-percentage hospices were for-profit, compared to 56 percent of all hospices. On average, high-percentage hospices served beneficiaries in 20 nursing facilities.

High-percentage hospices received more Medicare payments per beneficiary and served beneficiaries who spent more time in care. Medicare paid an average of $3,182 more per beneficiary for beneficiaries served by high-percentage hospices than it paid per beneficiary for those served by hospices overall. High-percentage hospices served beneficiaries who spent more days in hospice care, which contributed to higher Medicare payments. By the end of 2009, the median number of days in hospice care for a beneficiary served by a high-percentage hospice was 3 weeks longer than the median number of days for a typical hospice beneficiary.

High-percentage hospices typically enrolled beneficiaries whose diagnoses required less complex care and who already lived in nursing facilities. Together, beneficiaries with ill-defined conditions, mental disorders, and Alzheimer’s disease accounted for over half (51 percent) of the beneficiaries served by high-percentage hospices. In contrast, 32 percent of all hospice beneficiaries had one of these three conditions as their terminal diagnoses; beneficiaries with these conditions typically received routine home care, which is less complex and costly than other levels of hospice care.

In 2009, the vast majority—almost 90 percent—of beneficiaries who lived in nursing facilities and received care from high-percentage hospices had resided in the facilities before electing hospice care. In comparison, 79 percent of all hospice beneficiaries who received care in nursing facilities resided in the facilities before electing hospice care.

The report included the following recommendations for the Center for Medicare and Medicaid Services:

Monitor hospices that depend heavily on nursing facility residents.
CMS should target its monitoring efforts on hospices with a high percentage of beneficiaries in nursing facilities and should closely examine whether these hospices are meeting Medicare requirements.

Modify the payment system for hospice care in nursing facilities.
Medicare currently pays hospices the same rate for care provided in nursing facilities as it does for care provided in other settings, such as private homes. The current payment structure provides incentives for hospices to seek out beneficiaries in nursing facilities, who often receive longer but less complex care. To lessen this incentive, CMS should reduce Medicare payments for hospice care provided in nursing facilities, seeking statutory authority, if necessary. Unlike private homes, nursing facilities are staffed with professional caregivers and are often paid by third-party payers, such as Medicaid. These facilities are required to provide personal care services, which are similar to hospice aide services that are paid for under the hospice benefit.

Patti Cullen, CAE
952.851.2487
pcullen@careproviders.org

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