Report: Medicare often overbilled by hospices and pays twice for some drugs

Published Apr. 3, 2016

WASHINGTON — Hospices often bill Medicare for a higher level of care than patients need, and Medicare often pays twice for the prescription drugs provided to people who are terminally ill, federal investigators say in a new report. The extra cost to Medicare was put at more than $260 million a year.

"Many hospices have been billing far more than they should have," said Nancy T. Harrison, a deputy regional inspector general at the Department of Health and Human Services who led the investigation.

The investigators found that Medicare was paying hospices almost four times as much as it should have for some patients. The patients were receiving "inpatient care" when all they needed was less-expensive routine care in their homes, the report said.

Medicare now pays hospices an all-inclusive rate of $720 a day for inpatient care and no more than $187 a day for routine home care.

The department's inspector general, Daniel R. Levinson, found that hospices were billing Medicare for a higher, more expensive level of care than patients needed in about a third of such cases.

In response to the report, Andrew M. Slavitt, the top Medicare official, said he was stepping up supervision of hospices.

Medicare's hospice benefit covers a combination of medical, social and counseling services, as well as prescription drugs, for people with a life expectancy of six months or less. It emphasizes the alleviation of pain and suffering rather than the cure of illness. Hospice patients generally forgo Medicare coverage for curative treatment of the terminal illness and related conditions.

In about 20 percent of hospice claims for inpatient care, Levinson said, the Medicare beneficiary did not need such care at all. In another 10 percent, he said, the patient needed the higher level care for only part of the inpatient stay.

And "in 1 percent of stays," he said, "there was no evidence that the beneficiary elected hospice care or was even certified as having a terminal illness."

The standard daily rate, paid to hospices by Medicare, covers the cost of prescription drugs that are used primarily to relieve pain and manage symptoms related to a patient's terminal illness. But investigators found that some patients also had insurance coverage under Part D of Medicare that paid for the same drugs.

"Medicare is paying twice when Part D pays for drugs that are already covered" by the hospice benefit, the report said. In these cases, it said, beneficiaries may incur extra costs, in copayments under Part D of Medicare.