OIG Targets Hospice Services in Skilled Nursing Facilities, Recommends Cuts

When the Department of Health and Human Services’ (HHS) top watchdog arm issued an overall warning about the state of hospice care earlier this summer, skilled nursing facilities were specifically singled out as areas for improvement.

The HHS Office of the Inspector General (OIG) accused hospices of using residents in nursing homes to artificially inflate their reimbursements and avoid providing the highest level of care by essentially targeting the easiest-to-treat residents.

Part of the problem, in the OIG’s estimation, is that hospice beneficiaries in SNFs and assisted living facilities (ALFs) generally had less complex medical needs than patients in other settings. For instance, among recipients of hospice care in SNFs, only about 15% had cancer diagnoses in 2013, compared to 38% of those who were given hospice services in their homes.


“Beneficiaries with cancer often require complex care and receive hospice care for substantially fewer days than beneficiaries with diagnoses of ill-defined conditions, mental disorders, or Alzheimer’s disease,” the OIG observed in its report.

On the flip side, about 52% of hospice care beneficiaries in SNFs had mental illness or Alzheimer’s, as opposed to just 27% in the home setting.

The OIG specifically singled out more than 260 providers that “targeted” nursing home residents, defined as hospice agencies that derived at least two-thirds of their beneficiaries from inpatient nursing facilities. About 75% of those “targeted” agencies were for-profit, the OIG observed.


“Like beneficiaries in ALFs, beneficiaries residing in nursing facilities commonly have conditions that are associated with less complex care, longer stays, and more Medicare payments,” the OIG wrote.

Nancy Harrison, lead author of the report and deputy regional inspector general with the OIG, said those trends were the result of the current way that Medicare reimburses for hospice services.

“The hospice payment system provides incentives for hospices to provide in these settings, because the patients in these settings … typically have less complicated needs and require fewer services,” Harrison told SNN. “So, there are hospices that may seek a financial advantage and target those sorts of facilities to find their patients.”

In fiscal year 2017, for instance, hospices received $734.94 per day for so-called “general inpatient care,” in nursing homes and other institutions, compared to $190.55 for the first 60 days of “routine home care.” That gulf concerned the OIG, especially considering that nursing homes already provide the types of normal personal-care services that hospices are tasked with offering.

In addition, the OIG noted that hospices failed to provide the full range of services laid out in patients’ care plans in 31% of nursing-home-based claims.

“We’ve found problems with the plan of care throughout our hospice work. Let’s remember that the hospices are the ones that developed the plans of care,” Harrison said. “They set their own bar. If they can’t meet that, that’s very concerning.”

The OIG has recommended that the Centers for Medicare & Medicaid Services (CMS) cut its reimbursement rates for SNF-based hospice care, while also boosting oversight of the way hospices operate in the institutional care setting.

Written by Alex Spanko and Robert Holly

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