OFFICE OF INSPECTOR GENERAL
FRAUD AND ABUSE ALERT:
NURSING HOME ARRANGEMENTS WITH HOSPICES
NOTE: THE FOLLOWING IS THE EXACT TEXT FROM THE DHHS OFFICE OF INSPECTOR GENERAL REPORT ABOUT POSSIBLE FRAUD/KICKBACK ARRANGEMENTS BETWEEN HOSPICES AND NURSING HOMES.
To see the report at the OIG website, you will need Adobe Acrobat Reader: click on the link cited below to access the government website.
This document is found at the following location: http://oig.hhs.gov/fraud/docs/alertsandbulletins/hospice.pdf
The Office of Inspector General was established at the Department of Health and
Human Services by Congress in 1976 to identify and eliminate fraud, abuse and
waste in the Department's programs and to promote efficiency and economy in
departmental operations. The OIG carries out this mission through a nationwide
program of audits, investigations, and inspections.
To reduce fraud and abuse in the Federal health care programs, including
Medicare and Medicaid, the OIG actively investigates fraudulent schemes to
obtain money from these programs and, when appropriate, issues Special Fraud
Alerts that identify segments of the health care industry that are particularly
vulnerable to abuse.
This Special Fraud Alert on the interrelationship
between the hospice and nursing home industries and describes some potentially
illegal practices the OIG has identified in arrangements between these providers.
What Is Hospice Care And Who Is Eligible To Receive It
Medicare's hospice benefit provides palliative care to individuals who are
terminally ill. Palliative care on pain control, symptom management, and
counseling for both the patient and family. Medicare hospice payments increased
from about $958 million for Fiscal Year 1993 to over $1.8 billion for Fiscal Year
1995. Although the hospice benefit is still a relatively small portion of total
Medicare Part A expenditures (about 1.5 percent), it has grown considerably over
the past several years.
In order to elect the hospice benefit, a Medicare beneficiary must be entitled to
Medicare Part A services and certified as terminally ill, which is defined as a
medical prognosis of a life expectancy of 6 months or less if the illness runs its
normal course. A beneficiary who elects to enroll in a hospice program waives his
or her rights to all curative care related to his or her terminal illness. Medicare
will continue to pay for services furnished by the patient's non-hospice attending
physician and for the treatment of conditions unrelated to the terminal illness.
The hospice must have a written plan of care which covers physician and nursing
services; physical, occupational, and speech therapy; medical social services;
home health aides and homemakers; short-term inpatient care; counseling; respite
care; and medical supplies, including drugs and biologicals. Certain of the hospice
services ("core services") must be provided directly to the beneficiary by
employees of the hospice, while other non-core hospice services may be provided
in accordance with contracts with other providers. However, the hospice must
retain professional management for all contracted services.
Reimbursement For Hospice Care
Medicare does not have a separate payment rate for routine hospice services
provided in a nursing home. Because hospice services are typically provided to
patients in their homes, the routine home care hospice rate does not include any
payment for room or board. For services provided to patients in nursing homes,
hospices receive the Medicare routine home care rate, which is a fixed amount per
day for the services provided by the hospice, regardless of the volume or intensity
of the services provided. Accordingly, where the hospice patient resides in a
nursing home, the patient remains responsible for payment of the nursing home's
room and board charges.
If, however, a patient receiving Medicare hospice benefits in a nursing home is
also eligible for Medicaid, Medicaid will pay the hospice at least 95 percent of the
State's daily nursing home rate, and the hospice is then responsible for paying the
nursing home for the beneficiary's room and board. The specific services included
in the daily rate payment are determined by a State's Medicaid program and may
vary from State to State.
In addition to the room and board payment, a hospice may contract with the
nursing home for the nursing home to provide non-core hospice services (i.e.,
those services which the hospice is not required by law to provide itself) to its
Provided In Nursing Homes
Vulnerabilities In Nursing Home Arrangements
Hospice services may be appropriate and beneficial to terminally ill nursing home
residents who wish to receive palliative care. However, arrangements between nursing
homes and hospices are vulnerable to fraud and abuse because nursing home operators
have control over the specific hospice or hospices they will permit to provide hospice
services to their residents. An exclusive or semi-exclusive arrangement with a nursing
home to provide hospice services to its residents may have substantial monetary value to
a hospice. In these circumstances, some nursing home operators and/or hospices may
request or offer illegal remuneration to influence a nursing home's decision to do business
with a particular hospice.
Hospice patients residing in nursing homes may be particularly desirable from a hospice's
financial standpoint. First, a nursing home's population represents a sizeable pool of
potential hospice patients. Second, nursing home hospice patients may generate higher
gross revenues per patient than patients residing in their own homes because nursing
home residents receiving hospice care have, on average, longer lengths of stay than
hospice patients in their homes. Also, there may be some overlap in the services that the
nursing homes and hospices provide, thereby providing one or the other the opportunity
to reduce services and costs.
A recent OIG report found that residents of certain nursing
homes receive fewer services from their hospice than patients in their own homes. Since
hospices receive a fixed daily payment regardless of the number of services provided or
the location of the patient, fewer services may result in higher profits per patient.
However, a hospice's access to nursing home patients depends on the nursing home
operator. Nursing home operators may restrict residents to one or two hospice providers.
While an exclusive or semi-exclusive arrangement can promote efficiency and safety by
permitting the nursing home operator to coordinate care, screen hospice caregivers, and
maintain control of the premises, it also enhances the value of the nursing home
operator's decision. In these circumstances, some nursing home operators or hospices
may request or offer illegal inducements to influence the selection of a hospice.
Paying Or Receiving Kickbacks In Order To Induce Medicare Or Medicaid Referrals
Because kickbacks can distort medical decision making, result in overutilization, and
have an adverse effect on the quality of care patients receive, they are prohibited under
the Federal health care programs, including Medicare and Medicaid. Under the anti-kickback
statute, it is illegal to knowingly and willfully solicit, receive, offer, or pay
anything of value to induce referrals of items or services payable by a Federal health care
The OIG has observed instances of potential kickbacks between hospices and nursing
homes to influence the referral of patients.
In general, payments by a hospice to a
nursing home for "room and board" provided to a Medicaid hospice patient should not
exceed what the nursing home otherwise would have received if the patient had not been
enrolled in hospice. Any additional payment must represent the fair market value of
additional services actually provided to that patient that are not included in the Medicaid
Specific practices which are suspected kickbacks include:
- A hospice offering free goods or goods at below fair market value to induce a
nursing home to refer patients to the hospice.
- A hospice paying "room and board" payments to the nursing home in amounts in
excess of what the nursing home would have received directly from Medicaid had
the patient not been enrolled in hospice.
- A hospice paying amounts to the nursing home for "additional" services that
Medicaid considers to be included in its room and board payment to the hospice.
- A hospice paying above fair market value for "additional" non-core services which
Medicaid does not consider to be included in its room and board payment to the
- A hospice referring its patients to a nursing home to induce the nursing home to
refer its patients to the hospice.
- A hospice providing free (or below fair market value) care to nursing home
patients, for whom the nursing home is receiving Medicare payment under the
skilled nursing facility benefit, with the expectation that after the patient exhausts
the skilled nursing facility benefit, the patient will receive hospice services from
- A hospice providing staff at its expense to the nursing home to perform duties that
otherwise would be performed by the nursing home.
Parties that violate the anti-kickback statute may be criminally prosecuted or subject to
civil monetary penalties, and also may be subject to exclusion from the Federal health
What To Do If You Suspect Fraud Involving Arrangements Between
Nursing Homes and Hospices
If you have information about nursing homes and hospices engaging in any of the
activities described above, contact any of the regional offices of the Office of Investigations of the Office of Inspector General, U.S. Department of Health and Human Services, at the following locations:
Field Office: Boston
States Served: MA, VT ,NH, ME, RI, CT
Field Office: New York
States Served: NY, NJ, PR, VI
Field Office: Philadelphia
States Served: PA, MD, DE, WV, VA, DC
Field Office: Atlanta
States Served: GA, KY, NC, SC, FL, TN, AL, MS
Field Office: Chicago
States Served: IL, MN, WI, MI, IN, OH, IA, MO
Field Office: Dallas
States Served: TX, NM, OK, AR, LA, CO, UT,WY, MT, ND, SD, NE, KS
Field Office: Los Angeles
States Served: AZ, NV, So. CA
Field Office: San Francisco
States Served: No. CA, AK, HI, OR, ID, WA
[This is the end of the OIG Special report, reproduced here for your convenience.]
The Hospice Patients Alliance is available to assist you if you have questions about your loved one's care in a hospice, whether in your home or a nursing home, or any other facility. The law regarding hospice can be found at our website. If you suspect actual fraud or kickbacks as noted above, these should be reported to the Office of Inspector General IN WRITING if at all possible, because a written complaint from you is much more effective than a simple call on the telephone.