Inspector General: Hospices Incentivized To Work In Assisted Living

Hospices that provide care in assisted living facilities (ALFs) have a greater monetary incentive to do so than those that don’t, a recent study from the Office of Inspector General (OIG) finds.

Medicare payments for hospice care in ALFs more than doubled in five years, totaling $2.1 billion in 2012, data show. The study is based on an analysis of all Medicare hospice claims from 2007 through 2012.

“Hospices provided care much longer and received much higher Medicare payments for beneficiaries in ALFs than for beneficiaries in other settings,” the OIG writes, noting that hospice beneficiaries in ALFs often had diagnoses that usually require less complex care.


Hospices typically provided fewer than five hours of visits and were paid about $1,100 per week for each beneficiary receiving routine home care in ALFs, data show. And for-profit hospices received much higher Medicare payments per beneficiary than nonprofit hospices.

“This report raises concerns about the financial incentives created by the current payment system and the potential for hospices to target beneficiaries in ALFs because they may offer the hospices the greatest financial gain,” the OIG writes. “Together, the findings in this and previous OIG reports show that payment reform and more accountability are needed to reduce incentives for hospices to focus solely on certain types of diagnoses or settings.”

The OIG outlines several recommendations for the Centers for Medicare & Medicaid Services (CMS) as part of its ongoing hospice reform efforts: reform payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays, target certain hospices for review, develop and adopt claims-based measures of quality, make hospice data publicly available for beneficiaries, and provide additional information to hospices to educate them about how they compare to their peers.


CMS concurred with all five recommendations, the OIG says.

Access the study here.

Written by Cassandra Dowell

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