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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Operation Restore Trust:  Review of Medicare Hospice Eligibility at the San Diego Hospice Corporation," (A-09-96-00064)

March 11, 1997

Complete Text of Report is available in PDF format (775K). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This report provides the results of our audit of eligibility determinations for Medicare hospice beneficiaries at the San Diego Hospice Corporation (SDH), San Diego, California. This audit was part of a joint initiative among various Department of Health and Human Services components called Operation Restore Trust (ORT). The ORT seeks to identify specific vulnerabilities in the Medicare program and pursue ways to reduce Medicare exposure to abusive practices. The hospice audits focused on Medicare beneficiaries in hospice care for at least 210 days.

The objective of our review was to evaluate hospice eligibility determinations by the San Diego Hospice Corporation (SDH) for beneficiaries that remained in hospice care for more than 210 days. We also determined the amount of payments made to the SDH for those Medicare beneficiaries that did not meet the Medicare reimbursement requirements.

Our review included a medical evaluation of the SDH’S eligibility determinations for 78 beneficiaries who had been in hospice care for more than 210 days. The review showed that: 37 of the beneficiaries were not eligible for hospice coverage; and for 19 beneficiaries, we were unable to conclusively determine their eligibility status.

Our medical determinations were made by physicians employed by or under contract with the Medicare peer review organization for California. All of the 37 ineligible determinations were confirmed by medical review staff of Blue Cross of California fiscal intermediary for the SDH.

The incorrect eligibility determinations were due to inaccurate prognoses of life expectancy by hospice physicians based on the medical evidence in the patients’ files or because the physicians certified beneficiaries as terminally ill based on insufficient clinical data. The SDH received improper Medicare payments totaling $2.1 million for the 37 ineligible beneficiaries and $1.35 million relating to 19 beneficiaries for whom we were unable to determine that a terminal illness existed at the time of admission to the hospice.

We are recommending the intermediary:

-- Recover payments of $2.1 million made through May 15, 1996 for the 37 beneficiaries who were not eligible for Medicare hospice benefits; Recover any improper payments made on behalf of those beneficiaries enrolled in hospice care after May 15, 1996;
-- Conduct medical reviews of the 19 cases, for which the hospice received $1.35 million, that we were unable to conclusively determine that the beneficiary was terminally ill. Based on the results of these reviews, take appropriate action to recover amounts determined to be overpayments.
-- Coordinate with the Health Care Financing Administration (HCFA) in providing training to hospice providers and physicians on eligibility requirements for hospice beneficiaries, particularly the requirement for a 6-month prognosis.
-- Analyze utilization trends to identify hospices with numerous claims for beneficiaries with over 210 days of hospice coverage and conduct medical reviews on a sample of their claims.
-- Conduct periodic reviews of hospice claims to ensure the hospices are obtaining sufficient medical information to make valid eligibility determinations.

The intermediary did not provide any comments concerning its concurrence or nonconcurrence to our recommendations. It plans to perform medical reviews for the 19 beneficiaries whose medical records did not contain sufficient information and consult with HCFA before recovering any overpayments.