Review of Improper Payments Made to Hospitals and Skilled Nursing Facilities for Beneficiaries Electing Hospice Benefits

EXECUTIVE SUMMARY:

This final audit report points out that for the 5-year period ending December 31, 1992, hospitals and skilled nursing facilities (SNFs) were improperly paid an estimated $21.6 million for services provided to Medicare beneficiaries receiving hospice care. Once a beneficiary elects hospice care, no Medicare payments are allowed to hospitals or SNFs for services related to the beneficiary's terminal illness. In such situations, the hospitals or SNFs should be reimbursed by the hospice facility in which the beneficiary is enrolled. The claims were improperly paid because of claims processing weaknesses in the Health Care Financing Administration's (HCFA) Common Working File system. We will be recommending improvements to this system in a separate report. In this report, we are recommending that HCFA instruct the fiscal intermediaries (FI) to review the related medical records of Medicare beneficiaries in hospices and, where improper payments were made, the FIs should seek refunds of incorrect payments and make appropriate adjustments to hospital cost reports. The HCFA concurred with our findings and recommendations.