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OIG Report Zeroes in on Hospice Care and CAH Services

June 30, 2015:

Among the topics with recommendations in the Office of Inspector General’s spring 2015 Semiannual Report to Congress are two that could have broad implications for Medicare beneficiaries and providers. The first involves hospice care provided in assisted-living facilities, and the second, swing-bed payment in critical access hospitals.

The OIG noted that Medicare payment has more than doubled for assisted-living facility services over the course of the last five years. When the agency looked closely at what those payments went toward, it noticed that hospices receive higher Medicare payment for services provided in ALFs than in other settings and that the ALFs were providing care for their patients for a longer period than for beneficiaries receiving the same services in other settings. The report notes that hospices were being paid more than $1,000 per beneficiary per week for routine home care in ALFs, typically spending fewer than five hours on care because ALF patients require less intense hospice services than those patients in other settings.

As a result, the OIG is recommending:

  • Reducing the financial incentives for hospices to target beneficiaries with certain diagnoses and those likely to have lengthy stays in ALFs
  • Identifying particular hospices OIG can review
  • Developing and using claims-based measures of quality of care
  • Making hospice data publicly available
  • Providing hospices with data enabling them to compare themselves with their peers

The OIG identified another large payment drain in swing beds at critical access hospitals (CAHs). A CAH aims to ensure that a wide range of services are provided to beneficiaries living in remote areas. Whereas most hospitals dedicate beds to acute care, patients requiring post-acute care are transferred to a skilled nursing facility. However, CAHs can use their beds, as needed, for either acute or SNF care as long as the patient was an inpatient for at least three consecutive days.

To encourage CAHs to provide swing-bed services, Medicare pays for SNF services provided in swing beds at 101 percent of reasonable costs, rather than at the lower SNF prospective payment system (PPS) rate. As a result, the OIG has noticed that swing-bed use rose substantially between 2005 and 2010; a period of time in which Medicare could have saved $4.1 billion had the services been paid under SNF PPS rather than at the reasonable cost level.

Because of these findings, OIG is recommending paying swing-bed services at the lower SNF PPS rates.

Further, the OIG also mentions that calculating coinsurance for outpatient CAH services based on a percentage of charges places an excessive financial burden on beneficiaries. Currently, beneficiaries pay between two and six times the amount of co-insurance for 10 common outpatient services at CAHs than they would at acute-care hospitals. The end result is that, in 2012, beneficiaries paid about $1.5 billion of the estimated total cost of $3.2 billion for CAH outpatient services.

As a result of these findings, the agency recommends:

  • Basing coinsurance for outpatient CAH services on interim payment rates rather than on charges
  • Processing outpatient claims for CAH services as if they were paid under the outpatient PPS to calculate an OPPS-equivalent coinsurance


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