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The Fundamentals of Hospice Compliance What Is It and What Are the Implications for the Future? An Overview for Hospice Clinicians Part 2: Hospice Risk Areas

Balfour, Susan RN, BA

doi: 10.1097/NHH.0b013e318252c337
Feature: CE Connection

This article, Part 2 of a 2-part series, continues the examination of the Medicare compliance climate and its impact on hospice providers. This 2nd part focuses on hospice-specific compliance risk areas and specific risk-reduction strategies. The case example from Part 1 is continued.

Susan Balfour, RN, BA, is a Partner at Hospice Fundamentals in Cary, North Carolina.

Supplemental digital content is available for this article. Direct URL citation appear in the printed text and are provided in the HTML and PDF versions of this article on the journal's Web site (

The author and planners have disclosed that they have no financial relationships related to this article.

Address for correspondence: Susan Balfour, RN, BA, 119 Boldleaf Ct., Cary, NC 27513 (

For 40 additional continuing nursing education articles on hospice and palliative care topics, go to



The purpose of this two-article series is to assist hospices in understanding the new compliance climate and its impact on all Medicare and Medicaid providers. Part 1 explored the Office of the Inspector General's (OIG) focus on voluntary compliance and introduced the Path of the Prudent Hospice, a model for an internal framework that incorporates the OIG's seven compliance plan elements and provides a valuable tool to assist in determining the root cause(s) of compliance or performance problems. This article examines the perennial hospice risk areas: eligibility, general inpatient and continuous care (CC) claims, improper revocations, coverage requirements, and care planning and hospice care in the nursing home.

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The Hospice Risk Areas

Because space precludes a complete listing of hospice risk areas, this article focuses on five of the most significant:

  1. Eligibility,
  2. General inpatient (GIP) and CC claims,
  3. Improper revocations,
  4. Coverage requirements and care planning, and
  5. Hospice care in the nursing homes.

There is a brief review of each of the five areas (and if the self-assessment reveals potentially serious compliance issues, stop and consult legal counsel before proceeding. See “The Important Role of the Healthcare Attorney” Sidebar). followed by suggested areas for self-assessment.

The five areas were selected based on the frequency of their inclusion in annual OIG work plans, content of periodic OIG reports on hospice projects, and Medicare Administrative Contractor (MAC) hospice claim edits.

Hospices that fall short in these areas are at risk for consequences ranging from denial of payment for claims all the way to the imposition of civil and/or criminal penalties and exclusion from the Medicare program.

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To be eligible for the Hospice Medicare Benefit (HMB) a beneficiary must be certified as having a terminal prognosis with a life expectancy of 6 months or less if the terminal illness runs its normal course (Certification of Terminal Illness, 2010). The hospice is responsible for continually evaluating terminality and, at the time that it determines that the beneficiary no longer meets the requirement, must initiate discharge.

The HMB was established in 1983. In the early days of the HMB, the vast majority of beneficiaries had a cancer diagnosis and, although there were outliers, the illness trajectory was relatively easy to predict. Most patients died within 6 months or fewer. Over the years, however, the diagnosis mix changed drastically; by 2010, only 35.6% of individuals admitted to hospice care had a primary diagnosis of cancer (NHPCO, 2011). Prognostication, never an exact science, has proved particularly difficult when determining and supporting initial and ongoing hospice eligibility, particularly with debility unspecified and dementia diagnoses. With no signs of this trend reversing, hospices continue to be challenged in supporting the terminal status of patients with noncancer diagnoses.

Assessing Performance

The hospice patient clinical records are the sole source of data to support eligibility and coverage. Although some hospices routinely monitor patient clinical records for quality of content, others may only become aware of the inadequacy of the record when they are undergoing medical review by an outside entity. By that time it is too late.

Although not an exhaustive list, some important areas of self-assessment and documentation include:

  1. Does the patient's clinical record
    1. include easily retrievable longitudinal measures?
    2. employ appropriate scales (used consistently and correctly)?
    3. capture-related conditions and comorbidities?
  2. Does staff know and document to the MAC's local coverage determinations (LCDs)?
  3. Does staff know the signs and symptoms of advancing disease progression (both general and disease-specific)?
  4. Is documentation of individual team members monitored, particularly soon after hire? If deficiencies are identified, is there follow-up?
  5. Are all disciplines supporting and capturing decline and disease progression?

For more information, see Sidebar, “The Importance Role of the Healthcare Attorney.” Hospice patients present a wide breadth of diagnoses and disease processes; this calls on each hospice to develop the corresponding depth and breadth of clinical knowledge in its staff. If knowledge deficits are not addressed or if poor documentation skills and habits are tolerated, it will be much more difficult for the hospice to effectively and consistently support eligibility.

Eligibility and Marketing Practices

Hospices with aggressive marketing practices may also face unique challenges related to eligibility. Without adequate screening and evaluation at the time of referral, hospices may be accused of admitting ineligible beneficiaries.

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General Inpatient and CC Claims

Of the four HMB levels of care, GIP care and CC are reimbursed at significantly higher levels (Table 1). Any hospice with high utilization of either level of care can draw scrutiny.

Table 1

Table 1

Assessing Performance

Once again, documentation plays the key role.

  1. Would clinical record reviews consistently demonstrate:
    1. What precipitated the patient's need for the higher level of care?
    2. What interventions were put in place to try to avoid it?
    3. For every day of care at the higher level does the patient's clinical record indicate why it is still necessary?
    4. How professional management was accomplished?
  2. The descriptions for what necessitates GIP or CC are broad and may be open to interpretation. How is the decision made in your hospice?
  3. Does the patient record demonstrate team participation in the decision?
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Improper Revocations

The HMB uses a prospective pay model—providers are paid a fixed amount based on the beneficiary's level of care on any given day. Out of that amount the hospice is responsible for providing all professional services and an array of products and services related to the terminal and related diagnoses; there is no additional reimbursement, even for very costly medications or interventions.

As early as 1995 the OIG identified that some hospice providers were “encouraging hospice beneficiaries or their representatives to temporarily revoke their election of hospice during a period when costly services covered by the hospice plan of care are needed, so that the hospice may avoid the obligation to pay for these services” (OIG, 1995). The OIG continues in this practice; hospices with statistically higher percentages of revocations will stand out in data analysis.

Assessing Performance

Every hospice needs to continually track its discharges and revocations and analyze the data on an ongoing basis.

  1. Does the clinical record paint a clear picture of the reason for the revocation?
  2. How frequently are revocations closely followed by a reelection?
  3. Does the clinical staff understand the difference between a discharge and a revocation?
  4. Does the clinical staff understand that only the beneficiary or his or her representative can make the decision to revoke the HMB?
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Coverage Requirements and Care Planning

The hospice Medicare regulations, found at 42 CFR §418, are composed of Subparts A through H (Figure 1). Subparts C and D, the Conditions of Participation, define and describe the minimum requirements for delivery of care and apply to all patients, regardless of payer source. Subpart B spells out requirements for election, certification, revocation, discharge, and transfer. These requirements, often referred to as the technical requirements, are specific to Medicare beneficiaries.

Figure 1

Figure 1

Subpart F, Covered Services, (Figure 2) lists what is required for care to be covered by Medicare. The requirements are straightforward: the beneficiary must complete a valid election, a certification must be completed, and a plan of care has to be established before care is provided. The plan of care must be reviewed at the specified intervals by the individuals defined in the care planning section of the Conditions of Participation and the services that are provided must be consistent with the plan of care.

Figure 2

Figure 2

Straightforward or not, some hospices clearly are challenged by these requirements. An OIG report released in September 2009 detailed the results of a review of 450 randomly selected claims of hospice patients who resided in nursing homes to determine if they met Medicare coverage requirements. (Medicare Hospice Care for Beneficiaries in Nursing Facilities: Compliance With Medicare Coverage Requirements, OEI-02–06–00221, 2009). The results? A startling 82% of the claims did not meet at least one coverage requirement. See Figure 3 for the frequency of problem areas. As an interesting side note, the OIG noted that, in this report, claims from not-for-profit hospices fared worse than those from for-profit hospices—89% of the claims from not-for-profit claims did not meet the requirements as compared to 74% of the claims from for-profit hospices.

Figure 3

Figure 3

Although the 450 claims were all for care provided in nursing homes there is no reason to assume that record reviews for beneficiaries receiving hospice care in their homes would lead to a less woeful outcome.

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Election of the HMB is a type of informed consent and it is important that the person making the election fully understand what the election means.

Assessing Performance

  • Does the election form include the elements specified in Subpart B §418.24 of the federal hospice regulations?
  • Is the election form signed by the beneficiary or the beneficiary's representative (as defined under state law)?
  • Is the ability to explain the HMB treated as a staff competency and tested periodically?
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Physician certification (and recertification) has become an increasingly complex process with multiple steps including face-to-face and the narrative that crossover between clinical and billing departments. The opportunities for things to go wrong are many and the consequences costly.

Assessing Performance

  • Does the process include all the elements and meet the time frames identified in §418.22?
  • Do at least two people know the process accurately or operationally from start to finish?
  • Is this clearly written out in step-by-step order?
  • Does everyone who touches or is involved with the certification process understand the regulatory requirements and his/her role in the process?
  • Do people understand that they must not make changes to the process on their own?
  • Are prebilling monitors and processes in place to immediately identify any break in the process?
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Care Planning and the Delivery of Patient Care

Hospices have very specific requirements for care planning. Found in Subpart C at §418.56, they spell out content, intervals for review and update, and coordination of services. How would your hospice do if payment were conditioned on meeting these requirements?

Assessing Performance

To assess performance in this area, use the material in the Interpretive Guidelines (IG) (Internet Only Medicare Manuals, 2009). Developed by CMS to guide surveyors, the material includes probes and procedures that hospices can and should use. The IG serves as a valuable tool to allow hospices to assess their own performance and determine what corrective measures are needed.

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Hospice Care in the Nursing Home

This area has long been an area of concern to the OIG. The provision of hospice care in the nursing facility can carry significant compliance risks, many of which are spelled out in the OIG's 1998 Special Fraud Alert entitled Fraud and Abuse in Nursing Home Arrangements with Hospices (OIG, 1998). Clearly written, this special alert remains a timely resource for hospices to use when reviewing its relationships with its nursing home partners. Further areas of concern can be found in a review of the OIG's annual work plans (available at

Most recently, the OIG's FY 2011 and 2012 work plans have included projects focusing on hospice marketing materials and agreements with facilities, particularly those hospices with a large volume of nursing home patients.

Assessing Performance

To assess performance in this area, review the 1998 Fraud Alert and the recent OIG work plans and reports. Review your contracts, marketing materials, and practices. For hospices providing GIP in a skilled nursing facility, review the payment provisions and the review the procedure for changing to a GIP level of care. Remember that it is the hospice's decision, not the facility's.

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Other Risk Areas

What are the risk areas beyond these five? Readers are advised to review the list of 28 risk areas included in the 1999 OIG Compliance Guidance for Hospices and to pay attention to the annual OIG work plans and periodic reports issued at the completion of a project (OIG, 1999).

For additional information, see Balfour (2012).

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Developing Regulatory Competency

An important early step for any hospice wishing to strengthen its compliance framework is the development of internal regulatory competency. This can be accomplished by implementing the following six practices:

  1. Establishing defined expectations of regulatory knowledge by position with periodic testing for competency;
  2. Implementing a plan for teaching regulatory content in orientation and at regular intervals;
  3. Monitoring for performance compliance with negative consequences when necessary;
  4. Assigning responsibility for monitoring compliance and a plan to communicate and teach the findings at appropriate levels;
  5. Instituting an ongoing internal development program; and
  6. Using a defined decision-making process to resolve regulatory questions, particularly the unusual ones.
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Resource Allocation

The interventions and the suggestions in this article require resources. From where will they come? Many hospices are already struggling to balance costs that are increasing more rapidly than reimbursement.

There is no easy answer. The change in the external environment necessitates a change in resource allocation. Hospices that choose to ignore this reality may find themselves unable to weather the storm. Some may find that making the internal adjustments can be difficult, particularly hospices that have never honsetly evaluated and addressed any compliance shortcomings.

This presents a significant challenge from a management perspective. Moving people from the “but we've always done it this way, and we've never had a problem” position to one of readiness to adopt new practices and procedures requires commitment, persistence, and the willingness to apply negative consequences when people are unwilling to change their behavior.

But in the end, a hospice that makes the change may well discover an added bonus: the infrastructure that supports compliance is the exact same one that supports the highest quality patient care.

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Case Example: Part 1

Noah Carson, a 66-year-old male, was admitted to hospice care on May 2 with a terminal diagnosis of pancreatic cancer with metastases to the liver. He elected his HMB at the time of admission. On May 12, he was admitted to the hospital under the Medicare Hospice GIP level of care following an onset of severe pain at home. He remained in the hospital for 4 days and was then discharged home on an effective pain regimen. If you are wondering where and how to start, the OIG has provided a series of 11 short podcasts---each is only 4–5 minutes long---that does an excellent job of getting hospices off on the right foot (Supplimental Digital Content 1,

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Case Example: Part 2

Prebilling Review of Claim for GIP for Noah Carson

Before submitting claims for May services to Medicare, the compliance committee decided to review 50% of all claims that included any days of inpatient (both GIP and respite) and CC to determine if the documentation supported the higher level of care. The review of the documentation of Mr. Carson's GIP found:

  1. No indication of any team involvement in the decision to transfer Mr. Carson to GIP.
  2. The plan of care was not updated when the patient was transferred to GIP level of care.
  3. There was documentation of one phone call to the GIP facility to speak with Mr. Carson's primary RN the day after GIP admission.
  4. There was no documentation of any contact with the attending physician or any visits or calls to the hospital.
  5. There was no documentation of any contact with the family.
  6. Although the hospice RN had documented the increased pain that lead to the transfer to GIP, there was no ongoing documentation to support the patient remaining at GIP level for 4 days.

The review committee determined that the hospice clinical record did not support submission of a claim for four days of GIP care and changed the level of care on the claim to routine home care; however, under the terms of their contract for GIP, the hospice submitted payment to the hospital for 4 days of GIP care.

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Case Example: Part 3

The compliance committee identified the need to do a more in-depth review of GIP and decided to conduct prebilling clinical record reviews on 100% of the GIP claims during the next month. Results demonstrated inconsistency in the following areas:

  1. Presence of adequate documentation to support the higher level of care.
  2. Evidence of exercise of professional management responsibilities.

Using the Path of the Prudent Hospice (Supplemental Digital Content 2,, they examined the formal infrastructure to determine the root cause of the problem. The initial inquiry was focused on the Policies and Procedures and Training and Education areas. Because they believed that the situation presented both a significant quality of care issue and a potential compliance issue, the project was fast-tracked with a 2-week goal or deadline for information gathering.

On reviewing the findings they set a 6-week deadline for completion of the steps on Table 2.

Table 2

Table 2

The group decided that the situation called for continued intense interventions and continued to continue to monitor at 100%. (See Table 3.)

Table 3

Table 3

They continued monitoring 100% of the claims for the next calendar quarter. At the end of that period, data analysis demonstrated marked improvement. They decided to monitor 50% for the next quarter and then, if the results were in the preidentified acceptable range, drop to an ongoing 15% monitor.

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The Important Role of the Healthcare Attorney

It is imperative that hospices become more adept at identifying and addressing potential or actual compliance issues. Equally imperative is that they understand the need for a relationship with a healthcare attorney and the importance of contacting the attorney as soon as an issue arises. This individual can advise the hospice on how to proceed in the correct fashion and what steps should be taken to minimize risk. This does not mean that every situation will incur sizable legal fees; many times only a short telephone call will be necessary. However, when a situation arises that does call for more intense legal services, realize that the expenditure has the potential to pay for itself many times over.

Many hospices, particularly non-profits, have attorneys on their boards that often do some pro bono work. Be aware that healthcare law is a highly specialized area.

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Certification of Terminal Illness. 42 CFR 418.22 (b)(1). (2010).
Balfour, S. (2012). The fundamentals of hospice compliance: What is it and what are the implications for the future? An overview for hospice clinicians, Part 1. Home Healthcare Nurse, 30(2), 114–123.
Internet Only Medicare Manuals. (2009) State Operations Manual, Appendix M: Medicare Hospice Care for Beneficiaries in Nursing Facilities—Compliance With Medicare Coverage Requirements, OEI-02–06–00221. Retrieved from
NHPCO Hospice Care Facts and Figures. (2011). Alexandria, VA: National Hospice and Palliative Care Association.
Office of the Inspctor General. (1995). Publication of the Medical Advisory Bulletin on Hospice Benefits. Federal Register, 60, 55721.
Office of the Inspector General. (1998, March). Fraud and Abuse in Nursing Home Arrangements With Hospices. Retrieved from
Office of the Inspector General. (1999). Publication of the OIG Compliance Program, guidance for hospitals. Federal Register, 64(195), 54031–54049. Retrieved from

Supplemental Digital Content

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