Medicare

Pursuant to a congressional request, GAO reviewed hospices that were not Medicare-certified, to determine: (1) the factors that influenced a hospice not to participate in Medicare; (2) whether the Health Care Financing Administration (HCFA) set reasonable prospective payment rates for hospices; (3) whether Congress could adopt additional standards to ensure that participating hospices provided quality care; and (4) whether HCFA and its intermediaries consistently administered the hospice benefit with program policies.

GAO found that: (1) enrollment in a Medicare hospice required certification that the patient was terminally ill and would die within 6 months; (2) a participating hospice must have a contract with an inpatient care facility that stipulates that hospice staff will assume care of a patient at that facility; (3) nonparticipating hospices believed that inpatient facility physicians would be reluctant to relinquish patient management to hospice physicians; (4) although some hospices believed that hospitals were reluctant to contract for patient care at the Medicare hospice inpatient rate, they seemed to have no problems in obtaining the contracts or in providing all inpatient services; (5) hospices had a payment cap of $9,010 times the number of enrolled patients, which some nonparticipating hospices thought could impose a financial risk, but HCFA data showed no instances where hospices reached the cap or filed claims that exceeded the cap; and (6) although some nonparticipating hospices had concerns that reimbursement was limited to no more than 20 percent of total care days as inpatient days, most hospices did not reach the 20-percent limit and did not believe that the limit had an adverse impact on their operations. GAO also found that: (1) it could not determine the reasonableness of payment rates, since hospice cost data included incomplete and inaccurate data on labor hours, and understated overhead costs, parent-organization costs allocated to operations, and inpatient service costs; (2) the HCFA formula for calculating unit costs, which apportions overhead to cost centers according to square footage, is not always appropriate; and (3) although Medicare required home health agencies to train employees and protect patient rights, the requirements applied only to their affiliated hospices.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: