OIG audit reveals Medicare overpaid millions for prescription drugs in hospice care

Medicare Part D overpaid millions of dollars for prescription drugs that should have been covered by the Medicare Part A hospice benefit, according to a recent report from the Office of Inspector General (OIG), which conducted an audit from 2016 payments. In other words, CMS paid twice for the same drugs.

Hospice organizations should have paid $160.8 million for drugs in 2016­­––but the cost was covered by Medicare Part D, the report found. Hospices also should have likely paid for many of the drugs in the remaining $261.9 million of the total cost of $422.7 million that year, even though hospices told OIG they shouldn’t have paid.

The report urged CMS to work directly with hospice providers to ensure they are paying their fair share for prescription drugs.

The agency also noted CMS needs to come up with a strategy to ensure the overpayments don’t continue and Part D covers drugs that should be covered in the Medicare Part A hospice benefit. The hospice benefit providers a per diem payment to organizations for each day a beneficiary is in hospice care, regardless of the services provided, and drugs are covered under this benefit. When a person is in hospice care, hospices provide all care, including drugs. The savings to Part D would be at least $160.8 million, OIG concluded.

CMS has since responded that it is working on the issue and will ensure no disruption in beneficiary access. Still, OIG was not confident CMS is finding solutions, after a report from years earlier had similar findings.

“Although we acknowledge CMS’s efforts after our 2012 report, we disagree that they will adequately address the issue because the duplicate payments persist,” the report summary read. “We continue to recommend that CMS develop controls to stop the duplicate hospice drug payments.”

OIG conducted its audit of the total Part D cost ($423 million) by extrapolating from a random sample of prescription drug event (PDE) records and contacting the hospices that provided care to the beneficiaries who received drugs. The total sample cost was just under $400,000.