Hospice is designed to provide comfort and supportive care to terminally ill patients with a prognosis of six months or less. However, the high per diem payment structure makes it a significant target for sophisticated fraud schemes. Improper billing for hospice services not only costs taxpayers millions but can also harm vulnerable patients by denying them necessary care. Understanding the primary modes of operation is crucial for identifying and hopefully preventing millions in improper payments.
Eligibility Fraud
The most fundamental form of hospice fraud involves falsely certifying patients who are not terminally ill, allowing improper billing for years instead of months. Improper certification comes in several forms: (1) enrolling patients that don’t meet the ‘six-month prognosis’, (2) patients on hospice for multiple benefit periods, (3) failure to perform face to face visits or failing to disclose the patient’s condition is improving for recertification, (4) Concurrent billing of hospice and other services simultaneously (chemotherapy, radiation, or other curative treatments).
Service and Billing Fraud
Hospice care is primarily paid via a daily rate (per diem) based on the level of care where it can be vulnerable to fraud, waste and abuse (FWA). Per-dem rates vary for routine home care (RHC), HCPCS Code T2042, versus continuous home care (CHC), HCPCS Code T2043. Keep an eye on high rates of continuous home care claims for patients not in acute distress or for billed hours that may include routine non-skilled tasks as these could also be indicative of upcoding. Also be sure the appropriate place of hospice care is being used. HCPCS Codes Q5001-Q5010 outline the specific location of the hospice care. Review suspect facility claims which typically will contain Revenue Codes 651, 652, 655, 656, 657, 658, 659.
What to look for
Look for outliers in length of stay for hospice patients, outliers for higher-level care (CHC vs RHC) appropriate certifications, financial relationships, kickbacks (hospice and referring) and more. An additional avenue to help protect hospice patients could be tax fraud. The Centers for Medicare & Medicaid Services (CMS) has recently launched a new initiative designed to help curb both fraudulent billing AND tax evasion tactics commonly used by unscrupulous hospice operators. The Fraud Tax Project, an effort to improve program integrity, is aimed at uncovering operators who are committing both health care and tax fraud. According to Dr. Mehmet Oz, “In many instances, criminal tax fraud convictions allow CMS to swiftly revoke billing privileges, cutting off fraudulent billing activity and preventing future losses.”[1]
HCFS HAS YOU COVERED
Combating fraudulent billing in hospice benefits requires a multi-pronged approach. Payers need to leverage advanced data analytics to identify suspicious billing patterns and outliers. If you’re using the HCFSPlatform, we’ve got you covered. Our Artificial Intelligence (AI) models can identify spikes and other anomalous billing patterns. We can also help identify new provider billing patterns to potentially catch any inappropriate billing quickly. Additionally, we have peer comparison and excessive billing alerts that identify outliers. Some examples of our alerts include:
[1020-01] through [1020-04] – SUSPECT HOSPICE PATIENTS
[2411-01] and [2411-02] – INAPPROPRIATE QUANTITY, SKILLED NURSING SERVICES IN A HOME HEALTH OR HOSPICE SETTING
[2657-01] – INAPPROPRIATE UNITS, PER DIEM HCPCS CODES
[2741-01] – MULTIPLE PROVIDERS BILLING HOSPICE
[2841-01] – INAPPROPRIATE NUMBER OF SERVICES, HOSPICE PRE-ELECTION EVALUATION AND COUNSELING SERVICES
[1] https://hospicenews.com/2025/11/26/cms-announces-new-hospice-tax-fraud-initiative/
If you’re not using the HCFSPlatform™ and you’re interested in knowing more, email us at [email protected].
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