Federal Watchdog Finds Medicare Could Have Saved 255.1 Million Dollars by Better Screening New Hospice Patients

The Department of Health and Human Services Office of Inspector General released an audit in June 2026 finding that Medicare could have avoided an estimated 255.1 million dollars in hospice payments if contractors had implemented pre-payment or post-payment reviews for a specific high-risk group: new hospice enrollees who had no inpatient or emergency department claims in the 18 months before entering hospice care.

Auditors reviewed 100 initial certification periods for patients who fit that profile. They found that 45 of those periods, nearly half, did not meet Medicare's hospice eligibility requirements. In 21 cases, clinical records did not support a terminal illness diagnosis. In 24 others, documentation requirements were not satisfied. Together, those 45 cases involved 545,499 dollars in directly identified improper payments, but auditors extrapolated the risk across the broader population to arrive at the 255.1 million dollar figure.

To qualify for the Medicare hospice benefit, a physician must certify that a patient has a terminal illness with a life expectancy of six months or less if the illness follows its normal course. The OIG report noted that patients without recent hospital or emergency room visits before starting hospice may warrant additional review because their clinical trajectory may be harder to document.

CMS concurred with the OIG's recommendation to work with Medicare Administrative Contractors to develop targeted eligibility review procedures for this group. No changes to the benefit itself were proposed.