Federal Watchdog Turns Its Attention to Nursing Homes and Hospice Providers — and Operators Say the Market Is Flooded

Washington, D.C. — Federal investigators are taking a harder look at the money flowing between nursing homes and hospice providers, and operators say the scrutiny is long overdue.

An Office of the Inspector General work plan, announced in July, sets out to examine what Medicare actually pays for hospice care delivered inside nursing homes — and to estimate how much the program could save if the payment structure were tightened up. The review also targets hospice providers whose patient rosters skew heavily toward beneficiaries living in these facilities.

Too Many Players, Operators Say

Nursing home leaders describe a crowded field. Jody O’Mara, chief nursing officer at Journey Skilled Nursing, said her organization has watched hundreds of hospice companies enter the market over the past few years, making it harder to find partners that share the facility’s goals.

“There are too many hospice companies,” O’Mara said. Her advice to fellow operators: find two or three providers that align with your organization and stick with them.

Money is part of the friction, too. Past hospice partners have fallen hundreds of thousands of dollars behind on payments owed to Journey, according to O’Mara, a lag that became a driving force in the search for better partnerships. The company is now exploring a joint venture with Hospice 360 covering its Georgia facilities, with the deal expected to close by the end of the year.

Documentation Is the Fault Line

Among the core problems flagged in the OIG review: terminal prognoses and levels of care that insurance didn’t support, often because the paperwork fell short. Jessie McGill, a senior curriculum development specialist with the American Association for Post-Acute Care Nursing, said facilities must document that a resident genuinely qualifies for the hospice benefit — or risk having that coverage removed.

It cuts both ways, she noted. Residents sometimes improve after a major medication change, and a physician may then need to determine they no longer meet terminal illness criteria. In those cases, the resident graduates from the program and can return later if their condition changes.

McGill worries the review may miss the root cause, though. “Is it that we have misbehavior by providers where these residents truly should not have been on hospice, and we’re trying to capture reimbursement where we should not have, or is it a paperwork flaw, poor documentation?” she asked.

What Facilities Should Do Now

The work plan doesn’t create new requirements, but experts say it’s a good moment for operators to review their hospice agreements and confirm exactly which organization handles each part of a resident’s care. Lauren Stenson, also with the association, advised against overhauling workflows because of the announcement — but she called it an opportunity to tighten coordination.

The payment questions come as providers already contend with shifting reimbursement rules across the sector, including uncertainty around federal nursing home funding tied to Medicaid policy.

For O’Mara, the solution starts with mindset. “We’re on the same team,” she said of the nursing home-hospice relationship. “It’s not their patient, our patient. It’s an interdisciplinary approach, and we’re all in it together.”