Jim’s Notebook: Former OIG Official Urges Hospice Reform After Personal Experience
I read a fascinating article in Forbes a few days ago that I wanted to share here. For the piece, author Wes Kilgore interviewed Dana Corrigan, a former acting inspector general for the U.S. Department of Health and Human Services. Corrigan is also a former director for the Center for Program Integrity at the U.S. Centers for Medicare and Medicaid Services (CMS). In those roles, she was heavily steeped in the fight against hospice fraud.
In August 2025, the article reported, Corrigan and her sister had to place both their parents in hospice care within a matter of days. I was struck by Corrigan’s statement that hospice care as a lived experience was very different from what she saw in documents and spreadsheets in her regulatory office.
“It was surreal being on the other side,” Corrigan told Kilgore. “I spent a significant amount of time during my career analyzing fraud and abuse, taking actions against bad hospice providers, and trying new approaches. But seeing it through the eyes of a daughter caring for her own parents changed that.”
As much as I enjoyed the article, I wish it had elaborated a little more on this point and what differences Corrigan saw. But instead it moves on to talk about hospice fraud, which is appropriate given the trend’s prominence in the news lately and Corrigan’s background in that area.
Corrigan goes on to discuss the role of data breaches in hospice fraud, including the use of the dark web and other tools by bad actors to steal Medicare Beneficiaries Identifiers (MBIs). They then proceed to bill Medicare for patients who are not eligible for those services, often without the patients’ knowledge.
In Forbes, Corrigan recommends that state and federal regulators tackle bigger questions than a “Whack-a-Mole” approach to slamming individual fraudulent operations. This can include “harder policy questions,” such as certificates of need, changes in payment incentives and more robust surveys, among others.
One other interesting idea from Corrigan is to place limits on the numbers of hospices a physician can support, though that may run into questions about whether enough doctors are available to support current and future demand.
But, Corrigan maintains, the specter of fraud “overshadows a fundamental policy failure,” which is an outdated Medicare Hospice Benefit. I believe this view has merit.
As the Forbes article points out, and as I and many of our sources have said previously on Hospice News, the more than 40-year-old benefit was designed with cancer patients in mind. Cancer has a much more predictable trajectory than many of the diagnoses hospices encounter more frequently today, such as dementia-related illnesses and other neurodegenerative conditions.
Patients with these conditions often live longer than the designated six-month benefit period for hospice. The six-month terminal prognosis requirement can be a disservice to these patients who need longer periods of care, even though they can go through recertifications.
The requirement also butts hospices up against compliance concerns, such as the Medicare payment cap, long lengths of stay and live discharges. A wave of payment suspensions recently sent to hundreds of hospice providers in certain markets were based on live discharges.
Palliative care expansion, hospice benefit reform
In Hospice News editorials, I have posed the questions: How nice would it be if we could just give people the care they need when they need it?
This could be easier said than done within the confines of the Medicare Hospice Benefit, especially in its current form. But other options exist as well, such as the establishment of a community-based palliative care benefit that would offer comfort care to the non-terminally ill. Corrigan called for this in the Forbers article, and over the years I have called for this on Hospice News.
The National Hospice and Palliative Care Organization, which is now the National Alliance for Care at Home, advocated for such a benefit for several years. Now, the National Partnership for Healthcare & Hospice Innovation is working to design a model.
Expansion of palliative care, and the existence of a payment model that supports the full range of interdisciplinary care, could have a range of benefits. It would benefit patients in need earlier in their disease trajectory and aid in smoother transitions to hospice when the time is right. It could relieve some regulatory restrictions on accessing comfort care, and it could slash health care costs due to reduced hospitalizations and emergency department visits.
Corrigan also recommended extending the hospice benefit period from six months to one year to reflect the growing trend of longer stays based on patient needs.
“Six months or less feels different from a year,” Corrigan said in Forbes. “This is subjective, of course. But there is a really good study by Jonathan Gruber and Jetson Leder-Luis about how an over-focus on fraud prosecutions in hospice can be a mistake if it drives up overall health care costs.”
I believe that to be this study published last year from the American Economic Review. Early hospice enrollment for people with Alzheimer’s disease and related dementias was associated with nearly $29,000 in savings per patient over five years compared with traditional hospital care, the study found.
The researchers also found that when families avoid hospice because of fear or confusion about legal and medical decisions, patients often cycle back through emergency rooms, specialist visits and additional procedures, increasing costs to the Medicare system.
When families avoid hospice because of fear or legal confusion, patients return to emergency rooms, see specialists, undergo procedures and drive up Medicare costs, the study indicated.
Other research bears this out. Hospice care saves Medicare roughly $3.5 billion for patients in their last year of life, according to a joint report from the National Hospice and Palliative Care Organization (NHPCO), the National Association for Home Care & Hospice (NAHC) and NORC at the University of Chicago. NHPCO and NAHC have since merged into the National Alliance for Care at Home.
Corrigan raises some really thought-provoking points on these issues in the Forbes article that I think warrant greater attention in the policymaking space.
Things the hospice community should think about include:
Does the Medicare Hospice Benefit need reform?
How can the benefit be restructured to better serve the needs of today’s patients?
Should the six-month terminal prognosis requirement be re-evaluated?
Do we need a community-based palliative care benefit, and what would be the implications of that for patients and for the nation?
I would love to hear your take. Please drop a comment.
My perspective aligns perfectly with yours. Please note this recent submission to MedPac:
MedPac Policy Submittal
Aligning Hospice Payment and Benefit Design with Patient Need
Executive Summary
This proposal advances three integrated reforms: (1) replace the six-month prognostic eligibility requirement with diagnosis of terminal illness; (2) integrate hospice fully into the Medicare benefit; and(3) transition reimbursement to a guardrailed reasonable cost-based model. These reforms are supported by extensive evidence that hospice reduces Medicare spending while improving care, but also recognizes that the current payment model creates negative structural incentives tied to time, classification, patient selection and benefit design.
Core Policy Rationale
Medicare payment systems shape clinical behavior. Fee-for-service systems incentivize volume and coding intensity. Hospice was designed to avoid these distortions, yet its per diem structure substitutes new proxy variables—length of stay, level-of-care classification, and patient trajectory. These proxies create predictable financial incentives that influence provider behavior, even in the absence of coding-based reimbursement.
The central policy insight is that eliminating coding does not eliminate incentives. Incentives shift to whatever variables define payment. In hospice, those variables are time, classification, selection and insurance benefit design.
As a result, even a simplified system can produce distortion if the underlying payment model is misaligned with patient need.
Evidence Base
MedPAC analyses consistently demonstrate that hospice reduces total Medicare spending in the final months of life, largely by reducing hospitalizations and ICU utilization. CMS data show that hospice patients experience fewer acute care transitions and improved care coordination. Peer-reviewed studies (e.g., Teno et al., JAMA) show lower aggregate spending and improved patient and family satisfaction in end-of-life care.
Structural Limitations of Current Model
Per diem payment rewards longer lengths of stay regardless of intensity
Level-of-care categories (e.g., continuous care) create classification-based revenue variation
Diagnosis and eligibility framing influence enrollment patterns
Negative financial incentives and coverage benefit flaws reduce the effective use of hospice.
Solutions to These Limitations
Replace Prognostic Certification by eliminating the six-month prognosis requirement and replace it with physician-documented diagnosis of terminal illness. Prognostication is inherently unreliable and delays appropriate care access.
Integrate Hospice into Medicare by eliminating hospice as a separate carve-out and integrate it into the core Medicare benefit to allow continuity between curative and palliative care.
Implement Reasonable Cost-Based Reimbursement by replacing per diem payments with reimbursement based on reasonable costs, with safeguards including cost benchmarks, audits, and defined allowable expenses. This eliminates incentives tied to time, classification, and patient selection.
Why Cost-Based Reimbursement is Appropriate for Hospice
Hospice differs fundamentally from hospital care. It is lower cost, less variable, and not driven by discretionary high-cost technologies. Care is labor-based and predictable, making it feasible to define reasonable cost benchmarks. Therefore, the risks of cost inflation associated with historical hospital cost-based reimbursement are materially reduced in hospice. This payment model would also dramatically reduce payment fraud in hospice and the invasion of private equity into this care space.
Expected Outcomes
Improved access to palliative care
Elimination of financial incentives for patient selection
Alignment of payment with actual care needs
Preservation of Medicare cost savings
Reduction in administrative burden and fraud in the hospice space
Implementation Pathway
Time is of the essence to start bending the Medicare cost curve. All these suggestions have been tested - most through the CMS CMMI demonstration program with demonstrated quality and cost benefits. Consequently, I would offer this option to Hospices and Health Systems immediately without further testing.
Conclusion
Hospice demonstrates that simpler payment systems and simple benefit revisions can improve care and reduce costs, but also shows that proxy-based payment models inevitably shape behavior. This proposal advances the next stage of reform: aligning reimbursement directly with patient need through a disciplined cost-based approach and simple benefit design changes.
Michael D. Connelly, MBA, JD, LFACHE
John’s Island, South Carolina
mdcmercy@gmail.com
Www.thejourneys-end.org
I would welcome further dialogue with you on this topic
I used hospice care for my parents and it was a life saver for a working only child. Like many my dad didn’t want to hear anything about using hospice because he said mom would live more than six months. I honored his wish, but in hindsight realize that had we understood the many benefits of hospice we would have signed up much earlier. I believe that if the criteria was one year or less that would feel much safer and more reasonable than six months.