Many hospice administrators are familiar with the hospice PEPPER report. A smaller number of hospice leaders, however, are familiar with its counterpart: the Comparative Billing Report (CBR) and eCBR, the electronic version of the Comparative Billing Report. While the PEPPER provides a general overview of a hospice agency’s billing data, the CBR is a specific tool used by Medicare to identify individual agencies whose billing patterns differ significantly from their peers. To manage hospice compliance effectively, it is important to understand the purpose and the mechanics of the CBR.
What is a CBR and Who Generates It?
A CBR is a formal educational resource produced by CMS (the Centers for Medicare & Medicaid Services). It provides data-driven insights into a hospice agency’s billing patterns compared to state and national averages.
The report is a collaborative effort:
CMS: defines the metrics (like length of stay) used to monitor for billing errors.
National Contractors: CMS hires private companies to do the data analysis. CMS may hire different companies to handle the data work versus managing distribution of the reports to providers.
MACs (Medicare Administrative Contractors): An agency’s local contractor (like Palmetto GBA, CGS, or NGS) may also provide their own version, called an eCBR, through their provider portal.
How the CBR Highlights Outliers
The CBR is a proactive tool designed to encourage providers to review their own data before a formal audit occurs. It identifies “outliers” – agencies that fall outside of normal billing ranges – by following a simple comparison process:
“Finding your Neighbors”: Instead of comparing a small local hospice to a massive national chain, the CBR groups each hospice agency with similar agencies. An agency’s data is compared against other hospices in their specific state. This ensures the comparison is fair and based on the local market.
The 1-to-100 Ranking: For each metric that is measured, the report provides the agency’s “percentile” score, ranking the agency on a scale from 1 to 100.
Imagine 100 hospices are standing in a line, ordered from the lowest billing to the highest.
If an agency’s CBR report indicates that the agency is in the 90th percentile, it means that the agency is billing more than 90 of the other hospices.
This is why the 90th percentile is the “red flag” area; it tells Medicare that the agency is at the very edge of the pack.
Clear Results There is no need to be a trained statistician to read or interpret the CBR report. The report uses clear labels:
Significantly Higher: This is the primary “outlier” signal. It indicates that the agency’s billing for a specific metric is in the top 10% (90%th percentile) of all providers. While not proof of wrongdoing, it is a high-priority “red flag” that warrants an immediate internal review of patient charts.
Higher: The agency is billing more than the average hospice. This is a signal to monitor the trend to ensure it does not move toward the 90th percentile.
Does Not Exceed: The agency’s billing is aligned with or lower than the average of its peers.
Not Applicable (N/A): The agency did not have enough claims in that category during the reporting period to create a statistically valid comparison.
Real-World Metric Examples
Each CBR focuses on a narrow “Target Area” of vulnerability. Two common examples for hospices include:
Non-Cancer Length of Stay (NCLOS) > 210 Days: Comparing the agency’s percentage of long-stay non-cancer patients against jurisdiction benchmarks.
GIP Average Length of Stay (ALOS): Benchmarking the agency’s inpatient stays (Q5004–Q5009) against state averages to identify potential overutilization.
How CBR Differs from PEPPER
It is helpful to view these two reports as different tools for the same goal:
Feature
PEPPER
CBR / eCBR
Primary Intent
Provides a broad risk profile across many areas at once.
Focuses on a specific billing trend with educational detail.
Result
A list of scores for 12+ different categories.
A specific label like “Significantly Higher” for one area.
Comparison
National, MAC, and State averages.
Usually State, Region, and Jurisdiction National averages.
Converting Comparative Data into Operational Action
The value of these reports lies in the establishment of a functional loop that transforms comparative data into focused action. Hospice leadership should treat PEPPER and CBR/eCBR results as signals tied to specific topics and timeframes. By comparing results against national or state benchmarks, leadership can determine whether a specific billing pattern requires continued monitoring or a formal investigation.
Determining the Response: Monitor vs. Investigate
A hospice agency that appears as a statistical outlier should view the data as a prompt for a focused internal review rather than evidence of an error. The Hospice PEPPER User’s Guide clarifies that these reports do not identify improper payments directly; instead, they serve as guides for auditing and monitoring billing changes over time. When a hospice agency looks materially different from its peers – particularly when that difference persists across multiple quarters – leadership should initiate a targeted investigation.
Maintaining a Narrow Scope
If an investigation is necessary, the review should remain strictly tied to the specific topic that triggered the signal. Effective hospice leadership avoids broad “audit everything” exercises in favor of targeted analysis:
Length of Stay (LOS) > 210 Days: The agency should review the long-stay patient population and the documentation patterns driving extended care.
GIP Average Length of Stay (ALOS): Leadership should focus on General Inpatient stays, discharge transitions, and the specific documentation supporting those inpatient days.
Closing the Loop
To finalize the process, the hospice agency must document the scope of the review, the specific findings, and any subsequent process changes. Re-checking the trend in the following cycle ensures these reports become a permanent part of the agency’s operating rhythm. CMS and MACs intend for these tools to function as educational resources that support a self-audit culture within the hospice organization.
Summary: Key Takeaways for Hospice Leadership
Effective compliance management requires utilizing both the PEPPER and the CBR as complementary tools for agency oversight. While the PEPPER serves as a broad indicator across many categories, the CBR functions as a targeted tool for identifying specific billing trends that may require immediate attention.
Hospice leadership should prioritize internal reviews for any metric labeled “Significantly Higher” or landing in the 90th percentile, as these results indicate the agency is a statistical outlier compared to its peers. By conducting narrow, focused chart audits based on these specific signals and documenting the findings within the QAPI process, a hospice agency can demonstrate a proactive approach to billing accuracy. Ultimately, treating the CBR as an educational resource rather than a threat allows leadership to refine workflows and improve documentation standards before external audits are initiated.
Hospice agencies are under increasing scrutiny by government auditors. A particularly concerning and financially devastating aspect of government audits is the use of statistical extrapolation. Understanding the extrapolation process is essential for providers to safeguard the financial healthof their agencies and ensure compliance with all regulations.
What is Government Extrapolation in Hospice Audits?
Extrapolation is a statistical methodology used by auditors, particularly the Office of Inspector General (OIG). Extrapolation can significantly amplify the financial implications of audit findings. The process of extrapolation is governed by the Medicare Program Integrity Manual, Chapter 8. This chapter of the manual outlines the specific statistical methods and requirements for conducting extrapolation studies.
What is Extrapolation?
Extrapolation is a sampling technique used to project audit findings from a small sample of claims to an entire population of claims. Instead of reviewing every single claim that a hospice has submitted for payment, auditors select a statistically valid sample for review. They then use the error rate found in the sample to estimate overpayments across all similar claims in the population. This allows auditors to perform a detailed review of only a small sample of claims while estimating the total amount of improper claims across a large population.
Auditing every single claim in the population is impractical due to time and resource constraints. By examining a representative sample, auditors can make statistically valid projections about a much larger group of claims without having to review each one individually.
How Does the Extrapolation Process Work?
The extrapolation process typically follows the following key phases:
Universe Definition:
Auditors define the “universe” or population of claims to be examined. This may be all Medicare hospice claims submitted by your agency within a specific period (e.g., all claims billed between January 1, 2024, and December 31, 2024) or a subset of claims (e.g., all General Inpatient Care claims).
Sample Selection:
Using statistical sampling software, auditors select a statistically valid random sample from the universe. The term “statistically valid” is significant because it ensures that the sample accurately represents the entire population. This allows for reliable projections from the sample to the larger group. The industry standard software used to support sample creation is called RAT STATS (created by the OIG for the U.S. Department of Health and Human Services). Typically, samples consist of 100 claims, though this can vary.
Medical Review:
Each claim in the sample is rigorously reviewed by independent medical contractors who determine whether the services provided met Medicare requirements for hospice eligibility and documentation. The auditors review the documentation for compliance with Medicare regulations, including patient eligibility, physician certifications, medical necessity for services, and appropriate billing for levels of care. Any claim found to be out of compliance is identified as an “error,” and the precise dollar amount of the overpayment for that specific claim is calculated.
Calculation of Error Rate:
A monetary error rate is determined for the sample. This is calculated by dividing the total dollar amount of improper payments found in the sample by the total dollar amount of payments for all claims in the sample.
Extrapolating to the Universe/Statistical Projection:
The calculated monetary error rate from the sample is applied to the entire “universe” of claims. This projects the estimated total overpayment across all claims in the defined audit scope. The estimated total overpayment is calculated as the monetary error rate of the sample multiplied by the total dollar paid for the audit universe.
How Does Extrapolation Impact a Hospice Agency?
Extrapolation can have a significant financial impact on hospice agencies. Even a small number of denied claims or identified overpayments in a sample can result in a large demand for repayment. This can pose a severe financial challenge. Further, responding to an extrapolated audit can pose a significant administrative burden on hospice agencies, requiring considerable time and resources from administrative and compliance teams.
Additionally, OIG audit findings are often publicly released. This raises concerns about agency reputational risk and may jeopardize relationships with referral sources and the community. An adverse extrapolated audit outcome can also lead to increased scrutiny in future audits and potentially trigger further investigative actions.
Mitigating Extrapolation Risk
Given these potential significant negative impacts of extrapolation, hospice agencies should consider proactive actions that could help mitigate the likelihood of negative audit findings. The most effective actions include:
Robust Compliance Program: Agencies should implement and strictly adhere to a comprehensive compliance program. This includes continuous staff education on Medicare regulations, thorough patient eligibility assessments, diligent documentation of physician certifications, and accurate coding for all levels of care.
Internal Auditing: Conduct regular, proactive internal audits of claims and medical records. Focus on high-risk areas identified by Medicare (e.g., General Inpatient Care (GIP) stays, long lengths of stay, live discharges). Identifying and correcting deficiencies internally before an external audit is crucial.
Looking Ahead
Government extrapolation in hospice audits represents a significant financial risk for hospice agencies. Understanding the statistical methodologies, maintaining excellent documentation practices, and implementing robust compliance programs are essential for surviving in this challenging regulatory environment.
A hospice election statement is a condition of payment under Medicare. For a patient to be eligible to receive hospice services under the Medicare benefit, the patient or the patient’s authorized representative must elect hospice care by signing a hospice election statement. While Medicare provides a model of this form, each hospice agency is free to design their own hospice election form. However, there are some required elements, as specified by Medicare. To find out more details about the hospice election statement, read more at our blog post here: What is the Hospice Election Statement requirement?
Why is the hospice election statement important?
An invalid hospice election statement can impact payment for the entire patient hospice stay. There has been a recent rise in denials related to the election form. As such, it is important for hospice agencies to ensure that all required elements are present on the form and that the forms are completed accurately.
What are are tips for avoiding common hospice election form denials?
Tip 1: Use the model election form provided by CMS or stick to something very close to it. This will ensure that no critical elements are missed. CMS has provided a model hospice election form. Hospice agencies are not required to use this model form; they may design their own election form.
Tip 2: Focus on the purpose of the document and stick with the required elements, Over the years, hospices have had a tendency to add to their election forms so that it has been moving away from its original legal intent. While it is good to provide patients with additional information, the election form may not be the appropriate place to provide this information. By adding information to the election statement, there is a risk that upon audit contractors may find fault with aspects of the document that are not part of Medicare’s required elements of the election statement. In other situations, contractors missed the election statement since it was buried in a such a long document.
Tip 3: build in redundancy in the elements of the elements of the hospice election statement. Use the admission material to build in redundancy of the required elements of the hospice election statement. That is, the required elements can be included in the election statement but some of the election statements which, for example, are acknowledgement statements, can be included in other admission material that is provided to the patient on admission. This could be helpful to defend potential claim denials or invalid denials in case of audit.
Tip 4: Reduce the possibility of errors in completing the forms, by stressing the importance of the forms, creating standardized processes, and leveraging technology. Reduce human error by ensuring that the individuals responsible for completing the documents understand their importance. Human error is the biggest problem with properly completing the hospice election statement form. Create processes to double check the forms – in real time. Leverage technology, where possible, to eliminate the possibility of errors or to detect errors.
To receive hospice services under the Medicare benefit, a patient or his authorized representative must elect hospice care.
If the patient or authorized representative elects to receive hospice care, the patient must file an election statement with a specific hospice agency. The election statement serves to indicate that the patient is choosing hospice care.
The election statement and the election statement addendum are conditions for payment.
What is the structure of a hospice election form?
Every hospice agency can design and create their own hospice election statement form although Medicare has published a model form that can be used by hospice agencies Model Hospice Election Statement. The election statement must include all of the following elements:
Name of hospice agency that will be providing the services
Acknowledge that nature of hospice services have been explained to the patient including, in particular, the palliative rather than curative nature of care
Acknowledge patient understands that by electing hospice care, some Medicare services are waived
For hospice elections beginning on or after October 1, 2020, a statement that although it would be rare, there could be some necessary items, drugs, or services that may not be covered by hospice because these items are deemed to be unrelated to the terminal illness or related conditions
The effective date of the election. This may be the first day of hospice care of a later day. But it cannot be a date that precedes the date that the election statement was signed by the patient or their authorized representative.
The individual who is serving as the patient’s attending physician, if any.
Acknowledgement that the identified attending physician was the choice of the patient or authorized representative
Signature of patient or authorized representative
There are some additional requirements for the election statements for elections beginning dated October 1, 2020 or later. These election statements must also include :
Information on patient cost sharing for hospice services
Notification of the patient or authorized representative right to receive an addendum to the election statement. The addendum is only required to be furnished to beneficiaries, their authorized representatives, non-hospice providers, or Medicare contractors who request this information. This addendum includes a list and rationale for the items, drugs, or services that are not covered by hospice services because the hospice has deemed these to be unrelated to the terminal illness and related conditions.
Information on the Beneficiary and Family Centered Care Quality Improvement Organization (Beneficiary and Family Centered Care (BFCC) ), including that immediate advocacy is available through this organization if the patient disagrees with the hospice’s determination regarding non-covered services
Right to Request Patient Notification of Non-Covered Items, Services, And Drugs
At any time, a patient may request, in writing, the Patient Notification of Hospice Non-Covered Items, Services, and Drugs. addendum to the election statement.
The hospice agency must provide the notification within five days, if this request is made on the start of care date.
If the request is made during the course of hospice care, the hospice agency must provide the requested notification within 72 hours.
If the patient (or authorized representative) requests the addendum at the start of care but dies with five days, the hospice is deemed to have met its requirement and is not required to provide the addendum.
When would a hospice update the addendum?
The addendum lists the patient’s diagnoses and conditions that are present upon hospice admission and the items, services, and drugs that are not covered by the hospice because they are deemed to be unrelated to the terminal illness and related conditions.
During the course of hospice care, the addendum may require update, for example, if the patient’s plan of care is updated.
Changes to the addendum will need to be signed by the patient or his authorized representative and stored in the patient’s medical record with the hospice agency.
Where can you find more information on the election statement
A Medicare credit balance represents a Medicare overpayment to a provider due to patient billing error or claims processing error that must be refunded to Medicare. The report is referred to as a Credit Balance Report because when a provider receives excess payment for a claim that was submitted, this is typically reflected in the provider’s accounting records (i.e., in the patient account receivable) as a “credit.”
What instances may give rise to a credit balance?
Different situations may give rise to a Medicare overpayment. For example:
Paid twice by Medicare or may be paid by Medicare and by another insurer for the same service
Incorrect calculation of patient deductible or patient coinsurance amount
Paid for non-covered services
Billed at incorrect daily rate
Which hospice agencies must file a Credit Balance Report?
If a hospice provider has more than one provider number, a separate report must be submitted for each provider number. Providers who have a low utilization (i.e., determined by the intermediary that they should file a low utilization Medicare cost report) or who file less than 25 Medicare claims per year are not required to file a Medicare Credit Balance Report.
What does a credit Balance Report Consist of?
The Credit Balance Report consists of two pages. The first page is a Detail Page, where the hospice provider enters information about each credit balance, on a claim by claim basis. Once a claim has been reported on one Credit Balance Report it should not be reported again on a subsequent Credit Balance report. The second page is a Certification Page. All providers must complete the Certification Page. The Detail Page is only required if the provider has credit balances to report.
The Detail Page
On this page, the provider must include detailed information about each Medicare claim with a credit balance, explanation why the credit balance arose, and indicate whether the credit balance is being repaid with the filing of the report.
The Certification Page
The second page of the Credit Balance Report is a certification page. Facilities that do not have any credit balances in a quarter are only required to submit the signed certification page. There are key areas of this page.
The first area serves as a reminder that there is a requirement to file a Credit Balance Report and failure to file this report will result in suspension of Medicare payments. Further, any misrepresentations may lead to fines and further penalties
The second area requires an officer or administrator of the hospice agency to sign a certification that that Credit Balance Report is true and accurate
The third area requires a selection from one of three choices: (i) provider qualifies as Low Utilization Provider (ii) Detail Page included with Report (iii) no credit balances to report
When is the report due?
A hospice provider must assess any Medicare credit balances on a quarterly basis and must report any identified Medicare credit balances within 30 days of the end of each calendar quarter. The Medicare Credit Balance Report due dates are as follows:
Quarter Ending
Due Date
March 31
April 30
June 30
July 30
September 30
October 30
December 31
January 30
What happens if a provider fails to submit a Credit Balance Report?
Failure to submit a Credit Balance Report by the 15th calendar day after the report due date will result in a Suspension Warning letter. If the completed report is not received within 15 calendar days from issuance of the letter, Medicare payments to the provider are suspended under a completed letter is received, accepted, and processed.
Where can you find a Credit Balance Report form?
The Credit Balance Report that must be completed and submitted is Form CMS-838, which can be found here: Medicare Credit Balance Form (pdf)
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