Husch Blackwell Secures $44 Million Cut in Hospice Overpayments

Health care law firm Husch Blackwell secured a $44 million reduction in Medicare overpayment charges for an unnamed hospice client involved in an audit. The firm’s hospice and palliative care team appealed the overpayment finding, and the U.S. Centers for Medicare & Medicaid Services (CMS) dismissed the claim denials. This left the hospice with a final overpayment of less than $30,000.

Hospices work within an aggregated payment system monitored by CMS. If a hospice exceeds the payment capitation rate, then it must refund the amount to CMS. On average, the margins of hospices exceeding the payment cap threshold was in the range of 21.9% in 2019, which fell to 12.1% following refunds to CMS for cap overages that year, according to the Medicare Payment Advisory Commission (MEDPAC).

While capitation rates pose challenges for hospices’ bottom lines, the majority of these audits are mostly related to a patient’s hospice eligibility, according to Meg Pekarske, health care and hospice law attorney at Husch Blackwell and chair of its hospice and palliative care practice group.These cases center around different technical issues related to the conditions of payment, as Pekarske told Hospice News.


“The vast majority of claim denials are all centered around whether a person had a six-month prognosis. There needs to be light shed on this because there shouldn’t be this wide gap between what the government comes through with and then where the administrative appeal process ends up,” said Pekarske. “The numbers that are put out in these audits, they will bankrupt hospices. Very good hospices are trying to deal with a legal strategy and defend themselves, but also having to prepare for the worst case scenario, like they might have to close their doors.”

CMS and its contractors use statistical extrapolations to monitor Medicare payments to hospices. These processes may be leading to inefficiencies and errors in claim denials, according to Bryan Nowicki, law attorney for Husch Blackwell’s hospice and palliative care group.

The basis of relying on physician determination of eligibility within the limited six-month timeframe parameters of the Medicare Hospice Benefit has created a grey area for both providers and federal agencies that monitor them, Nowicki told Hospice News. Federal contractors disagreeing with hospice physician determinations can cost providers millions in Medicare overpayments.


“There’s a real tension out there between how Congress defines the hospice benefit, and even how CMS has defined that benefit, as not-time limited based upon a grey area of prognostication and really using the hospice physician as the gatekeeper and deferring to that hospice physician,” said Nowicki. “The tool of [data] extrapolation process has really caused that tension, and hospices are caught in the middle of what Congress wants them to have their physicians decide.”

A main reason for claim denials is the insufficiency of some physician narratives. A hospice physician’s narrative on a patient’s condition is often one of the single most important pieces of documentation an organization can have in their line of defense against Medicare overpayment auditory action.

Documentation errors can end up making or breaking hospices in terms of overpayments. Submitting incomplete and inaccurate required documentation can land surveyors and auditors on a hospice’s doorstep. Accurate documentation can help hospice avoid auditory attention and the financial repercussions that can follow.

Even with careful documentation and billing practices, a hospice can only do so much to avoid risk of paying back millions and bottoming out, according to the Husch Blackwell team, which called for change at a policy and federal level to catch up to nationwide growing demand for serious illness and end-of-life care.

“Our hope is that this sends a signal to CMS that at times, and perhaps often, its contracted auditors are pursuing audits that are really unfairly jeopardizing the livelihood of these hospices,” Nowicki told Hospice News. “I would hope that they would take a hard look at even beginning the extrapolation process.”

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