Hospices Refocus on Legal Compliance in Marketing Practices

Regulators have placed a heightened focus on hospice in recent years, as increasing utilization has driven up health care costs. As anti-kickback and fraud cases proliferate in the industry, keeping a close eye on legal and regulatory compliance — including marketing tactics and spending — will be key for hospice providers. 

Improper marketing activities present a red flag for regulators and can lead to significant financial penalties, exclusion from participation in federal and state programs, and even jail time, according to Rachel Hold-Weiss, partner at law firm Arent Fox. Hold-Weiss focuses on health care regulatory, transactional and litigation matters in the post-acute care arena. 

Keeping a close eye on compliance in marketing methods and associated spending is critical to identifying problematic areas and solutions, Hold-Weiss told Hospice News.

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“Often, marketing is divorced from compliance and it’s not brought in, but the compliance part is so critical,” Hold-Weiss told Hospice News. “There are types of marketing activities that are problematic. If your marketers are handing things out, somebody needs to be watching it, somebody needs to be tracking it, somebody needs to be on top of it. Not from the financial and business side, but from the patients and regulatory side. If you have the compliance oversight of that, then there’s a better chance that somebody will pick up an activity that may be problematic sooner rather than later.”

Providers can face legal consequences if they disseminate misinformation or inconsistent messaging about services or engage in improper solicitation of hospice to ineligible beneficiaries. Other concerns include unethical or illegal inducements offered to patients and families or slandering competitors and other entities, Hold-Weiss outlined during a recent National Association for Home Care & Hospice (NAHC) webinar.

The biggest risk lies in marketing tactics in which hospice incentives are issued to actual or potential referral sources, Hold-Weiss told Hospice news. This occurs when anything is given in exchange for referrals such as meals, goods, free services or gift giving, to name a few examples.

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Establishing a compliant marketing program with oversight to monitor spending and practices is pivotal to avoiding some of these “golden risks” in a hospice’s outreach activities, according to Hold-Weiss. Hospices seeking to ensure compliance in their marketing should also ensure staff are well-versed in related laws and regulations through ongoing training and education, including mock scenarios, Hold-Weiss stated.

“Your marketers need very specific training [and] marketing training has to be different,” said Hold-Weiss. “Compliance training that is geared solely towards marketers focuses on marketing scenarios of what they’re allowed to do and what types of issues are problematic. When you give that type of specific training to marketers, you can have a better sense that your marketers know what’s right and wrong and have a strong background to report bad activity or avoid doing something improper.”

Though not foolproof, training is an essential component of marketing compliance. Providers also need to ensure they have a detailed compliance auditing and monitoring process to track where marketing money is allocated as well as staff activities, said Hold-Weiss. Hospice eligibility requirements and the scope of services should be prominently featured in outreach materials and communication.

Hospice organizations are under increasing legal and regulatory scrutiny related to medical necessity complaints under the False Claims Act and the closely related anti-kickback statute. The U.S. Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health & Human Services Officer of the Inspector General (HHS-OIG) have been looking closely at matters such as longer lengths of stay, live discharges, documentation errors and omissions, general inpatient care utilization, and billing for services deemed unrelated to the terminal diagnosis, among other concerns. 

Illegal kickbacks and false claims cases have resulted in fines or settlements reaching millions of dollars, with some providers facing criminal charges and prison sentences. In January 2021, the U.S. Department of Treasury reported that enforcement efforts had recovered more than $3 billion during the previous fiscal year from False Claims Act cases. About $2.6 billion of that was from lawsuits involving the health care industry, including hospices.

The concept of illegal kickbacks is not new to the hospice industry, but represents a legal trend that providers should have on their radar when it comes to shaping their marketing strategies, according to Hold-Weiss.

“Watching the trends and spends is critically important,” said Hold-Weiss. “A trend is this payment of kickbacks for increasing referrals that’s ongoing, and it’s a heightened area of scrutiny. I would say to hospices to be on the lookout for activities that could trip that area up. For marketers, they do something different that has a heightened risk, [and] their activities lead to different potential risks.”

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