Knowing their rights, risks and responsibilities in the appeal process can be key for hospices to weather a regulatory audit.

Hospice providers have grown increasingly concerned about the financial and operational impacts of heightened auditing activity in the industry. Some have faced reimbursement suspension when auditors suspect potential overpayment or fraud.

Hospices rely heavily on Medicare reimbursement to sustain operations and patient care, and suspensions can endanger providers’ ability to remain afloat, according to Meg Pekarske, hospice attorney and partner at Husch Blackwell.

“What’s so troubling with payment suspensions, and the rare case when they are used, is because hospice is unlike pretty much any other provider out there with 90% to 95% of their revenue coming from Medicare,” Pekarske told Hospice News. “This really does put people out of business. Most hospices cannot withstand a payment suspension and then just shutter their doors because it just is so debilitating. These suspensions are having really grave impacts, with patients and jobs at stake.”

Hospices have limited appeal options when it comes to payment suspensions, according to Jennifer Weaver, attorney at health care law firm Waller and co-chair of its health care industry team. Providers can begin the appeals process only after an overpayment determination has been made, meaning they must figure out how to sustain their programs without reimbursement as the audit proceeds.

Hospices must understand the factors that can trigger a payment suspension as well as the ways that they can respond.

“The way it works right now is that while a payment suspension is in place, providers cannot appeal the auditor’s decision,” Weaver told Hospice News. “Regulations don’t allow providers to appeal through the Medicare appeals process to challenge auditor decisions. You have to wait for the audit to be completed and in the meantime you’re not getting paid, so it creates an incredible challenge for hospices.”

Nuts and bolts of audits and payment suspension

Hospices are put between a rock and a hard place when it comes to pushing back on a suspension, according to Jacob Harper, partner at the global law firm Morgan Lewis.

“An unfortunate issue for the hospice community is that regulators have a tremendous amount of authority,” Harper told Hospice News. “There is not a great silver bullet to be able to overcome a payment suspension once it’s been imposed.”

Audits from Unified Program Integrity Contractors (UPIC) and Supplemental Medical Review Contractor (SMRC) take a close look at provider Medicare claims to detect potential instances of health care fraud and abuse.

The U.S. Centers for Medicare & Medicaid Services (CMS) contracts UPIC entities to conduct investigations and audits related to potential fraud, waste or abuse. UPICs in particular are on the rise as regulators seek out bad actors in the hospice space.

In the hospice realm, auditors often zero in on questions of patient eligibility and length of stay. CMS and their contractors tend to see red flags on hospice claims that are missing physician signatures or have incomplete or inaccurate documentation. Long lengths of stay or high rates of live discharges can also signal regulatory scrutiny.

If an auditor determines that fraud allegations are credible or if they see evidence of an overpayment, they can suspend a hospice’s Medicare payments or cut them off from future reimbursement, according to Husch Blackwell Attorney Bryan Nowicki. Those funds go into a trust until their investigation is complete.

Temporary suspension periods vary depending on how long regulators take to review audit claims and process overpayment decisions, placing financial pressures on hospices in the meantime, Nowicki said.

“We’ve seen suspensions lifted within six months to year, but it could be costing providers tens of millions of dollars over that time and impose a financial burden,” Nowicki told Hospice News. “The good news is that the administrative process of these audits used to take five to seven years to play out and now it’s more between 18 months and two years as the audit review backlog dwindles down.”

In addition to suspended payments, hospices can also be put on prepayment reviews in which 50% to 100% of billing claims may be subject to review, according to Weaver.

A fine line between responsibility and risk

Hospices can follow a rebuttal process when arguing against payment suspension, according to Pekarske. After a hospice receives audit results, MACs send them a demand letter. This serves as a “trigger” for providers’ immediate appeal options, Pekarske said.

For example, hospices have 15 days following receipt of the demand letter to submit a rebuttal statement to CMS to lift or prevent a payment suspension or overpayment recoup actions, said Nowicki. However, rebuttals can be less than successful in avoiding financial penalties, he added.

“The rebuttal process is not utilized heavily, though it’s available,” Nowicki said. “We haven’t found a lot of success with that. It just seems like such a high bar to use the rebuttal process to accomplish much of anything. What is much more typical and standard is to follow the administrative appeals process where you’re addressing all aspects of the audit. Making an appeal can be a long process with many stages. We tell clients that they’ve got to be patient and persistent to find success in that process, and that they’re going to be in it for the long haul.”

Following the administrative process allows hospices to gain a comprehensive review of the entire audit, whether that’s review of clinical medical records and physician decisions or of their documentation for technical errors or extrapolations and statistical review of patients, said Nowicki.

A key to appeal arguments is a hospice’s ability to illustrate impacts of payment suspension, such as demonstrating that the financial hardship could result in patients losing access to care.

“Typically, the only rationale for why a suspension would be lifted or modified is due to beneficiary access issues,” Harper told Hospice News. “There may be limited hospice providers within a particular geographic area. So perhaps the argument can be made that not having access to your funds for a significant period of time can be an existential crisis for patient access if they can’t survive payment suspension.”

Hospices should ensure that they submit thorough and complete medical records in response to an audit request if they hope to avoid an escalated case payment suspension, according to Weaver. Including a cover sheet that details a medical necessity summary for patients served during the audit period can be helpful to provide auditors with background on how the provider complies with Medicare hospice reimbursement criteria, she added.

However, this is where hospices walk a risky ledge. Striking a balance between under- and over-producing information is crucial when responding to auditor requests for patient data extrapolations, said Nowicki.

“Hospices can be both under- and over-productive in submitting medical records and supporting documentation related to the period under auditing review,” Nowicki said. “It’s about trying to hit that sweet spot where you’re giving exactly what the auditor needs to make decisions, and narrow the scope of the audit. Then you wait for the determination and that’s when you can really start to implement more of an advocacy strategy pushing back against the audit results.”