Program Integrity Takes Center Stage in CMS’ 2024 Proposed Hospice Rule

The 2024 proposed hospice rule from the U.S. Centers for Medicare & Medicaid Services (CMS) signals the agency’s earliest response to widespread calls to bolster program integrity within the benefit.

In additional to a 2.8% hike in the per diem base rate, the proposal includes new requirements around who can certify patients, health equity initiatives, quality measurement and telehealth.

But after months in the public spotlight, the program integrity piece is taking center stage as the agency seeks to update its rules.


“CMS has included a ‘deep dive’ into hospice utilization trends and related data that clearly signals concerns about emerging patterns and potentially inappropriate behavior on the part of some hospice organizations,” Bill Dombi, president of the National Association for Home Care & Hospice (NAHC), told Hospice News. “We should anticipate increased emphasis on program integrity in the hospice program.”

This “deep dive” includes a close look at the number of beneficiaries using the hospice benefit, live discharges, reported diagnoses on hospice claims, Medicare hospice spending and Medicare Parts A, B, and D non-hospice spending.

Other provisions are designed to promote greater transparency around hospice ownership. In addition, CMS is seeking comments from the public, hospice providers and other stakeholders on increasing access to the higher-acuity levels of hospice care.


These actions come in the wake of reports of potentially unethical or illegal practices among hospices, particularly among new companies popping up in California, Texas, Nevada and Arizona.

A rash of newly licensed hospice operators in those states have been associated with suspicious or unethical practices. The issue first gained attention late last year in California.

In some instances, multiple hospices have been operating out of the same address without a corresponding increase in the population of eligible patients. Some individuals also hold management positions at several of these hospices simultaneously.

Thus far, California is the only state to take action on the issue, beginning with a moratorium on new hospice licenses and an extensive audit of California’s oversight processes.

Meanwhile, calls for federal action have grown louder.

Members of Congress have requested briefings from CMS on the issue. Several legislators grilled U.S. Health & Human Services Secretary Xavier Becerra in a committee hearing on Capitol Hill last week.

“More fraudulent hospice providers are gaming the system. They’re stealing Medicare dollars, assessing opioid medication and depriving patients of access to the care that they need,” Rep. Beth Van Duyne (R-Texas) said during the hearing. “We’re well beyond the time to be patient and the time for action is now.”

The provisions of the proposed rule are an “initial step” towards strengthening protections against waste, fraud and abuse, CMS indicated in a press release.

This includes a proposed requirement that all physicians who order or certify hospice services for Medicare beneficiaries be enrolled in Medicare or validly opted-out. If finalized, this would be a condition for payment.

“CMS is looking closely at the hospice industry, as we have increasing concerns about fraud, waste and abuse in this space,” the agency indicated in a statement. “While this rule takes initial steps, this is part of a larger effort by CMS to address hospice fraud, waste and abuse that will continue this year.”

The agency has also proposed to increase to 4% the payment deductions for hospices that do not submit quality measure data to the agency, including the Hospice Item Set. Currently, that percentage is 2%.

The proposed 2.8% payment increase, an estimated total of $720 million, has also furrowed some brows. Stakeholders contend that the percentage is too low to offset inflation, wage pressures and other headwinds, according to National Hospice and Palliative Care Organization (NHPCO) COO and interim CEO Ben Marcantonio. 

“The 2.8% proposed rate increase for hospices is not enough to support the care hospices provide,” Marcantonio told Hospice News. “Our members are dealing with inflation rates that are twice that high, compounded by historical workforce challenges. And sequestration cuts will bring that 2.8% to something closer to 1%.”

Providers voiced similar concerns last year when they received a 3.8% increase. Some contended that the rate put them at a disadvantage in competing in the labor market with health systems and other entities.

Industry observers anticipate that the “lower than expected” rate hike could adversely impact providers’ finances, according to Brian Tanquilut, equity analyst for the investment banking firm Jefferies Financial Group.

“Given inflationary pressures seen by most [health care] providers and comments from sector bellwether [VITAS parent company Chemed (NYSE: CHE)], we believe investors were expecting a higher rate increase vs. CMS’s proposal,” Tanquilut indicated in a research note. “While CMS could still adjust this rate to reflect more recent trends once they finalize the rule, the rate proposal would be an incremental negative for hospice providers.”

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