How Emerging Hospice Regulations Could Impact Providers

Increased hospice oversight aimed at curbing fraud in the industry could come with a mixed bag of financial and operational impacts for providers.

The U.S. Centers for Medicare & Medicaid Services (CMS) has honed in on hospice program integrity, rolling out a swath of new measures to reduce fraud, waste and abuse in the space. During the past two years, CMS has introduced new regulations, updated survey process, increased auditing activity and enhanced reviews of providers’ claims, patient eligibility and quality data.

Hospice regulation has taken a winding path in recent years, representing both a push and pull in terms of quality hospice care delivery, according to William Dombi, president of the National Association for Home Care & Hospice (NAHC).

“Hospice has come under increasing fire over recent years, initially from reports about hospices that perform poorly on health and safety standards and endanger vulnerable patients, and more recently with respect to dramatic growth in the number of hospice providers in some western states that have raised program integrity concerns,” Dombi said in a statement emailed to Hospice News. “All concerned have a part to play in addressing these concerns.”

Patient safety concerns came to the forefront in hospice in 2019 following a report from the U.S. Department of Health and Human Services Office of the Inspector General (OIG). The report rocked the industry when it found that roughly 20% of hospices surveyed by regulators or accreditors between 2012 and 2016 had a deficiency that posed a serious safety risk.

Meanwhile, a swathe of newly licensed providers emerged in Arizona, California, Nevada and Texas that have caught the attention of regulatory watchdogs. Evidence suggests that potentially hundreds of these hospices were established with the purpose of selling the license at a profit or committing fraudulent acts. In some instances, multiple hospices have been operating out of the same address without a corresponding increase in the population of eligible patients.

The proliferation of new hospices being “flipped” for profit prompted new regulations to address these concerns. CMS in its proposed home health rule for 2024 introduced a requirement that would prohibit hospice owners from selling their businesses within 36 months of Medicare enrollment to curb illegal or unethical activity.

“The choices made now will determine whether [CMS] will achieve its intended result: improving poor providers’ performance and the sector overall,” Katie Smith Sloan, president and CEO of LeadingAge, told Hospice News in an email.

As regulators take deeper dives into the various avenues where fraud can occur in hospice business, working to ensure compliance has some providers left grappling with additional operational and financial strains.

Program integrity audits are not without warrant, but they can have significant impacts on hospices’ ability to thrive, according to Meg Pekarske, partner at the law firm Husch Blackwell.

Keeping up with regulatory shifts and increased audits has led to increased staff training, tighter documentation practices and additional steps in billing claim reviews – all efforts that can wear on existing workforce shortages and sometimes represent higher expenses, she said.

“Program integrity audits can have the largest financial exposure for a hospice,” Pekarske previously told Hospice News in an ELEVATE podcast episode. “Just the volume of [audits] that is happening right now across the country, where sometimes several [audit] projects have large claim pulls that sometimes have 40 claims in each round, and that leads to cash flow issues [and] potentially payment suspension and other things. With program integrity audits, not only is the number of audits going up, but the value of these audits and the extrapolation as well.”

Billing claims and clinical documentation are the biggest data pieces that regulators watch for maleficence, according to Zaundra Ellis, vice president of hospice professional services at the health care software provider Axxess.

In the realm of hospice data collection, these are two areas in which regulators “want to see lower error rates,” she said at the NAHC Financial Management Conference in New Orleans.

Case in point, inaccurate billing was among the driving forces behind the OIG’s recently announced nationwide audit of general inpatient hospice services (GIP). A report from OIG found that roughly one-third of Medicare claims for hospice GIP services are billed in error, the OIG indicated. Common errors include billing for GIP services when hospice patients did not need this level of care.

Solid documentation and billing practices are keys to avoiding regulatory attention and responding to auditing requests, Ellis stated.

“They are all looking for that documentation to support the level of care and the claims that you’re submitting,” Ellis said. “Improper billing and overpayments [are also] where [regulators] point and say, ‘This is fraud.’ That can reach the next level of getting additional parties involved to protect these organizations’ interests in patient care. That’s the potential for someone to face federal charges for fraud [and] an upheaval with a hospice organization. They look at current and past improper payments, and work in the past and future.”