Unified Program Integrity Contractor (UPIC) auditors are taking a sharper look at nursing home room-and-board for hospice patients.

Hospices have increasingly faced more regulatory scrutiny in recent years amid rising program integrity concerns, including ramped up UPIC audits, among various others. These audits are designed to instill oversight measures aimed at safeguarding against bad actors in the hospice industry.

Regulators have been zeroing in around hospices’ data when it comes to patient interviews and Medicaid skilled nursing room-and-board payments, among other aspects of care delivery. These data could give UPIC auditors clues as to potential malfeasance. However, auditors’ data extrapolation methodology is flawed and poses risks for quality hospice providers, according to Bryan Nowicki, partner at the law firm Husch Blackwell.

“The latest is the law has been developing, and there are new approaches that the auditors are taking to extrapolation, which has led to new ways to try to attack what [providers] are doing or criticize them as legally insufficient,” Nowicki said in a recent Husch Blackwell podcast. “We’ve found flaws in how they assemble the [claims] universe.”

The U.S. Centers for Medicare & Medicaid Services (CMS) contracts UPICs to investigate instances of suspected fraud, waste and abuse. UPIC auditors seek to prevent inappropriate payments from occurring, according to CMS.

Understanding the emerging red flags on auditors’ radars is crucial for providers’ viability, said Meg Pekarske, partner at Husch Blackwell.

Percolating to the top is greater attention to hospice care delivered to patients in skilled nursing facilities, Pekarske stated. Auditors are carefully examining the claims associated with these services, particularly around room-and-board payments for hospice patients, which can represent significant health care costs.

UPICs allow the ability to identify suspected inappropriate payments. Audits that result in determinations of overpayment can have hospices facing steep financial risks, according to Pekarske. Ensuring documentation around dually eligible beneficiaries is important when it comes to hospice patients based in skilled nursing facilities, she added.

“The room and board issue is a really big dollar value issue,” Pekarske said during the podcast. “The upshot here is that a common mistake that is made by state, Medicaid and UPIC auditors is that they look at how much hospices are paid and they don’t think about whether or not the payments represent [those] for hospice patients. We’ve had to go to battle over the health integrity issue. It’s still troubling that people have to pay legal fees to deal with this when there are actually dual eligible Medicaid hospice patients living in nursing homes.”

The financial headwinds resulting from alleged overpayments can be a significant blow to a hospice’s margins, according to Nowicki. The recouped payments have totalled into the millions in some cases, making compliance a key sticking point to sustainability, he added.

A large challenge is that Medicare and Medicaid UPIC auditors may be examining claims in very different ways, complicating hospices’ ability to respond to these types of audits, Nowicki stated.

“The financial stakes are significant, and the room and board can be as much or more than the hospice payments you received,” Nowicki said. “It’s really important to invest in resources, because when you’re talking about extrapolated overpayments, we’ve had anywhere from a million to $48 million. On the UPIC side, what can be confusing is now UPIC contractors do both, and it seems like internally they have different staff doing the Medicare and Medicaid side. Sometimes that gets a bit confusing.”