Regulators are narrowing focus around hospice patient eligibility. Hospices in the Midwest and South have recently survived the scrutiny in federal courts in a case that could have ripple effects on regulatory oversight.
The U.S. Court of Appeals for the Sixth Circuit oversees four states of Kentucky, Michigan, Ohio and Tennessee. The Sixth Circuit ruled in favor of hospice providers in a recent case that raised questions related to eligibility criteria and reimbursement.
The case represents a significant decision for hospices nationwide, according to Joe Diedrich, partner at Husch Blackwell. The federal ruling addressed questions often brought up by Medicare auditors related to post-payment coverage denials, which can challenge legitimate providers’ financial sustainability, Diedrich said during the law firm’s recent podcast.
“When a federal court of appeals makes a decision, not only does that matter for the particular case, but that also means that any district court in those states has to follow [it],” Diedrich said. “It’s very important, and we were very fortunate to win on the limitation of liability issue in this case. This Sixth Circuit case is the first court anywhere in the country at the court of appeals level to make this determination. It’s going to be hugely persuasive for all other pending federal court cases and even [administrative law judge (ALJ)] cases.”
The case’s significance centers around questions related to the limitation of liability provision included in the Social Security Act. Often called the “safe harbor” provision, these question whether a provider reasonably believed that billed services met Medicare coverage requirements according to hospice Local Coverage Determination (LCD) guidelines.
The LCD guidelines include criteria to determine a patient’s terminal prognosis of six months or less that must be present in clinical documentation. Hospices deemed in violation of the limitation of liability provision must return Medicare payments.
For the first time, federal judges in the case addressed questions that a provider’s awareness of LCDs does not alone establish knowledge of noncoverage, Diedrich indicated. The case signals that federal courts may recognize the lack of clarity in Medicare guidance alongside the complex and extensive clinical decision-making processes involved in a hospice admission.
The case illuminates important challenges for hospices when it comes to determining a patient’s terminal condition, according to Zaina Niles, associate at Husch Blackwell.
Even hospices with strong clinical documentation and compliance education may fall under regulatory watch, Niles said. Auditors use various data when reviewing billing claims for potential patterns of fraud, waste and abuse. However, clinical and billing data often do not provide sufficient details of an individual’s overall terminal condition or decline, she added.
“There has to be a case-by-case determination of whether the provider was reasonable in providing that care and billing for those claims,” Niles said during the podcast. “Now, the favorable decisions that we’ve gotten in federal district courts and also the Sixth Circuit … really take the wind out of the [Medicare] contractors’ sails. It’s not enough to just give a blanket statement that the provider had constructive notice.”
Administrative law judges have often ruled in favor of Medicare auditors in cases surrounding hospice eligibility, said Husch Blackwell Partner Bryan Nowicki. Some hospices have successfully appealed these ALJ decisions in federal court, a possible signal that the “scales” could be tilting more in favor of providers, Nowicki said.
The recent federal circuit court ruling represents a potential turning point as hospices undergo increased regulatory scrutiny amid program integrity issues in the space, according to Nowicki.
“In fighting these battles on behalf of hospices … Now, more than ever, they need help wherever they can get it,” he said. “There are so many variables in prognostication. In the hospice space, there are local coverage determinations, but they are far from black and white. In this case, the court recognized the open-ended nature or the grey area of prognostication. These cases are really going to prove to be a difference maker.”
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