Hospice payment suspensions by the U.S. Centers for Medicare and Medicaid Services (CMS) have hit vendors hard, including pharmacies and durable medical equipment (DME) companies.
CMS earlier this year began suspending Medicare payments to hundreds of hospices allegedly due to suspected fraud. Providers received letters indicating that they were suspended for at least 180 days, a time period that the agency could extend to as long as one year.
The majority of these letters pointed to live discharges as the impetus behind the suspensions, each citing five patient records. Evidence indicates that some legitimate hospices were caught up in the dragnet due to patients being discharged for valid reasons, such as a revocation of the benefit, moving out of a provider’s service area or transfer to another hospice.
The financial impact on these hospices has been devastating in many cases, with some closing their doors or laying off staff.
“We have been trying to operate. We haven’t been just discharging patients; that wouldn’t be the ethical or moral thing to do, so we have been servicing patients,” a hospice CEO told Hospice News on background. “We’re just at this point using credit cards as much as we can to offset the costs of running on a skeleton.”
CMS in May imposed a six-month national moratorium on new hospice and home health provider enrollment in Medicare. The move came alongside an announcement that the agency had suspended payments to 773 hospices and 23 home health agencies in Los Angeles County, California, over suspected fraud. CMS at that time said the payment suspensions totaled roughly $70 million.
These regulatory actions have had a ripple effect on vendors, according to a DME company CEO that spoke to Hospice News on background.
“These hospice agencies are being suspended. They’re not getting paid,” the DME CEO told Hospice News. “If they’re not getting paid, their employees are not getting paid. DME providers like us are not getting paid. Pharmacies are not getting paid. Any other contractor they have is not getting paid.”
This has placed some vendor businesses in peril, and some of them have been considering layoffs of their own, another DME provider said.
“Our employees are kind of at a standstill,” he told Hospice News. “We’ve been trying to keep everybody on board, keep them employed, keep them paid for as long as we possibly can.”
The fraud issue is real. Widespread hospice fraud has been documented across several states. In some cases, providers have enrolled patients who were ineligible for hospice care or did so without their knowledge or consent. Other schemes have involved paying to transfer patients between hospice organizations, engaging in “license flipping,” and offering illegal kickbacks for referrals, among other violations.
One DME company leader indicated that they had lost 50% to 60% of their business due to the suspensions, in some cases because their hospice clients were shut down. In some cases, the shuttered hospices did not notify their vendors that they were closing, and companies had to track down patients to retrieve equipment.
For now, vendors are trying to hang on long enough to see some of these issues resolved, and which hospices are left standing when the smoke clears. Hospice News in previous reporting spoke to 10 hospices who had received suspensions. Of those, two to date have received notice that their suspensions have been lifted.
“We’re all feeling the pain,” a DME CEO said. ‘We’re hopeful that we were going to ride the storm out within the next couple of months to get back up on track. But as time goes forward, the damages are starting to appear.”
