CMS Addresses Benefit Integrity Issues Related to Hospice Care

The U.S. Centers for Medicare & Medicaid Services (“CMS”), the agency that administers the Medicare hospice benefit, has announced increased scrutiny of hospice programs in the wake of growing concerns over hospice service fraud. Via media reports and its own research, CMS identified inappropriate patient certifications for hospice benefits and insufficient provision of services to hospice beneficiaries. CMS officials Dara Corrigan (CMS deputy administrator and director of the Center for Program Integrity) and Dr. Dora Hughes (acting director of the agency’s Center for Clinical Standards and Quality (“CCSQ”) and acting CMS chief medical officer), outlined CMS’ latest efforts to mobilize against this fraud in a recent blog post.

As background, for a patient to be eligible for Medicare hospice benefits, and for a hospice provider to be entitled to bill for such benefits, a patient must be certified as “terminally ill,” meaning “that the individual has a medical prognosis that his or her life expectancy is 6 months or less if the illness runs its normal course.” See 42 C.F.R. §§ 418.20, 418.3. This certification must be made at the time of hospice admission, signed by a physician, and renewed at 90 days and every 60 days thereafter. Id. at § 418.22; 42 U.S.C. § 1395f(a)(7)(A)(ii). The certification must be accompanied by clinical information and other documentation that support the medical prognosis of terminal illness in the medical record. 42 C.F.R. § 418.22(b). The total amount of reimbursement a hospice provider may receive from Medicare in a year is subject to two caps: a cap on reimbursements for inpatient services, 42 U.S.C. § 1395x(dd)(2)(A)(iii); see 42 C.F.R. § 418.302(f), and an “aggregate cap” on total reimbursements for all hospice services, 42 U.S.C. § 1395f(i)(2); see 42 C.F.R. §§ 418.301(b), 308(a).

Deputy Administrator Corrigan and Chief Medical Officer Hughes write that CMS has noted a reported pattern of “churn and burn” schemes where a new hospice bills until it is audited or reaches its statutory yearly payment limit, at which point it shuts down, keeps the money, buys a new Medicare billing number, and transfers patients to it, then resumes billing. Some hospices also list addresses that appear to be non-operational. CMS’ response has been multifaceted.

One strategy CMS has already begun is a nationwide hospice site visit project, making unannounced visits to every Medicare-enrolled hospice. CMS has authority to either deactivate or revoke Medicare billing privileges for hospices not operational at the address listed on their Medicare enrollment form. As of mid-August, CMS had visited over 7,000 hospices, nearly 400 of which were being considered for potential administrative action.

CMS is also implementing additional medical reviews to ensure hospices are submitting claims to Medicare only for patients who are eligible for the benefit. In Arizona, California, Nevada, and Texas, where CMS has observed rapid growth in the number of potentially fraudulent hospices, CMS will conduct a medical review before making payments on any claims made by newly enrolled hospices. And in all states, CMS is initiating a pilot project to review hospice claims following an individual’s first 90 days of hospice care.

CMS has also proposed several regulatory changes, including:

1. prohibition of transfer of provider agreement and Medicare billing privileges of a new hospice for 36 months;
2. implementation of a hospice Special Focus Program that would increase oversight of poor-performing hospices that have repeated cycles of serious health and safety deficiencies; and
3. inclusion of criminal background checks for owners upon initial Medicare enrollment.

In addition, CMS has recently finalized various survey and enforcement requirements related to qualifications of hospice-certifying physicians, multidisciplinary composition of state survey teams, and surveyor training and testing. Surveyors are also now required to collect standardized survey deficiency information for publication on CMS websites in order to provide patients with transparent information on hospice care quality.

Faced with increased scrutiny, hospice providers must remain vigilant regarding Medicare enrollment and billing requirements to avoid CMS attention relating to perceived fraud, abuse, and waste in the hospice industry.

A full copy of the CMS announcement is available on CMS’ blog.