OIG Recommends Greater Scrutiny for Hospice Services Furnished to Patients in ALFs

What Should Your Hospice Do?

The evaluation and policy division of the HHS Office of Inspector General (OIG) issued a study dated January 13, 2015 after evaluating all Medicare hospice claims from 2007 through 2012.  OIG’s general study observations were that:

  1. Hospices provided care much longer for beneficiaries in assisted living facilities (ALFs) as compared to other settings like nursing facilities, private homes and SNFs;
  2. ALF residents often had diagnoses that usually required less complex care;
  3. Hospices typically furnished fewer than 5 hours of visits for routine home care patients in ALFs; and
  4. For-profit hospices received “much higher” Medicare reimbursement per beneficiary than nonprofit hospices. 

Ultimately, OIG, like MedPAC before it, recommends to CMS that its hospice payment reform should address the financial incentives under the current system to target ALF residents for hospice services. 

If history is a guide, critical OIG studies such as this one trigger additional targeted scrutiny, and so hospices, particularly for-profit hospices, should expect increased hospice audits related to their services to ALF residents.  Indeed OIG’s study recommends that CMS “target certain hospices for review.”

One important point the OIG study does not address is the simple observation that residents of ALFs are generally more likely to be healthier than residents of nursing homes and SNFs and so you would expect a lower median number of hospice days for patients in those non-ALF settings.  Nonetheless, with the OIG findings that “hospices provided care to beneficiaries in ALFs much longer than to beneficiaries in any other setting” and “Medicare paid twice as much for care for beneficiaries in ALFs than for beneficiaries in other settings,” the OIG’s call for scrutiny of hospice care furnished in ALFs is, as a practical and policy matter, unavoidable.  Hospices should take note.

So what are the takeaways of this latest OIG hospice study? 

  • If you are a for-profit hospice, you will likely face a higher level of scrutiny than your non-profit peers. This for-profit hospice “call out” is consistent with prior OIG hospice reports that have done the same.
  • If your hospice serves a disproportionate or high number of ALF residents (identified by OIG in its study as hospice that had more than half of their Medicare payments from care provided in ALFs), you are more likely subject to Medicare review.
  • OIG recommendations to CMS for hospice payment reform, greater transparency on hospice payments, and better data for hospices to compare themselves against their peers (all of which CMS agreed with), will likely be adopted in the future.  But hospice reform has been on CMS’s Affordable Care Act “to-do” list since 2010 and those reform wheels can turn slowly.
  • In the meantime, hospices should look to see if their ALF resident data looks different in 2015 than it did three years ago in 2012, the last year covered by OIG’s study.  If not, it makes sense to consider potential compliance assessments of its services furnished in the ALF setting.
  • For any individual hospices with a disproportionate number of ALF residents (i.e., greater than 50%), consider an appropriately focused compliance review to assess potential risk, particularly if your hospice has cap liability and a higher than average length of stay.

While in the current program integrity focused environment, CMS and OIG audits may be an inevitable part of participating in the Medicare program, it is important to pay heed to the government’s clear signals of the increased scrutiny that lies ahead and to get out ahead of auditors by engaging in appropriate internal assessment and, as appropriate, process improvement.

Posted by: Howard Young, Esq. and Jacob Harper, Esq., Morgan Lewis & Bockius LLP (hyoung@morganlewis.com