What Hospices Can Learn from Home Health Agencies on New Program Integrity Rules

Hospices seeking to gauge the potential impact of new regulatory actions in the space can look to their counterparts in the home health field.

The steps that the U.S. Centers for Medicare & Medicaid Services (CMS) has put forth to strengthen hospice program integrity mirror rules implemented in years past for home health providers, including medical review processes and rules for when a provider can sell their business.

Generally, when applied to home health, policies like these were effective at improving compliance and reducing unethical or illegal activity, according to Bill Dombi, president of the National Association for Home Health & Hospice (NAHC).

“There was a scramble first to understand them, and then there were efforts to try to find workarounds. And then there were efforts to comply. We then started seeing the greater degree of impact,” Dombi told Hospice News. “Providers sharpened their games relative to compliance for purposes of claims and quality of care, and then those people who were trying to get into the home health business without the best of intentions just disappeared.”

CMS is no doubt hoping for similar results for the Medicare Hospice Benefit.

The agency is working to curb the impact of a rash of new providers that have emerged so far in four states: California, Arizona, Texas and Nevada. A large contingent of these companies were established with the purpose of selling the license at a profit, with little concern for patient care.

Arizona had 239 new Medicare-certified hospices appear between 2018 and 2022, representing 52% of all providers in the state. In that time frame, Nevada saw 56 newly certified hospices, and 369 emerged in Texas.

In some instances, multiple hospices have been operating out of the same address without a corresponding increase in the population of eligible patients, according to the California Department of Justice (CDOJ). Some individuals also hold management positions at several of these hospices simultaneously.

The issue first garnered attention in California, where CDOJ reported that lax hospice oversight had “created the opportunity for large-scale fraud and abuse,” and that it had identified “numerous indicators of such fraud and abuse by hospice agencies” statewide.

As it became apparent these similar concerns existed in other states, calls for federal action grew louder from providers, industry organizations and lawmakers.

“The vast majority of people in the industry are committed to the principles and the practice and the delivery. There are, in fact, some outliers. We’ve watched people who’ve just abused the system and compromised the protections and services that have been given to some of our most vulnerable people,” Rep. Earl Blumenauer (D-Ore.) told Hospice News. “There are people who are running hospice programs that are only theoretical. They’re not actually providing services to people, and they are bleeding money from the federal government.”

Thus far, the agency has proposed a rule that would require hospice owners to wait at least 36 months to sell their businesses after receiving Medicare certification. CMS has also taken some steps to make hospice ownership more transparent and plans to step up medical reviews of hospice claims.

The problem represents an opportunity for the hospice community to work with lawmakers to identify solutions, according to Ben Marcantonio, COO and interim CEO of the National Hospice and Palliative Care Organization (NHPCO).

“One of the key things is really collaborating [with lawmakers] and coming to a real common understanding of what the concerns and issues are and what the solutions are,” Marcantonio told Hospice News. “With the program integrity area, would [CMS and legislators] take action with us on our recommendation around a moratorium in certain states, to get a focused, time-limited moratorium so that we don’t compromise access to care.”

In January, a coalition of industry groups sent 34 recommendations to CMS for improving program integrity, including NHPCO, NAHC, LeadingAge and the National Partnership for Healthcare and Hospice Innovation. Their recommendations included a temporary moratorium on new hospices enrolling in Medicare.

The earlier experiences of home health providers informed those recommendations as well.

“We borrowed from the experiences in home health with the proposals that we advanced the CMS including the 36-month rule, So if we see the hospice rules have an impact like the home health ones, then it will do its job,” Dombi said. “We would anticipate that the chances of that happening are high, even if it’s a little bit late, given what we’ve seen already occurring in California and some of the other states.”

The “36-month” rule forbids any change in majority ownership during the 36 months after initial Medicare certification, including acquisitions, stock transactions or mergers.

Hospices may benefit from the fact that CMS had some time to work out some of the kinks in the rule since implementing it for home health. In its first iteration, the 36-month rule for home health agencies was “a mess” that blocked some legitimate transactions, but it became “workable” following some revisions, Dombi said.

Additionally, CMS is conducting a small pilot program to test the waters on post-payment reviews of hospice stays that exceed 90 days. The agency has contracted with Noridian Healthcare Solutions, LLC as its Supplemental Medical Review Contractor (SMRC). Noridian will perform the reviews and submit findings to CMS.

“CMS internal data has identified a potential area of vulnerability beginning with the second benefit period, or 91st day in hospice,” Noridian indicated in an announcement. “The SMRC was tasked to perform data analysis and conduct medical record review activities.”

Noridian will review Part A hospice claims that were filed during the calendar year 2021. The SMRC will notify hospices under review with a statement of reasons, request for documentation as well as informational resources. In 2022, the projected improper payment amount for hospice care is expected to be close to $2.9 billion, a rate of 12%, Noridian indicated.

CMS is also developing “enhanced oversight” for providers in California, Nevada, Arizona and Texas. A key component of this includes a medical review of claims before a Medicare Administrative Contractor (MAC) will pay them.

The enhanced oversight period applies to hospices in those four states that are newly enrolled in the Medicare program as of July 13, as well as those who are submitting or undergoing a change in ownership.

While the impact of those changes will largely depend on how CMS executes them, the agency has stopped short of issuing the moratorium proposed by NAHC, NHPCO, NPHI and LeadingAge.

Under current law, CMS has the authority to impose moratoria on certification but so far has balked at using it for hospice.

The agency’s rationale is that it does not believe that it has the ability to make exceptions when a provider can demonstrate a need for an additional hospice in a particular community, Dombi said. Exceptions like these are included in the current state licensing moratorium in California.

This rationale is “perplexing,” according to Dombi.

“They didn’t have exceptions in home health either, and that didn’t seem to bother them back in the 1990s or later periods when they exercised that authority,” he said. “We think they have the ability to be laser-focused and say, ‘There will be no more home health agencies or no more hospices in the following zip codes,’” he said. “But right now they’re using the explanation that they don’t have the power to give somebody an exception when they could demonstrate need.”