As hospice continues to be a very profitable area in healthcare, the scrutiny of services provided to patients is catching the eye of the OIG. The OIG, following marching orders from the wonderfully popular Affordable Care Act (aka Obamacare) focuses on hospice services provided to patients residing in Assisted Living Facilities (ALFs).
The OIG report uses claim data from 2007 through 2012, along with associated provider costs from cost reports. (This is why we always stress the accuracy of cost reports, even though they seem tedious and antiquated.) The data brought out very interesting statistics. The OIG is putting for-profit hospice providers in their crosshairs and is focusing on:
Reimbursement: For-profit hospices (according to the OIG report) received “much higher Medicare payments per beneficiary than nonprofit hospices.” Residents of ALFs typically received longer periods of care which resulted in hospice providers receiving much higher payments for these patients than those with similar diagnoses in other settings.
ALFs as a Target: The report indicates that the method of reimbursing for hospice care by providers is creating a system in which ALF residents are attracting ambulance chasers. ALF residents are considered the most lucrative patients to admit to hospice and therefore CMS needs to come up with a way for hospice providers to look at all patients equally, rather than just those in an ALF, which may generate higher reimbursement. This argument is similar to the one made a few years ago when publicly traded home health agencies were discovered to be providing more therapy than needed to increase overall reimbursement.
Diagnoses: ALF residents often did not require complex care. Less than 5 hours of care was provided to ALF residents at an average cost of $1,100 per week or $220 per hour.
The OIG goes on to recommend that CMS modify payment methods to hospice providers that strip the incentive for providing care to ALF residents with longer lengths of service and certain diagnoses. Second, the report is setting the stage for OIG targeting of hospices – similar to the OIG targets currently underway on home health. Quality measures that are made available round out the report with an emphasis on making sure patients who receive care can compare one provider to another. Education also was stressed as a way to inform providers that they might be putting themselves under future scrutiny.
CMS’ response to the report: we agree with all recommendations. Therefore, if you provide hospice services or will be thinking about providing hospice services, be prepared for hospice to be in the current state home health is in within a few years. Obamacare’s goal is to bring down healthcare costs and one way that is going to happen is to make sure providers take the first hit to their profit margins in the form of lower reimbursement and increased compliance.