Emily Bajcsi, Jason Christ Interviewed in “How Hospices Can Prepare for Increased Federal Audits Under the IMPACT Act”

The Advisory Board Company’s Daily Briefing November 2014

Emily Bajcsi, Associate in the Health Care and Life Sciences practice, in the firm's Boston and Washington, DC, offices, and Jason Christ, Member of the Firm in the Health Care and Life Sciences practice, in the firm's Washington, DC, office, participated in a Law Review Q&A, “How Hospices Can Prepare for Increased Federal Audits Under the IMPACT Act,” in The Advisory Board Company's Daily Briefing. The pair provide insight into the effects of the recently passed Improving Medicare Post-Acute Care Transformation (IMPACT) Act and advice for hospices looking to minimize the risk of audit or government investigation.  

Following is the full text:

The recent passage of the Improving Medicare Post-Acute Care Transformation (IMPACT) Act and the increased scrutiny from the Office of Inspector General (OIG) and the Department of Justice (DOJ) should be a wake-up call for hospices to develop robust compliance programs to prepare for increased audit and enforcement activities.

We spoke with Emily Bajcsi and Jason Christ of Epstein Becker & Green, P.C. to discuss emerging reimbursement challenges and how hospices can prepare for more audits from federal agencies.

What is the IMPACT Act and how is it affecting hospices?

The IMPACT Act was passed in early October and brings about several key changes that affect hospices. IMPACT mandates that all Medicare-certified hospices be surveyed at least every three years to ensure that they are meeting the conditions necessary for participation in Medicare.

Many hospices can expect to be surveyed more frequently than in previous years (those accredited by private accreditation organizations may already be on a three-year survey cycle). Prior to this legislation, CMS required certification surveys of hospices every six years, compared with home health agencies, which are required to be surveyed every three years, and nursing homes, which are surveyed annually.

Also, in 2013, the OIG found that more than 15% of state-surveyed hospices were past due for their six-year survey, leading to concerns about inadequate oversight of hospice compliance with Medicare quality of care and participation requirements.

Additionally, the new legislation requires medical reviews for all hospices with a soon to be determined percentage/number of patients receiving care for more than 180 days (the specific threshold that would trigger this medical review is yet to be set by CMS). Under this new legislation, hospices will find themselves subject to increased scrutiny.

What are some other emerging risk areas in hospice care that hospices should know about to minimize risk of audit or government investigation? How should hospices address them?

Before a federal audit or investigation occurs, hospices should be aware of a number of risk areas. Three of the most significant risks are long-stay patients, financial arrangements with referral sources, and clinical documentation insufficiency.

The first risk area is so-called long-stay patients. Patients that exceed Medicare's second 90-day hospice benefit period are in a higher risk spectrum. This is because the Medicare hospice benefit is intended for beneficiaries with an expected prognosis of six months or less to live.

Hospices that have a high proportion of long-stay patients, especially those with certain diagnosis codes, are at a higher risk of an audit or investigation from federal agencies, particularly given the forthcoming medical reviews ushered in under the IMPACT Act. Hospices can access reports issued by CMS's Program for Evaluation of Payment Patterns Electronic Report (PEPPER) and other third-party trade association data summaries to benchmark its own census against objective standards. Such a comparison can identify opportunities for additional monitoring and self-policing. Organizations should also proactively and continuously assess whether patients are medically appropriate for hospice care and whether patients meet reimbursement guidelines through its Interdisciplinary Groups (IDGs), physician assessments, and compliance channels.

The second key risk area is financial arrangements with entities and individuals who are sources of state and federal program patient referrals. OIG is increasingly investigating and penalizing hospice organizations for tying financial incentives to patient volume or referrals.

In particular, the government has cracked down on improper financial arrangements with nursing homes, hospitals, physicians, or members of the hospice’s own staff who can influence admissions or recertifications. These types of arrangements may violate the several fraud and abuse laws such as the federal Anti-Kickback Statute and the Stark Law. Kickback arrangements also trigger liability under the False Claims Act. Hospices should avoid providing improper incentives or compensation to staff members who can influence admission volumes and consult with internal or external counsel before entering into any sort of financial arrangement with other health care entities who are in the position to refer patients to ensure compliance.

Lastly, hospices should be very concerned about clinical documentation requirements. Another way that CMS tries to reduce medically unnecessary admissions and recertifications is by requiring hospices to undertake various assessments that require extensive documentation.

For instance, if a hospice does not perform and/or properly document a face-to-face encounter between patients and caretakers when CMS requires it, the hospice benefit period may not be reimbursed. Hospices should ensure that physicians follow proper documentation guidelines and are thorough in their clinical narratives to prevent auditor scrutiny. Hospices can enhance their clinical documentation practices through periodic internal auditing, as well as partnering with outside counsel to engage third-party consultants on behalf of the hospices in a privileged assessment of current documentation practices.

Overall, as audit and enforcement activities grow exponentially, hospices should strengthen their internal auditing and monitoring functions in order to identify and address key risk areas through policies and procedures.

What are potential consequences of audits and investigations?

Hospices can be required to refund claims that are deemed inappropriate during a federal audit.

CMS contractors who perform audits can also make referrals to the OIG or the DOJ who may undertake its own investigation. These federal investigations are also often initiated by a whistleblower, a qui tam relator under the False Claims Act. Such investigations often involve costly and onerous document discovery through requests found on Civil Investigative Demands and other subpoenas.

The penalties under the Anti-Kickback Statute can include imprisonment, civil and criminal fines and mandatory exclusion from participation in all federal health care programs.

DOJ can also seek penalties under the False Claims Act for violations of the Anti-Kickback Statute or to claw back monies reimbursed for claims that are not medically necessary or supported by required documentation. The False Claims Act penalties are substantial and allow the government to seek treble damages (e.g. three times a claims amount) with additional penalties.

Finally, OIG can require a hospice to enter into a Corporate Integrity Agreement that may require a third party to oversee and monitor the hospice for a period of years in exchange for the OIG’s agreement to not exclude the hospice from federal programs.

Reprinted from the Advisory Board Company’s Daily Briefing, November 2014, available here.