OIG targets hospice for inappropriate admissions
Vitas expected to be target of future audit reports
As the hospice industry continues to reel from shrinking length of stay (see cover story in this issue), the Office of Inspector General (OIG) in November released another report on hospice, consolidating results from its Operation Restore Trust (ORT) audits of long-stay patients at 12 hospices. Titled, Enhanced Controls Needed to Assure Validity of Medicare Hospice Enrollment, this consolidated or roll-up report states, "Our reviews at selected hospices have uncovered problems with beneficiary eligibility that lead us to conclude that the problems first discovered in Puerto Rico [in 1994] are widespread."
The report’s major result concerns 2,109 long-stay patients (still on service after 210 days or discharged for reasons other than death after more than 210 days on service) audited at 12 hospices in California, Florida, Illinois, and Texas. A total of 1,373, or 65%, were deemed "ineligible for hospice because, at the time of initial diagnosis, they were not terminally ill as defined by Medicare regulations, i.e., having a life-expectancy of six months or less." For another 262 patients (12%), eligibility could not be determined because of missing clinical evidence.
Reports on five of the 12 audited hospices have already been released, recommending that a total of $17.2 million be recouped for 345 ineligible patients. To date, Medicare fiscal intermediaries have made no effort to recoup this money. The hospices and the Arlington, VA-based National Hospice Organization (NHO) have challenged OIG’s conclusions and methodology, asserting that it is merely substituting its PRO reviewers’ subjective judgments for those made by hospice medical directors and attending physicians. "The report itself I find quite disturbing, even though it’s not the first time we’ve seen the conclusions," says NHO president John J. Mahoney. "After all this time there’s still no response to our critiques of OIG’s methodology."
What is new in the latest OIG report is its tally of another 1,028 ineligible patients (totalling $65.8 million in alleged improper payment), for the seven hospices whose audit reports have not yet been released, "pending further OIG review." The new report also states that six of the seven hospices whose audits have not yet been released belong to an unnamed "nationwide chain of hospices." The geographical spread and size of these six programs clearly points to Vitas Healthcare Corporation, a for-profit chain with headquarters in Miami. Vitas, the country’s largest provider of hospice care with operations in seven states, recently announced its intention to sell 3.8 million shares of common stock. (See Hospice Manager Advisor, December 1997, pp. 139-140.)
Vitas’ chief patient care officer, J.R. Williams, MD, confirms that Vitas was audited by OIG 21¼2 years ago. "We’ve been after them to release our report," he says. "Without having seen our report, it’s all speculation. But you have to assume that when and if our report is issued, it will look like the other ORT hospice reports, with some sort of dollar figure attached" for a recommended amount to be recouped. Williams also points out that some 200 of the long-stay Vitas patients challenged by OIG auditors were also reviewed under focused medical review by the hospice’s regional fiscal intermediary, and 99% of these overlapping cases were paid, in part or in full.
OIG’s report also devotes considerable attention to the unnamed hospice chain’s marketing techniques, particularly its promotional literature "for downplaying or ignoring the six-month prognosis requirement," and its practice of paying sales commissions to marketing staff responsible for patient recruiting, based on the length of stay. In fiscal years 1994 and 1995, about 100 commissioned sales staff employed by the chain received total commission payments exceeding a million dollars a year, the report states.
Williams responds that his company’s hospice admission decisions are made by clinical staff who are not paid incentives, never by the commissioned marketing/sales staff whose jobs are to generate referrals. "The survival of hospice as an industry is attached to efforts to educate health care professionals about hospice as an alternative," he says. "What we have found is that the highly skilled professionals who do the best job are looking for compensation packages that have performance incentives."
OIG’s report identifies several underlying factors which it asserts contribute to the problem of Medicare hospice enrollments, including:
• less rigorous enforcement by the hospice industry of Medicare’s six-month prognosis requirement, especially for non-cancer patients and nursing home residents;
• the complexity and potential for abuse of hospice regulations for nursing home residents;
• weak internal controls in the Medicare hospice program in such areas as physician certifications of terminal illness, claims processing, and medical review;
• the design of the Medicare hospice reimbursement cap.
The report notes that the proportion of Medicare hospice cases enrolled longer than 210 days grew from 6% in 1990, when the unlimited fourth benefit period went into effect, to a high of 18% in 1994. (See charts, below.) OIG attributes the subsequent 4% drop in this figure to its scrutiny of the industry. However, the report pays no attention to the problem of short-stay hospice patients, except to view such admissions as a way for hospices to game the aggregate cap, and dismisses NHO’s Medical Guidelines for Defining Prognosis in Selected Non-Cancer Diseases, which were developed to help clarify difficult hospice admission decisions.
"The skepticism about NHO’s guidelines that I think was the most troubling aspect of the report and a rather transparent attempt to deflect criticism of their own reviewers’ lack of valid scientific basis for their decisions. This issue is the Achilles heel of the entire report," Mahoney says. OIG’s position: "We have no reason to dispute the medical opinion of the PRO reviewers, who determined that 1,373 beneficiaries were not terminally ill as defined by HCFA."
The report also recommends including a warning form on physician certification statements, pointing out the penalties for making false claims, monitoring the use of sales commissions as incentives for patient recruiting, strengthening claims processing controls by fiscal intermediaries, and seeking legislative change in the hospice reimbursement cap. The report also repeats recommendations in a previous OIG report on the nursing home hospice benefit to change existing payment methodology for hospice patients living in nursing homes. (See HMA, December 1997, pp. 138-139.)
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