Government microscope easing up on hospices
But new risks emerge in regulatory scene
Hospice providers that recently felt they were under siege by federal regulators trying to root out fraud and abuse may paradoxically face increased exposure in this area as a result of reduced federal oversight, according to Jay Mahoney, president of Summit Business Group in Annandale, VA.
"In some respects, we are victims of our own success," says Mahoney. "As we have gotten bigger and there has become more money, there has been more attention, and that attention is breeding more attention and more regulatory scrutiny."
At the same time, Mahoney says hospice is no longer being singled out for increased scrutiny by the federal government. "It certainly felt that way a few years ago when we felt like the entire weight of the government was falling down on our shoulders," he says. "The fact of the matter is that they are looking very hard at all providers."
"There is simply a general environment of mistrust out there," Mahoney asserts. He says the public views Medicare as fraught with fraud and abuse, and that has translated into increased federal oversight of health care programs across the board. He adds that the hospice industry faces a complex regulatory environment that is becoming even more complex as interpretations evolve over time.
Mahoney also points out that despite an increase in total resources devoted to rooting out health care fraud, regulatory authorities are spread fairly thin. "They are going to go where the money is, and the fact is that there is not a whole lot of money in hospice care," he adds.
For example, Mahoney says he does not expect another round of audits and evaluations spearheaded by the Department of Health and Human Services’ Office of Inspector General (OIG), such as Operation Restore Trust, which was launched two years ago.
In fact, hospice was not on the OIG’s Workplan for 2000 and Mahoney says he does not expect hospice to show up on the Workplan next year. "We are in a regulatory quiet period," he says. For example, he notes that it will be autumn before the hospice industry sees the proposed rule for revised Conditions of Participation (CoP). That means new CoPs are at least a year away, and a new survey process coming out of those new CoPs will take even longer.
Mahoney predicts the new CoPs will not include mandatory compliance programs for hospice. Currently, he notes that only hospice programs involved with Medicare+Choice programs are required to have a compliance program in place. What hospice providers may see instead are incentives similar to the Provider Plus program that the Health Care Financing Administration (HCFA) is developing for home health providers. Rather than requiring mandatory compliance programs, he says HCFA may begin to offer hospice providers the opportunity to reduce audits through voluntary measures. "That possibility certainly exists," he says.
Lax watchdog invites trouble
Having said that, Mahoney argues that hospice could become even a greater haven for bad behavior. He notes that only roughly 16% of all hospice programs are surveyed each year. "That includes surveys that are being done because of complaints," he adds. Moreover, that is a national average, which means that in some states, they are performing well under that number.
According to Mahoney, those trends have the potential to create some problems for hospice programs that are already doing a good job in this area. He says that is because it allows too long a period of time to pass without letting hospice providers gauge firsthand how regulators are interpreting hospice regulations. Mahoney says that is one of the things that happened in Region IX, where surveyors performed very detailed surveys in an area where they were not doing so before.
Mahoney reports that some hospice programs are now revolting against some of the interpretations that have been laid down. Worse yet, he said it creates an invitation for fraudulent providers who want to take advantage of relaxed oversight. "It gives them an opportunity to get in and make a lot of money and then get out before they get caught," he asserts.
Looking ahead, Mahoney also predicts that cost reports will become an increasingly important compliance issue. He says that HCFA currently has adopted a somewhat relaxed posture in this area. "Over time, this will become an area that you need to be very careful with because they do open up a risk area in terms of compliance."
Another area that will likely see increased scru-tiny is from your fiscal intermediaries, predicts Mahoney. In combination with HCFA’s integrity program is where hospices are likely to begin to see more audits, he added. "That is where you are probably going to see the greatest amount of pressure relative to hospice," he says. "It is going to come out of HCFA’s own integrity process."
OIG advisory holds clues
Health care attorney Elizabeth Hogue agrees with Mahoney’s overall assessment. In fact, she says one of the most important developments recently was the OIG’s advisory opinion that gave qualified approval for a program proposed by the Hospice Foundation of Martin & St. Lucie in Stuart, FL, that would offer certain services free of charge to hospice patients, using volunteers. (See story on p. 75.) Although more detailed guidance about copayments and deductibles would still be helpful, the opinion does lend the industry some guidance.
Hogue says another problematic area for hospice has revolved around the question of terminal illness and whether the prognosis for patients is six months or less. One of the most difficult situations Hogue said she recently encountered was when a patient was told by their physician they had terminal cancer and entered a hospice program only to discover that the doctor had misdiagnosed the disease. "That is probably the most difficult situation for hospices to deal with," she says.
Likewise, if a patient enters a hospice program relatively early in the course of their disease and is stabilized based on hospice care, the hospice may feel jeopardized by keeping that patient. As a result, many hospice programs will discharge the patient until the disease deteriorates in order to avoid any fraud or reimbursement issues, often disrupting the course of treatment.
Hogue says another problematic area has been the reluctance of physicians to refer patients for hospice care until they are well into a terminal illness. "I think that is a function of concern on the part of referring physicians about fraud and abuse," Hogue explains. But she adds that there are no simple solutions to this dilemma.
According to Hogue, the home health prospective payment is likely to encourage home health agencies to increase referrals to hospice. "A long-term patient is likely to be an outlier under the PPS [prospective payment] system," she explains. "Based on what we know about the PPS right now, people are skeptical about whether the costs of outliers will even be covered."
Even in those instances, Hogue says it is likely that more of the expenses related to their terminal illness will be covered by the hospice benefit rather than the home health benefit. "But that is often hard for patients to grasp," she adds.
Finally, she says some hospices may not be paying for everything they should be paying for under their prospective reimbursement system. "It is almost an underutilization system," she warns. "But that is a fraud issue waiting to happen."
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