For over a year, the hospice industry, legislators, and state and federal regulators have expressed concerns about the fast growth and potentially unscrupulous activities of new hospices in several states in particular. Those concerns were covered in the press and congressional hearings, with the California legislature leading the way to clamp down on abusive hospice practices with a hospice license moratorium enacted in 2022. Hospice industry leaders had called for the Centers for Medicare and Medicaid Services (CMS) to take additional action to target abusive new hospice practices in certain states and on July 12, 2023, CMS announced targeted oversight of new hospices in Arizona, California, Nevada, and Texas in a “MLN fact sheet.”
In short, for newly enrolled hospices or existing hospices in those four states that have a change of ownership (CHOW) on or after July 13, 2023, they will receive enhanced oversight by CMS for a period of between 30 days and one year. The enhanced oversight may include medical review, such as prepayment review.
This sub-regulatory enhanced hospice oversight comes on the heels of CMS’s recent hospice proposals announced in its 2024 Home Health PPS Update to subject hospices to the same “36-month rule” barring ownership changes that home health agencies are governed by at 42 CFR § 424.550(b)(1).
As defined in 42 CFR § 424.502, a “change in majority ownership” occurs when an individual or organization acquires more than a 50% direct ownership interest in a home health agency during the 36 months following the home health agency’s initial enrollment or most recent change in majority ownership; this includes an acquisition of majority ownership through the cumulative effect of asset sales, stock transfers, consolidations, or mergers.
Under that rule, a 100% ownership transfer is not necessary to trigger this “36-month rule.” Only crossing the 50% ownership threshold is required.
CMS proposes to extend this 36-month rule beyond home health agencies to include hospices in an effort to regulate what it believes may be abusive “flipping” of new hospice entities, perhaps in an effort to avoid Medicare or state surveys.
The CMS proposed home health rule also outlines additional hospice enrollment reporting regarding ownership at the grandparent level, such as an investment firm or holding company, with “private equity company” or “real estate investment trust” added to the list of organizational types in the 855A enrollment form.
The proposed rule outlines several other program integrity and enhanced oversight measures for hospice, such as the long-awaited “Special Focus Program” for targeting poor performing hospices, fingerprinting as part of the enrollment process, and including hospices as a “high risk” (instead of “moderate risk”) provider type for enrollment screening purposes which would result in revalidation every three years instead of every five years.
Finally, on July 12, CMS also announced a new hospice audit pilot program using its Supplemental Medical Review Contractor (SMRC), Noridian, to conduct post-payment reviews of hospice routine home care claims with dates of service between January 1, 2021 to December 31, 2021, where the hospice stay has been at least 90 days for nine specified diagnoses.
The targeted diagnoses include mostly those that lend themselves to longer stays, such as Alzheimer’s disease with early onset and unspecified heart failure or heart disease. More information on this limited pilot can be found on Noridian’s website.
If CMS is trying to enhance hospice compliance around hospice eligibility for non-specific diagnoses, it is curious that its SMRC pilot would focus on claims from 2021 when COVID-19 was at its height in the hospice population with hospice providers facing many workforce disruptions. Additionally, if history is a guide, Noridian will likely focus on technical documentation errors to deny and recoup payments, such as election statements that contain language deemed to be non-compliant with regulatory requirements.
Morgan Lewis will be hosting a webinar on these enhanced hospice oversight measures. Stay tuned for more information!