Health Law Scan

Legal Insights and Perspectives for the Healthcare Industry

The old adage—March comes in like a lion and goes out like a lamb—didn’t quite hold true for the hospice sector, which experienced a late-month flurry of activity. The government gave the hospice sector a lot to consider, from MedPAC’s suggested freeze on hospice rates to CMS’s 2025 Proposed Hospice Rule (public comments due May 28, 2024) that, if finalized as is, would include a 2.6% payment bump. CMS’s Proposed Hospice Rule lays the groundwork for the long-anticipated Hospice Outcomes and Patient Evaluation (HOPE) quality measures data collection instrument, which will be used to collect data at various points during the hospice stay, not just at admission and discharge.  

The House Ways and Means Committee in March put HHS and CMS Center for Program Integrity officials under the microscope about the committee’s ongoing concerns with potential fraud among newly enrolled hospices—particularly in California and other high-scrutiny states. And March saw CMS announce its plan to sunset on December 31, 2024 the hospice value-based insurance design (VBID) model that had been testing the Medicare Advantage “carve-in” for Medicare’s hospice benefit. Lastly, the month experienced more for-profit hospice chain acquisitions of and collaborations with nonprofit hospices, a growing trend that again spotlights the role of for-profit investors in hospice.  

In its Private Equity in Healthcare workshop, the Federal Trade Commission (FTC) solicited public comment through a request for information on deals, including those involving hospices and other home- and community-based service providers, conducted by health systems, private payers, private equity, and other alternative asset managers that involve healthcare providers, facilities, or ancillary products or services. This comes on the heels of various new US state laws that require greater reporting and transparency on healthcare acquisitions that may result in more government challenges to healthcare industry consolidation.

Staying attuned to these shifts among policymakers and antitrust enforcers is critical to hospices’ planning. Wage pressures and staffing shortages continue, interest in home-centered care remains high across the healthcare sector and among consumers, and program integrity measures, including enhanced enrollment screening and audits, remain a constant.  

In its Proposed Hospice Rule, CMS signals interest in hospice sector proposals for providing complex palliative treatments and higher-intensity levels of hospice care when such care poses financial risks to hospices—highlighting the agency’s interest in caring for medically complex, high-cost beneficiaries through palliative care rather than through the costlier acute care sector.  

Even with these myriad big picture challenges, hospice providers must remain vigilant to comply with documentation obligations, as evidenced by CMS’s proposed rule to clarify the difference between the often-conflated “hospice election” and a hospice “notice of election,” noting in its rulemaking commentary that “[a] complete election statement containing all required elements as set forth in [42 CFR] § 418.24(b) is a condition of payment” and encouraging hospice providers, once again, to use the “Model Example of Hospice Election Statement” “to limit potential claim denials.” CMS also proposes to make regulatory clarifications that physician members of the hospice interdisciplinary group may complete the initial certification of terminal illness. Similarly, CMS proposes to clarify that a “physician designee” may, when the hospice medical director is unavailable, certify terminal illness and determine admission to hospice care. While these are not a change in policy for CMS, they are welcome “clean-up” clarifications in the regulations to avoid Medicare survey or payment challenges related to these hospice certifications.

In sum, the hospice sector will be busy analyzing the flurry of March proposals. Staying abreast of regulatory and legal changes can be resource intensive, but most hospices rely on Medicare for over 90% of their revenue. Consequently, hospices must ensure they have the resources and focus to abide by Medicare’s expectation that hospices dot those i’s and cross those t’s to avoid material survey deficiencies, claim denials, and audit takebacks.