January 15, 2015 Practice Points

OIG Reveals Heightened Risk of Fraud in Assisted Living Hospice Care

The report comes as a resource to help the CMS reform the hospice payment system as required by the Affordable Care Act.

By Sarah Anna Santos

A report released January 13 by the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services reveals a heightened risk of improper payments for hospice care provided in assisted living facilities, or ALFs. The report comes as a resource to help the Centers for Medicare and Medicaid Services (CMS) reform the hospice payment system as required by the Affordable Care Act.

Hospices receive Medicare payments based on the amount of time patients are under their care, rather than by services rendered. Consequently, beneficiaries in ALFs, who typically have longer stays and diagnoses requiring less complex care than beneficiaries in other settings, may offer hospices the greatest financial gain. According to the report, Medicare payments for hospice care in ALFs more than doubled in five years, totaling $2.1 billion in 2012. The hospices were paid about $1,100 per week for each beneficiary but typically provided fewer than 5 hours of visits per week, said the report.

The OIG said the report “raises questions about whether Medicare is paying appropriately for hospice care in ALFs and whether beneficiaries are receiving the services they need during their last months of life.” It called for greater accountability and payment reform, including developing claims-based measures of quality such as the average numbers of services provided and physician visits. CMS concurred with each of the report’s recommendations, and specifically supported anti-fraud measures targeting those hospices with a high percentage of beneficiaries who rarely receive hospice visits.

— Sarah Anna Santos, Hunton & Williams LLP, Charlotte, NC


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