Hospice Industry Will Face Stricter Scrutiny Under New Law Aimed at Post-Acute Care Data Standardization

President Obama signed the “Improving Medicare Post-Acute Care Transformation Act of 2014” or the IMPACT Act of 2014 (the Act) on October 6, 2014. The new law is broadly focused on requiring all post-acute care providers to adopt standardized data protocols for patient assessment, quality of care and resource use data so as to allow for the exchange of such data.  However, one section of the Act singles out hospices for heightened scrutiny by federal regulators.

The hospice provisions of the Act implement recent Office of Inspector General (OIG) and Medicare Payment Advisory Commission (MEDPAC) recommendations and follow on the heels of several recent, high-profile fraud settlements involving hospice providers the government contends routinely admitted patients who did not meet Medicare hospice eligibility standards. Recent media coverage surrounding these settlements has generated concerns about whether hospice patients are receiving appropriate levels of care in Medicare-certified hospices.

To address these concerns, the Act subjects Medicare-certified hospices to more frequent inspections by Medicare surveyors tasked with verifying compliance with the Medicare hospice “conditions of participation.” In 2007 and again in 2013, reports issued by the OIG expressed concern about the frequency of Medicare surveys of hospices, noting in 2013 that more than 25 percent of Medicare-certified hospices had not been surveyed in the past six years. The Act responds to this concern by requiring surveys at least every 36 months.

The Act also addresses enforcement concerns about patient eligibility by subjecting hospices that have a specified percentage of “long length of stay” patients to medical review. To be eligible for the Medicare hospice benefit, a patient must have a terminal prognosis. Specifically, both the hospice and the patient’s attending physician must certify that the patient has an illness which, if it takes its normal and expected course, will result in the patient’s death within 6 months (or 180 days). Predicting death trajectories in terminal patients is far from an exact science, and it is not uncommon for terminally ill patients to outlive expectations. However, the government has expressed concern that some hospices routinely target patients who are not in the final stages of a terminal illness in order to increase the number of lower-cost, easier-to-care for patients and, thereby, increase profits.

This concern was expressed by MEDPAC in a March 2009 report that recommended requiring Medicare to medically review all hospice stays exceeding 180 days for hospices with 40 percent or more of its patients with stays in excess of 180 days. The Act implements the MEDPAC recommendation to require medical review for hospices with a large percentage of “long length of stay” patients but leaves it to Medicare to determine the threshold for imposing the requirement as well as the specific procedures for the medical review process. As a result, the “long length of stay” medical review will undoubtedly be the subject of future rulemaking.

The increased scrutiny called for in this new law should not come as a surprise to hospices. The new law is just one piece of a tightening regulatory and enforcement environment that will likely lead to major changes in the industry and substantially increased risk for individual hospices. Hospices that aim to survive and thrive in this new environment must invest in a compliance program that includes aggressive auditing and self-monitoring.