HHS I.G. Audit: 'Medicare Hospice Provider Compliance Audit – Franciscan Hospice'

WASHINGTON, May 20 -- The Health and Human Services Inspector General issued the following audit report (No. A-09-20-03034) entitled "Medicare Hospice Provider Compliance Audit: Franciscan Hospice" filed under the Centers for Medicare and Medicaid Services:

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Here are excerpts:

Report in Brief

Why OIG Did This Audit

The Medicare hospice benefit allows providers to claim Medicare reimbursement for hospice services provided to individuals with a life expectancy of 6 months or less who have elected hospice care. Previous OIG audits and evaluations found that Medicare inappropriately paid for hospice services that did not meet certain Medicare requirements.

Our objective was to determine whether hospice services provided by Franciscan Hospice (Franciscan) complied with Medicare requirements.

How OIG Did This Audit

Our audit covered 21,537 claims for which Franciscan (located in University Place, Washington) received Medicare reimbursement of $101.5 million for hospice services provided from January 1, 2016, through December 31, 2017. We reviewed a random sample of 100 claims. We evaluated compliance with selected Medicare billing requirements and submitted these sampled claims and the associated medical records to an independent medical review contractor to determine whether the services met coverage, medical necessity, and coding requirements.

What OIG Found

Franciscan received Medicare reimbursement for hospice services that did not comply with Medicare requirements. Of the 100 hospice claims in our sample, 79 claims complied with Medicare requirements. However, the remaining 21 claims did not comply with the requirements. Specifically, for 19 claims, the clinical record did not support the beneficiary's terminal prognosis, and for the remaining 2 claims, there was no documentation to support the hospice services that Franciscan billed to Medicare.

Improper payment of these claims occurred because Franciscan's policies and procedures were not effective in ensuring that the clinical documentation it maintained supported the terminal illness prognosis and the hospice services billed to Medicare. On the basis of our sample results, we estimated that Franciscan received at least $13 million in unallowable Medicare reimbursement for hospice services.

What OIG Recommends and Franciscan Comments We recommend that Franciscan: (1) refund to the Federal Government the portion of the estimated $13 million for hospice services that did not comply with Medicare requirements and that are within the 4-year reopening period; (2) based upon the results of this audit, exercise reasonable diligence to identify, report, and return any overpayments in accordance with the 60-day rule and identify any of those returned overpayments as having been made in accordance with this recommendation; and (3) strengthen its policies and procedures to ensure that hospice services comply with Medicare requirements.

In written comments on our draft report, Franciscan disagreed with our findings for 12 of the 19 sampled claims for which the clinical record did not support the beneficiary's terminal prognosis and said that a physician's clinical judgment is fundamental in determining that prognosis. Franciscan also disagreed with our use of extrapolation across the audit period. Franciscan agreed with our second recommendation and disagreed with our first and third recommendations.

After reviewing Franciscan's comments, we maintain that our findings and recommendations are valid. Federal regulations require that clinical information and other documentation support the beneficiary's terminal prognosis and be filed in the medical records. The report contains the details of our response.

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TABLE OF CONTENTS

INTRODUCTION ... 1

Why We Did This Audit ... 1

Objective ... 1

Background ... 1

The Medicare Program ... 1

The Medicare Hospice Benefit ... 1

Medicare Requirements To Identify and Return Overpayments ... 3

Franciscan Hospice ... 4

How We Conducted This Audit ... 4

FINDINGS ... 5

Terminal Prognosis Not Supported ... 5

Services Not Documented ... 6

RECOMMENDATIONS ... 6

FRANCISCAN COMMENTS AND OFFICE OF INSPECTOR GENERAL RESPONSE ... 7

Terminal Prognosis Not Supported ... 7

Franciscan Comments ... 7

Office of Inspector General Response ... 8

Use of Extrapolation ... 9

Franciscan Comments ... 9

Office of Inspector General Response ... 9

Recommendations ... 9

Franciscan Comments ... 9

Office of Inspector General Response ... 10

APPENDICES

A: Audit Scope and Methodology ... 11

B: Related Office of Inspector General Reports ... 13

C: Statistical Sampling Methodology ... 14

D: Sample Results and Estimates ... 15

E: Franciscan Comments ... 16

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INTRODUCTION

WHY WE DID THIS AUDIT

The Medicare hospice benefit allows providers to claim Medicare reimbursement for hospice services provided to individuals with a life expectancy of 6 months or less who have elected hospice care. Previous Office of Inspector General (OIG) audits and evaluations found that Medicare inappropriately paid for hospice services that did not meet certain Medicare requirements./1

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OBJECTIVE

Our objective was to determine whether hospice services provided by Franciscan Hospice (Franciscan) complied with Medicare requirements.

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BACKGROUND

The Medicare Program

Title XVIII of the Social Security Act (the Act) established the Medicare program, which provides health insurance coverage to people aged 65 and over, people with disabilities, and people with end-stage renal disease. The Centers for Medicare & Medicaid Services (CMS) administers the Medicare program.

Medicare Part A, also known as hospital insurance, provides for the coverage of various types of services, including hospice services./2

CMS contracts with Medicare Administrative Contractors (MACs) to process and pay Medicare hospice claims in four home health and hospice jurisdictions.

The Medicare Hospice Benefit

To be eligible to elect Medicare hospice care, a beneficiary must be entitled to Medicare Part A and certified by a physician as being terminally ill (i.e., as having a medical prognosis with a life expectancy of 6 months or less if the illness runs its normal course)./3

Hospice care is palliative (supportive), rather than curative, and includes, among other things, nursing care, medical social services, hospice aide services, medical supplies, and physician services. The Medicare hospice benefit has four levels of care: (1) routine home care, (2) general inpatient care, (3) inpatient respite care, and (4) continuous home care. Medicare provides an all-inclusive daily payment based on the level of care./4

Beneficiaries eligible for the Medicare hospice benefit may elect hospice care by filing a signed election statement with a hospice./5

Upon election, the hospice assumes the responsibility for medical care of the beneficiary's terminal illness, and the beneficiary waives all rights to Medicare payment for services that are related to the treatment of the terminal condition or related conditions for the duration of the election, except for services provided by the designated hospice directly or under arrangements or services of the beneficiary's attending physician if the physician is not employed by or receiving compensation from the designated hospice./6

The hospice must submit a notice of election (NOE) to its MAC within 5 calendar days after the effective date of election. If the hospice does not submit the NOE to its MAC within the required timeframe, Medicare will not cover and pay for days of hospice care from the effective date of election to the date that the NOE was submitted to the MAC./7

Beneficiaries are entitled to receive hospice care for two 90-day benefit periods, followed by an unlimited number of 60-day benefit periods./8

At the start of the initial 90-day benefit period of care, the hospice must obtain written certification of the beneficiary's terminal illness from the hospice medical director or the physician member of the hospice interdisciplinary group/9 and the beneficiary's attending physician, if any. For subsequent benefit periods, a written certification by only the hospice medical director or the physician member of the hospice interdisciplinary group is required./10

The initial certification and all subsequent recertifications must include a brief narrative explanation of the clinical findings that supports a life expectancy of 6 months or less./11

The written certification may be completed no more than 15 calendar days before the effective date of election or the start of the subsequent benefit period./12

A hospice physician or hospice nurse practitioner must have a face-to-face encounter with each hospice beneficiary whose total stay across all hospices is anticipated to reach a third benefit period./13

The physician or nurse practitioner conducting the face-to-face encounter must gather and document clinical findings to support a life expectancy of 6 months or less./14

Hospice providers must establish and maintain a clinical record for each hospice patient./15

The record must include all services, whether furnished directly or under arrangements made by the hospice. Clinical information and other documentation that support the medical prognosis of a life expectancy of 6 months or less if the terminal illness runs its normal course must be filed in the medical record with the written certification of terminal illness./16

Medicare Requirements To Identify and Return Overpayments

OIG believes that this audit report constitutes credible information of potential overpayments. Upon receiving credible information of potential overpayments, providers must exercise reasonable diligence to identify overpayments (i.e., determine receipt of and quantify any overpayments) during a 6-year lookback period. Providers must report and return any identified overpayments by the later of: (1) 60 days after identifying those overpayments or (2) the date that any corresponding cost report is due (if applicable). This is known as the 60-day rule./17

The 6-year lookback period is not limited by OIG's audit period or restrictions on the Government's ability to reopen claims or cost reports. To report and return overpayments under the 60-day rule, providers can request the reopening of initial claims determinations, submit amended cost reports, or use any other appropriate reporting process./18

Franciscan Hospice

Franciscan, located in University Place, Washington, is a nonprofit provider that furnishes hospice and palliative care, including nursing and medical care, physical therapy, in-home medical equipment, bereavement counseling, massage, aromatherapy, and music therapy.

From January 1, 2016, through December 31, 2017 (audit period), Franciscan provided hospice services to approximately 6,100 beneficiaries and received Medicare reimbursement of about $103 million.19 National Government Services, Inc. (NGS), serves as the MAC for Franciscan.

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FINDINGS

Franciscan received Medicare reimbursement for hospice services that did not comply with Medicare requirements. Of the 100 hospice claims in our sample, 79 claims complied with Medicare requirements. However, the remaining 21 claims did not comply with the requirements. Specifically, for 19 claims, the clinical record did not support the beneficiary's terminal prognosis, and for the remaining 2 claims, there was no documentation to support the hospice services that Franciscan billed to Medicare. Improper payment of these claims occurred because Franciscan's policies and procedures were not effective in ensuring that the clinical documentation it maintained supported the terminal illness prognosis and the hospice services billed to Medicare.

On the basis of our sample results, we estimated that Franciscan received at least $13 million in unallowable Medicare reimbursement for hospice services./21

As of the publication of this report, these overpayments include claims outside of the 4-year reopening period./22

Notwithstanding, Franciscan can request that a Medicare contractor reopen the initial determinations for those claims for the purpose of reporting and returning overpayments under the 60-day rule without being limited by the 4-year reopening period./23

TERMINAL PROGNOSIS NOT SUPPORTED

To be eligible for the Medicare hospice benefit, a beneficiary must be certified as being terminally ill. Beneficiaries are entitled to receive hospice care for two 90-day benefit periods, followed by an unlimited number of 60-day benefit periods. At the start of the initial 90-day benefit period of care, the hospice must obtain written certification of the beneficiary's terminal illness from the hospice medical director or the physician member of the hospice interdisciplinary group and the individual's attending physician, if any. For subsequent benefit periods, a written certification from the hospice medical director or the physician member of the hospice interdisciplinary group is required. Clinical information and other documentation that support the beneficiary's medical prognosis must accompany the physician's certification and be filed in the medical record with the written certification of terminal illness./24

For 19 of the 100 sampled claims, the clinical record provided by Franciscan did not support the associated beneficiary's terminal prognosis. Specifically, the independent medical review contractor determined that the records for these claims did not contain sufficient clinical information and other documentation to support the medical prognosis of a life expectancy of 6 months or less if the terminal illness ran its normal course.

SERVICES NOT DOCUMENTED

No Medicare payment shall be made to any provider unless it has furnished the information necessary to determine the amount due (the Act Sec. 1815(a)).

For 2 of the 100 sampled claims, there was no documentation to support the hospice services billed to Medicare:

* For one sampled claim, Franciscan claimed and received Medicare reimbursement for a physician service that was not documented in the associated beneficiary's clinical record./25

* For one sampled claim, Franciscan claimed and received Medicare reimbursement for an emergency department service that was not documented in the associated beneficiary's clinical record.

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RECOMMENDATIONS

We recommend that Franciscan Hospice:

* refund to the Federal Government the portion of the estimated $13,027,841 for hospice services that did not comply with Medicare requirements and that are within the 4-year reopening period;/26

25 Payment for the physician service was based on the physician fee schedule for those physician services furnished by hospice employees or under arrangements with the hospice and was not included in the all-inclusive daily payment made to the hospice (42 CFR Sec. 418.304(b)).

26 OIG audit recommendations do not represent final determinations by Medicare. CMS, acting through a MAC or other contractor, will determine whether overpayments exist and will recoup any overpayments consistent with its policies and procedures. Providers have the right to appeal those determinations and should familiarize themselves with the rules pertaining to when overpayments must be returned or are subject to offset while an appeal is pending. The Medicare Part A and Part B appeals process has five levels (42 CFR Sec. 405.904(a)(2)), and if a provider exercises its right to an appeal, the provider does not need to return overpayments until after the second level of appeal. Potential overpayments identified in OIG reports that are based on extrapolation may be reestimated depending on CMS determinations and the outcome of appeals.

* based upon the results of this audit, exercise reasonable diligence to identify, report, and return any overpayments in accordance with the 60-day rule/27 and identify any of those returned overpayments as having been made in accordance with this recommendation; and

* strengthen its policies and procedures to ensure that hospice services comply with Medicare requirements.

View full report at https://oig.hhs.gov/oas/reports/region9/92003034.pdf