CMS threatens to cut hospices from Medicare if they can’t prove legitimacy

By Susanna Vogel | Associate Editor

Hispanolistic via Getty Images

Dive Brief:
– The CMS continued its crackdown on hospice fraud on Tuesday, announcing nearly 400 hospice facilities may be removed from Medicare if the practices cannot prove they’re legitimate enterprises through address verification.
– The agency identified the potentially fraudulent operations by making unannounced visits to more than 7,000 hospice providers to determine whether practices were operational at listed addresses following media investigations into hospice schemes.
– The CMS announced it will implement a provisional period of enhanced oversight in states where fraudulent activity is particularly pervasive — like in Arizona, California, Nevada and Texas — and begin a nationwide pilot program to review hospice claims following an individual’s first 90 days of care.

Dive Insight:
Late last year, investigations into fraudulent hospice activity from ProPublica and the New Yorker spurred bipartisan interest in industry reform and prompted the CMS to launch a year-long effort to root out bad actors and increase industry transparency. Media reports and the agency’s own research found a “rapid growth” of fraudulent hospice practices, the agency said on Tuesday.

Fraudulent facilities include those that certify patients for care who were not terminally ill and those that run “churn and burn” schemes, where owners continually open new practices when they hit Medicare billing thresholds.

While the exact cost of fraud is difficult to quantify, seven out of ten of the largest hospices in the U.S. have been sued at least once under the federal False Claims Act, which governs Medicare fraud. In 2021 alone, the government recovered more than $1.6 billion from FCA lawsuits filed against hospice care facilities, according to the ProPublica report.

In January, the agency revised its guidelines for inspecting hospices to address fraud, including adding a more thorough review of why patients might leave hospice care alive.

In April, the agency made hospice ownership data public to help patients discern whether an operation was for profit or not for profit. Three months later, the agency finalized a requirement increasing scrutiny of hospice physicians, ensuring they have the appropriate qualifications and active licenses to treat Medicare beneficiaries.

The agency has also backed regulatory changes proposed by the hospice industry, including adding criminal background checks for owners of hospice practices upon Medicare enrollment.