Effective November 28, 2016, long-term care facilities that participate in Medicare and Medicaid will no longer be able to enter into “pre-dispute” agreements for binding arbitration with their residents.  The Centers for Medicare & Medicaid Services (CMS) issued the final rule on September 28, 2016, after consideration of extensive comments from key stakeholders in the long-term care community regarding proposed revisions.

Under the rule, a facility can ask a resident or a resident’s representative to enter into an arbitration agreement after a dispute arises.  However, the facility must comply with several requirements, such as ensuring that the agreement provides for the selection of a neutral arbitrator and a venue convenient to both parties.  Further, a resident’s right to remain in the facility cannot be contingent upon entering into the arbitration agreement and the agreement cannot contain language that discourages communications with federal, state or local surveyors and other officials.

As one of the more controversial changes, critics of the new arbitration rule have reacted strongly against the change and have commented that this part of the rule “clearly exceeds” CMS’s statutory authority.  In its response to public comments, CMS explains that the Secretary of Health and Human Services has the authority to administer the program under the Social Security Act by setting general practice parameters for payment under Medicare and Medicaid.  CMS further cites to its authority to promulgate regulations for residents’ health, safety and well-being and states that there is “significant evidence that pre-dispute arbitration agreements have a deleterious impact on the quality of care for Medicare and Medicaid patients.”  Nevertheless, there are several legal bases upon which to challenge the agency’s ability to preclude an arbitration agreement.

While CMS’s comments cite to a resident’s waiver of the right to a jury trial as a major factor considered in its decision to disallow pre-dispute arbitration agreements, the final rule does not expressly preclude jury trial waiver provisions within facility admissions agreements.  Jury waivers may help to address runaway verdicts that have become a concern in negligence cases in past years, while still respecting expressed concerns that arbitration presents undue costs to residents and creates an environment of “secrecy.”  Note that state law may vary on whether such waivers are enforceable.

Also remarkable is CMS’s comment that it will not address waiver of class-action litigation in this rule, but rather reserve the issue for consideration during future rulemaking.

The broad-sweeping final rule also contains several other provisions that directly affect compliance programs, training of nursing staff, updating infection and control programs, and other key requirements that long-term care facilities must comply with in order to participate in the Medicare and Medicaid programs.  It is advisable for long-term care facilities to promptly consult with a knowledgeable healthcare attorney to assess modifications to admissions packets and to otherwise establish the framework necessary to comply with the revised Requirements of Participation.

HHS Office of Inspector General Issues 2015 Work Plan (Part 1)

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) recently released its 2015 Work Plan. The OIG’s Work Plan outlines the reviews and activities the OIG plans to pursue during the 2015 fiscal year. Thus, the Work Plan gives health care providers an overview of the OIG’s enforcement priorities for the coming year.

The highlights from the OIG’s 2015 Work Plan are summarized in two separate posts.  This first post focuses on hospitals, nursing homes, hospice, and home health providers.

Hospitals: The OIG’s 2015 Work Plan places a major emphasis on hospitals, focusing its review of hospital activities in 22 areas. For the first time, the OIG will focus on adverse events in post-acute care for Medicare beneficiaries. The OIG will estimate the national incidence of adverse and temporary harm events for Medicare beneficiaries who receive care in long-term care hospitals, identify factors contributing to these events, determine the extent that the events were preventable, and estimate the costs to Medicare. According to the OIG, long-term care hospitals are the third most common type of post-acute care facility and account for almost 11 percent of Medicare costs for post-acute care.

The OIG also is focusing on the following hospital-related policies and practices, billing and payment, and quality of care and safety areas.

  • The OIG will study the impact of 2014 inpatient admission criteria known as the “two midnight policy.” The criteria require physicians to admit for inpatient care only those beneficiaries who are expected to need at least two nights of hospital care. If the beneficiary’s care is expected to last less than two nights, the beneficiary should be treated as an outpatient.  The OIG plans to study the impact of the new inpatient admission criteria on hospital billing, Medicare payments, and beneficiary co-payments, as well as determine how billing varied among hospitals.
  • The OIG will compare the Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments for similar procedures.
  • The OIG will determine the extent to which provider-based facilities meet the criteria of the Centers for Medicare and Medicaid Services (CMS). The OIG noted the financial incentives to bill as provider-based facilities because provider-based status allows facilities owned and operated to bill as hospital outpatient departments.
  • The OIG will examine other policies and practices that include:  reconciliation of outlier payments; costs associated with defective medical devices; salaries included in Medicare cost reports; and the payment policies for swing-bed services.
  • The OIG will examine various billing and payment issues, including inpatient claims for mechanical ventilation, selected inpatient and outpatient billing requirements, duplicate graduate medical education payments, indirect medical education payments, outpatient dental claims, and outpatient evaluation and management services billed at the new patient rate.
  • The OIG will examine other quality of care and safety issues in hospitals including hospital privileging, adverse events in inpatient rehabilitation facilities, and participation in projects with quality improvement organizations.

Nursing Homes: The OIG will review several areas relating to nursing homes, including Medicare Part A billing by skilled nursing facilities. The OIG stated that skilled nursing facilities increasingly bill for the highest level of therapy even though beneficiary characteristics did not change and that in 2009 skilled nursing homes billed one-quarter of all claims in error. In addition, the OIG will review questionable billing patterns for Part B services during nursing home stays. Congress directed the OIG to monitor Part B billing for abuse during non-Part A stays to ensure that excessive services are not provided. Of note, the OIG will also review the extent that Medicare beneficiaries in nursing homes are hospitalized for manageable and preventable conditions.

Hospices:The OIG will continue its focus on hospice care, specifically two areas in 2015: hospices in assisted living facilities and the use of hospice general inpatient care. As part of its review of the extent that hospice plans serve Medicare beneficiaries who reside in assisted living facilities, the OIG will determine the length of stay, levels of care received, and common terminal illnesses. The OIG’s work is intended to provide HHS with information as part of the Affordable Care Act (ACA) requirement that CMS reform the hospice payment system, collect data relating to hospice payment revisions, and develop quality measures for hospice. The OIG will assess the appropriateness of a hospice program’s general inpatient care claims, including a review of hospice medical records to address concerns that the inpatient level of hospice care is misused.

Home Health Services:The OIG will review compliance with the home health prospective payment system, notably the documentation required in support of Medicare claims. In addition, the OIG will examine the extent to which home health agencies employed individuals with criminal convictions.

Programs Should Prepare for Increased Oversight of Hospice Length of Stay

The media and regulators have heightened their focus on perceived hospice fraud and abuse. A Washington Post article describes how Medicare rules create a booming business in hospice care for people who are not dying, resulting in hospice firms draining money from Medicare. The article focuses on how the number of “hospice survivors” in the United States has risen, attributing the rise in part to hospice companies that earn more by recruiting patients who are not actually dying.

According to The Washington Post’s analysis of more than 1 million hospice patient records over 11 years in California, the proportion of patients who were discharged alive from hospice care rose 50 percent between 2002 and 2012. Longer stays are more profitable, the article states, because hospice companies generally spend more on patients when they begin care and again when the patients are at the end of their lives.

The federal government also is studying hospice length of stay, particularly in the nursing home and assisted living settings. According to a May 1, 2014, study titled “Medicare Hospice Payment Reform: A Review of the Literature (2013 Update),”performed by Abt Associates for the Centers for Medicare and Medicaid Services (CMS), hospice length of stay has increased 48 percent between 1998 and 2008. Although the average length of stay for chronic kidney disease and cancers remained relatively stable during this timeframe, the average length of stay increased significantly for most other diagnoses. The largest increase was for nonspecific diagnoses such as “debility, not otherwise specified,” “adult failure to thrive,” Alzheimer’s disease, and non-Alzheimer’s dementia.  According to Abt, some studies also have noted an increased length of stay for hospice patients who live in a nursing home.

The Office of Inspector General (OIG) at the Department of Health and Human Services (HHS) published a July 2011 report – “Medicare Hospices That Focus on Nursing Facility Residents”– on hospices that served a high percentage of nursing home residents. According to the OIG, these hospices served beneficiaries who spent more time in care and typically enrolled beneficiaries whose diagnoses required less complex care. The OIG stated that some hospices may be seeking out beneficiaries with particular characteristics, including those with conditions associated with longer but less complex care who are often found in nursing homes. Among the suggestions the OIG made was to increase monitoring of hospices that depend heavily on nursing facilities and to modify the payment system for hospice care in nursing facilities as the current payment structure provides incentives for hospices to seek out beneficiaries in nursing facilities who often receive longer but less complex care.

In its 2014 work plan, the OIG focused on hospice length of stay in assisted living facilities. The OIG noted that assisted living residents have the longest lengths of stay in hospice care and that the Medicare Payment Advisory Commission has said the long stays bear further monitoring and examination.

Recently signed legislation will soon create greater federal oversight for hospice programs. On October 6, 2014, President Obama signed into law the IMPACT Act of 2014 (Improving Medicare Post-Acute Care Transformation Act of 2014). The hospice provisions increase the frequency of state inspections, mandating surveys not less frequently than once every 36 months until September 30, 2025. In addition, the law focuses on hospice programs that appear to enroll patients who are not near death by requiring a medical review of hospice programs with a high percentage of patients who receive care for 180 days or more. The Secretary of Health and Human Services is required to set a threshold percentage or number of patients receiving care for more than 180 days that will trigger a review.

Hospice programs can begin preparing now for the increased oversight of hospice length of stay. Although CMS still needs to clarify the threshold percentage that will trigger a medical review and the methodology for the review, hospice programs can start to address, monitor, or audit the following areas.

  • Assess clinical documentation supporting hospice eligibility: Describe symptoms and diagnoses that support that the patient has a terminal condition and avoid vague terms or conclusory statements without documentation, such as “declining” or “needs hospice.”
  • Review policies and procedures to ensure that there are protocols in place so that appropriate assessments are performed and documented to demonstrate that a beneficiary is and remains eligible for the hospice benefit.
  • Conduct training on policies and procedures.
  • Create and use audit tools to evaluate that hospice eligibility requirements are met, policies and procedures are followed, and there is appropriate documentation.