Over the last 12 months, the Centers for Medicare & Medicaid Services (“CMS”) has received many reports of hospice fraud. In addition, CMS has seen the number of enrolled hospices increase significantly in Arizona, California, Nevada and Texas, raising concerns about market oversaturation.
On July 12, 2023, CMS released a Medicare Learning Network article (the “CMS Oversight Policy”) about its intent to institute a period of enhanced oversight for new hospices in Arizona, California, Nevada and Texas starting July 13, 2023. Enhanced oversight aims to reduce hospice fraud, waste and abuse.
New Hospices and Hospices Undergoing Changes of Ownership
The CMS Oversight Policy provides that those providers affected are “new” hospices, which it defines as:
- Newly enrolling in the Medicare Program, beginning July 13, 2023.
- Submitting a change of ownership that meets all the regulatory requirements under 42 CFR 489.18.
- Undergoing a 100% ownership change that does not fall under 42 CFR 489.18.
A change of ownership under 42 CFR 489.18 includes: (1) in the case of a partnership, the removal, addition or substitution of a partner, unless the partners expressly agree otherwise, as permitted by applicable state law, constitutes a change of ownership; (2) for a corporation, the merger of the provider corporation into another corporation, or the consolidation of two or more corporations, resulting in the creation of a new corporation constitutes a change of ownership.
Length and Type of Oversight
The period of enhanced oversight can be between thirty days and one year.
The provisional period of enhanced oversight will include a medical review, which may include a prepayment review.
Notification
If CMS places a hospice in a period of enhanced oversight, CMS will mail a letter to the hospice. The letter will detail the effective date and duration of the enhanced oversight period and notify the hospice that CMS may do a medical review of all claims.
Other Recent CMS Hospice Program Integrity Initiatives
The CMS Oversight Policy is one step CMS is taking to address program integrity concerns. Another CMS action occurred on July 10, 2023, when CMS published a proposed rule (“Proposed Rule”) that would create additional restrictions and steps for certain transfers of hospice ownership interests. In the Proposed Rule, CMS detailed its intent to implement two new program integrity measures: (1) subjecting a hospice to the highest level of screening, which includes fingerprinting all 5% or greater owners of these providers and suppliers; and (2) requiring that if a hospice undergoes a change in majority ownership within 36 months after the effective date of the hospice’s initial enrollment in Medicare or within 36 months after the hospice’s most recent change in majority ownership, the provider agreement and Medicare billing privileges do not convey to the hospice’s new owner, unless an exception applies.
Practical Takeaways
- Current and prospective hospice owners in Arizona, California, Nevada and Texas should anticipate the additional burden of enhanced oversight by CMS.
- Hospice providers in Arizona, California, Nevada and Texas looking to sell or exit the market should expect new buyers to consider these additional administrative costs when negotiating the purchase.
If you have questions or would like additional information about this topic, please contact:
- Sean Fahey at sfahey@hallrender.com or (317) 977-1472;
- Brian Jent at bjent@hallrender.com or (317) 977-1402;
- Todd Selby at tselby@hallrender.com or (317) 977-1440; or
- Your primary Hall Render contact.
More information about Hall Render’s Post-Acute and Long-Term Care services can be found here.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
