Combat Hospice Fraud with Careful Review of Claims

by Cindy Gallee, JD, RHIA, CHC
May 19, 2016, 10:00 AM

As long as there is profit incentive, fraud by wrongdoers can enter into the healthcare spectrum at any point. An increasingly common fraud scheme surrounds the care of the end-of-life patient in the hospice setting. In order for most payers to cover a patient receiving hospice care, a physician’s written certification that the hospice patient is terminally ill with a life expectancy of six months or less is typically required. Enter the fraud scheme – false certifications of terminal illness or life expectancy so that payment can be received for patients who do not meet the requirements.

The Department of Justice recently announced the conviction of two doctors in California as part of an $8.8 million healthcare fraud scheme.¹ At issue were the doctors’ false certification of patients as terminally ill and thus qualifying for hospice care. Investigation in this case revealed that a number of patients admitted to the hospice did not require end-of-life care and many were alive past six months. Though this case was a Medicare fraud scheme, the same scenario could happen with any payer, notably that hospice nurses performed “assessments” to determine whether the beneficiaries were terminally ill and, regardless of the outcome, the nurses certified that the beneficiaries did have terminal illnesses – even though the vast majority of them were not dying and many did not die. Then, hospice personnel altered medical records by creating fraudulent diagnoses in response to Medicare audits to make the beneficiaries appear sicker.

Hospice fraud has caught the attention of the Office of Inspector General. Inspector General Daniel Levinson told attendees at the Health Care Compliance Association's Compliance Institute last month that hospice fraud is a particularly alarming concern for the OIG and efforts will be stepped up in combating it. CMS has also responded to calls for hospice reform by replacing the hospice flat rate per diem payment system to a system that reimburses higher rates on days 1-60 of a hospice stay and lower rates after the 60^th day, which is designed to disincentivize long hospice stays.

Payers can step up their efforts in detecting and combating hospice fraud by carefully reviewing their hospice claims. Payers can review these three major areas in their hospice claims to detect many problems that can occur in the hospice setting:

Review diagnoses on hospice claims to ensure that terminal illnesses, not acute conditions are reported. Request periodic documentation to substantiate claims of reported diagnoses.

Monitor length of time that claims are submitted for the same patient. Request records on hospice stays extending longer than six months.

Review patient discharges from hospice alive. Review multiple hospice election periods and readmissions for the same patient.

Just as payers should guard against potential hospice fraud, payers should not let their claims as a whole go unguarded. Healthcare fraud, waste & abuse costs the industry billions each year and is expected to increase in the years ahead. Context⁴ Healthcare ’s⁴ Healthcare’s FWAHawk^TM Fraud, Waste & Abuse Detection Solution provides payers with a complete FWA investigation tool. FWAHawk complements the industry leading pre-payment capability of FirstPass™ with pre-built reports allowing for an analytical review of your claim data. FWAHawk can be a foundation to safeguard the health plan’s assets.

FWAHawk includes a library of reports built around current FWA topics that would help payers identify potential fraud schemes by providing insight and visibility into billing patterns. Each report provides a summary of the findings along with a capability to extract the supporting detailed data for your further analysis. Context updates the library on a regular basis to expand the pre-built scenarios. The library contents include topics such as: