Regulatory News Palliative Care: The Legal and Regulatory Requirements
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- Piers Stone
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1 Regulatory News Palliative Care: The Legal and Regulatory Requirements BY CONNIE A. RAFFA, J.D., LL.M. A ll hospice care is palliative care, but not all palliative care is hospice. How does hospice treatment of the patient differ from palliative care? Essentially, there is no difference: palliative care follows the same holistic approach of providing for the comfort, pain management and symptom control of the patient s physical symptoms, as well as addressing the spiritual and psychological needs of the patient and providing support to the family. It has been said that, Loosely defined, palliative care means making every day the best it can be. It means comfort care for pain and symptom control. It means sensitivity to the needs of the whole patient emotional and spiritual as well as physical. It means support for the family in their caretaking role, and in preparing for the changes to come. It means all that hospice has always done. Interestingly, in Chinese the symbol for palliative care means nurturing living. While receiving the same care, the palliative care patient need not be terminally ill or have a life-threatening illness, and he can still pursue curative treatment while receiving palliative care. A palliative care program is a comforting first step for a patient who is facing his mortality, but who is not yet able to acknowledge his condition and elect hospice care. REIMBURSEMENT OPTIONS Have you been frustrated in locating the state and federal regulations describing the requirements of palliative care and its reimbursement methodology? I m not surprised: there are none. Since this is a relatively new area in medicine, the revenue streams for palliative care programs depend upon how the palliative care is provided and require creative programs funded by current reimbursement opportunities. Thus, a palliative care consult team in a hospital with oncologists, anesthesiologists, psychiatrists, neurologists, neurosurgeons, pain management specialists, physician assistants, nurse practitioners, psychologists, and therapists will have both Medicare Part A (the appropriate DRG for the inpatient hospital care) and Part B reimbursement for professional services. On January 1, 2002, CMS issued Program Memorandum that adds a New Specialty Code (72) for physicians who provide pain management services. Many managed care organizations offer a palliative care program, and this may include a Medicare Part C managed care plan. Home health agencies with palliative care programs can bill Medicare Part A under its prospective payment system. Private pay and third party insurance coverage may also be involved. Finally, a contractual relationship between the palliative care program and another provider also may provide a source of revenue. For example, a certified home health agency (CHHA) may contract with a hospice for use of its specially trained nurses and social workers. The contract sets forth the payment to the hospice for use of its nurse by the home health palliative care program. Since palliative care programs are emerging in a variety of settings, such as hospitals, nursing homes, physician practices, home health agencies, and managed care programs, there are existing complex rules that impact these programs and require legal analysis. There are rules for Medicare and Medicaid reimbursement and certification, licensing, fraud and abuse involving kickbacks, patient inducements or solicitations, self-referral and cost reporting. All should be examined as they apply to the palliative care program s structure. LICENSING ISSUES OF PALLIATIVE CARE PROGRAMS A good place to start is to determine if the provider s state license permits it to offer palliative care services. For example, in New York State, a hospice must be licensed by the State Department of Health and provide hospice services. Because the state license and Medicaid hospice rules mirror the federal Medicare hospice rules including eligibility and services provided, a hospice in New York could not offer nursing services as part of a palliative care program to a patient who is not terminally ill. According to the State, if a licensed hospice contracts with another provider, such as a CHHA, to lease a hospice nurse to the CHHA palliative care program, the hospice is acting as a private duty nursing service for which it is not licensed. The need to address this issue became evident when many third-party payors (such as HMOs) were approaching hospices to contract with them to provide palliative care to patients who did not meet the Medicare definition of terminally ill (which had been adopted by the State), or chose not to elect hospice care, or were still pursuing curative care to prolong life or for recovery. The Hospice and Palliative Care Association of New York addressed the issue by proposing a new law, which was adopted on July 23, Public Health Law 4012-b permits a hospice acting alone or under contract with a certified home health agency, a long-term home health care program (NY version (Continues on page 8) NewsLine JUNE
2 Regulatory News (Continued from page 7) of PACE), a licensed home care services agency, or an AIDS home care program to provide palliative care to patients with advanced and progressive disease and their families. A hospice palliative care program in New York may bill thirdparty payors, but not Medicare or Medicaid or other government funded health plans for these palliative care services. A physician s certification that the patient is terminally ill with a prognosis of six months or less if the illness runs its normal course is not required. This new law in New York is consistent with a relatively recent CMS Program Memorandum (PM) A , entitled Medicare-Certified Hospices Clarification of Acceptable Parameters for Some Contractual Arrangements, issued October 25, The PM permits a hospice to contract with another entity for the provision of services that are not considered hospice services. The rationale for this rule is that the definition of Medicare hospice services found at 1861(dd) of the Social Security Act requires that a hospice program be primarily engaged in providing hospice care and services to terminally ill patients. The loophole is that primarily does not mean exclusively. The PM gives examples of different contract relationships where another health care entity purchases some of the highly specialized staff time or services of a hospice for their patient needs. These services are not hospice services, but become part of the package of services of the contracting provider to offer palliative care. A good example in the PM is a Medicare beneficiary receiving skilled services from a Medicare-certified home health agency. The beneficiary is diagnosed with a terminal illness but refuses to elect hospice care because he wants to pursue curative treatments. The patient is in pain. The CHHA purchases from the hospice specialized pain control services and specialized nursing services. The hospice bills the CHHA pursuant to the terms in its contract, and the CHHA pays the hospice directly. Neither provider bills Medicare for the contracted services. Instead, those services are reimbursed to the CHHA in its episode payment under the Medicare prospective payment system for CHHAs. The amount of Medicare reimbursement to the CHHA depends on which Home Health Resource Group (HHRG) applies to the patient (there are 80 HHRGs). Its selection depends on how the patient scores on the OASIS evaluation. The 23 OASIS questions that assess the patient s clinical severity domain, functional status domain (Activities of Daily Living), and service utilization domain dictate the HHRG. Also, where the patient lives and is treated determines which Metropolitan Statistical Area (MSA) applies to the Medicare payment. Since this patient remains a CHHA patient in its palliative care program, the CHHA must maintain the patient s medical record including documentation from the leased hospice staff. MEDICARE REIMBURSEMENT REQUIREMENTS IN THE CHHA PALLIATIVE CARE PROGRAM For the CHHA palliative care program that contracts for hospice staff services to receive any reimbursement from Medicare, the patient must be eligible for home health services under Medicare pursuant to 42 C.F.R He must be confined to the home, under the care of a physician, in need of skilled services on a part-time or intermittent basis pursuant to a plan of care signed by a physician, and the services must be provided by a CHHA or under arrangement. Medicare also requires that at least one of the qualifying services be provided directly by CHHA employees. These include skilled nursing and physical, speech, or occupational therapy, pursuant to 42 C.F.R , , and (a). Therefore, the CHHA must make sure that the contracted service from the hospice for its palliative care program is not the one qualifying service. So, if nursing is the CHHA s qualifying service, the CHHA cannot contract with the hospice for nurses, unless the CHHA decides to choose another service to be provided directly by CHHA employees. FRAUD AND ABUSE SAFE HARBOR AND CONTRACTING REQUIREMENTS IN THE CHHA PALLIATIVE CARE PROGRAM The hospice and CHHA may refer patients to each other. Thus, their contract must meet the safe harbor provisions for personal services and management contracts against the anti-kickback laws. The anti-kickback statute is a broad prohibition of the offer, solicitation, payment, or receipt of anything of value (direct or indirect, overt or covert, in cash or in kind) that is intended to induce the referral of a patient for an item or service that is reimbursed by all federal programs, including Medicare, Medicaid, TRICARE, and programs covering veterans benefits (Social Security Act 1128B, 42 U.S.C. 1320a-7b). The federal government has authority to enforce the law through criminal prosecution and, upon conviction, impose substantial fines and forfeitures, and imprisonment for up to five years. A violation also serves as the basis for exclusion from the Medicare and Medicaid programs, as well as other federal programs; the result is no reimbursement from any government-funded sources. CMS also has the authority to impose an administrative penalty of up to $50,000 for each kickback violation. To address the problems created by the broad language (Continues on next page) 8 NewsLine JUNE 2004
3 of the federal anti-kickback statute, Congress added several exceptions and the Department of Health and Human Services (HHS) adopted implementing regulations that describe financial relationships that are a safe harbor to the anti-kickback law. Compliance with a safe harbor is a defense to an anti-kickback law prosecution by the Office of Inspector General (OIG) or the Department of Justice (DOJ). To qualify for safe harbor protection, all of the requirements specified in the applicable statute or regulation must be met. Note that failure to meet all of the elements of a safe harbor does not mean that the financial relationship is an automatic kickback. Whether a kickback exists depends on the intent of the parties. It is vital that health care attorneys analyze the financial, ownership, contractual, and business relationships surrounding referral sources and the purchase, lease, order for, or arrangement of any service, item or facility for which payment may be made under Medicare, Medicaid, or any other federally funded health care program. There are safe harbors for many business relationships including investment interests; space rental; equipment rental; personal services and management contracts; sale of practice, referral services; warranties; discounts; employees; group purchasing organizations; waiver of beneficiary coinsurance and deductible; and others. The safe harbor that applies to our example, where the CHHA is leasing hospice staff to care for CHHA patients, is found at 42 C.F.R (d) and is used for contracts involving personal services and management. The regulation requires the following be met for the safe harbor to apply: As used in section 1128B of the Act, remuneration does not include any payment made by a principal to an agent as compensation for the services of the agent, as long as all of the following seven standards are met: i. The agency agreement is set out in writing and signed by the parties; ii. The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent; iii. If the agency agreement is intended to provide for the services of the agent on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals; iv. The term of the agent agreement is for not less than one year; v. The aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arm slength transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare or a state health care program; vi. The services performed under the agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law; and vii. The aggregate services contracted for do not exceed those that are reasonably necessary to accomplish the commercially reasonable business purpose of the services. So, the contract between the CHHA and the hospice must contain each of the above requirements to meet the safe harbor against allegation of kickback when the CHHA contracts for hospice staff, while both providers are referring patients to each other. COST REPORT REQUIREMENTS IN THE CHHA PALLIATIVE CARE PROGRAM Both the CHHA and hospice are required to file cost reports with their fiscal intermediary. Even though their actual reimbursement is not determined by the cost report because of PPS for CHHAs and the per diem rate for hospices, cost reporting regulations must be complied with. All cost reports have a signed attestation in which the provider affirms that all regulations have been met in the filing of the cost report. Therefore, in the CHHA/hospice palliative care model, cost report rules relating to allocation of the salaries and associated fringe benefits that reflect the amount of time the contracted hospice staff is working for the CHHA s palliative care program must be documented with time sheets or another methodology approved by the hospice s fiscal intermediary (42 C.F.R. Part 413 and Provider Reimbursement Manual HIM-15). Failure to do so may result in a reclassification of the salaries and fringe benefits of the contracted hospice staff to non-allowable in the hospice cost report, and ultimately could impact hospice per diem rates if CMS relies on hospice cost reports for future rate setting. (Continues on page 10) NewsLine JUNE
4 Regulatory News (Continued from page 9) NHPCO Partners With Aetna to Develop and Deliver Training for New End-of-Life Program NHPCO will be providing information and educational assistance to help train case managers working on Aetna s Compassionate Care program. Aetna, one of the nation s leading providers of health care, announced on April 29 plans for a comprehensive new program that will provide expanded benefits, nurse case management, and information to help their members and families cope with special needs and issues involved in care at the end of life. Aetna s Compassionate Care benefit offers increased, timely access to end-of-life care. Aetna members with the Compassionate Care benefit will have access to hospice and palliative care while still receiving curative treatments and/or with a twelve-month prognosis. Aetna will contract with providers to offer hospice care to people earlier in the disease progression. Respite care and bereavement support will also be included. NHPCO is working with Aetna regarding the implications for hospices, and will provide more specific information to our members before this benefit package is made available to Aetna members. The program also will offer improved pain and symptom management, continuity of care, advance care planning; expand personal support; and encourage better use of community-based services and resources. It is expected that these benefits will be available to a number of large plan sponsors representing more than 400,000 members beginning in January John W. Rowe, M.D., Aetna chairman and CEO, was quoted in Aetna s press release announcing this program as saying, We re launching this program because it s the right thing to do. It s not about reducing medical costs or saving money. It s about giving people choices and autonomy in the care they receive at the end of their lives. NHPCO is proud to work with Aetna to improve care for those patients and families living with life-limiting illness, commented J. Donald Schumacher, Psy.D., president and CEO of NHPCO. The expertise and experience found in the hospice and palliative care community will be invaluable as Aetna reaches out to provide their members with the best end-of-life care possible. More information is available at click on the prompt for the program announcement found towards the bottom of the home page. PHYSICIAN PRACTICE SPECIALIZING IN PALLIATIVE CARE There is recent interest by hospices and PCPs to structure contract arrangements with physician groups that specialize in palliative care. The physician group is a Part B Medicare provider. The typical arrangement is for the hospice or PCP to serve as a management service organization (MSO) by entering into a management and administrative services contract with the physician group. Typical services provided by the MSO are staff, equipment, space and general administrative services. Administrative services may include budgeting, bookkeeping, arranging for legal and accounting services, purchasing inventory and supplies, assisting in the recruitment of practitioners, maintaining files and records, assisting in strategic planning, payroll and billing. The health care industry has seen a large number of physician practices enter into relationships with MSOs, whereby the MSO is paid a sum of money to provide administrative back office services to the physician group. These contract relationships free up physician time for treating patients. Some hospices in New York are experimenting with this concept by creating a separate legal entity and applying for a license as a Diagnostic and Treatment Center, which is basically a clinic specializing in palliative care services. This type of relationship created between the hospice or PCP and the physician group is sometimes referred to as a captive professional corporation because the hospice or PCP exerts some control over the physician group as a result of the contractual relationship. The relationship created should be analyzed against state corporate practice of medicine laws, fee splitting laws, federal (Stark) and state self referral laws, and safe harbors of anti-kickback provisions covering the various contractual relationships, for example, personal services, management, lease, and/or equipment rental. A corporate practice of medicine prohibition prevents a business corporation or layperson from controlling the medical decisions of a physician and his or her professional staff. As a result, a business corporation may not employ and may be limited in contracting opportunities to hire licensed professionals to provide medical services. With the rise of the physician practice management companies over the last decade, many physician practices have ceded aspects of their control of the day-to-day business affairs to business corporations. The corporate practice of medicine prohibition is implicated to the extent that the management company exercises any control over the medical judgment or professional decision-making of a (Continues on next page) 10 NewsLine JUNE 2004
5 licensed practitioner. Therefore, it is imperative, particularly in states with broad corporate practice restrictions, such as New York, that a management services contract expressly avoids restricting the licensed practitioner s professional judgment. A physician s participation in such an arrangement may be viewed by the state as unprofessional medical conduct and subject the physician to sanction under the professional conduct rules of the state. If the hospice or PCP seeks to establish a medical professional corporation, a health care attorney should review the proposed organizational documents, for example the articles of incorporation and bylaws, to ensure that the physician has sufficient control. It could be problematic if the bylaws sought to limit the ability of the physician shareholders to receive distribution from the professional corporation. Similarly, a health care attorney should review bylaws and stock transfer agreement provisions that seek to force the sale of the physician s shares upon certain triggering events, or prohibiting the physician from voting on specified matters. With respect to the MSO, both parties should evaluate the degree to which the hospice or PCP controls the money flow to the physician group. The more control exercised by the non-physician entity, for example through budgetary constraints, the more likely the arrangement will be problematic and a possible violation of any state corporate practice of medicine laws. A successful example of the contractual relationship between a hospice and a palliative care physician group is the Palliative Care Center of the Bluegrass ( the Center ). Created to advance the concept of palliative care and reach a broader population not yet appropriate for hospice care, the Hospice of the Bluegrass established an outpatient palliative care service as a separately incorporated non-profit medical practice in January The practice is certified for Medicare Part B provider billing and meets licensing and tax requirements. The Center operates an outpatient clinic in rented space on the campus of their local hospital. It also is a base for the local hospital s palliative care consulting services. The physician group includes the medical director of the Hospice of the Bluegrass, the local hospital s advanced practice palliative care nurse, a licensed clinical social worker, and a part-time administrator of the physician group. The Center s mission is to serve patients with incurable diseases and limited life expectancies. Patients are referred to the Center for pain and symptom management. Palliative care services are offered, along with regular treatment. The Center may offer physician consultation services, primary physician services, and home physician consultation visits for a local managed care plan. HOSPITAL PALLIATIVE CARE TEAMS A hospital may have a palliative care consulting team consisting of a physician pain specialist or oncologist, nurse practitioner, social worker, and pastoral counselor. These teams assist with discharge planning. Members of the team are hospital employees and physicians. Reimbursement for members of the palliative care team in a hospital setting include the appropriate DRG (pain management, radiation, and related patient diagnoses) for the hospital; the physician bills Medicare Part B, Medicaid and other insurance; and the nurse practitioner bills Part B for services or insurance, if appropriate. However, there is no reimbursement stream for some of the team s services such as counseling. Private fundraising may pay for these services. A hospital s PCP could also contract with a hospice to provide trained nurses, social workers, counselors, therapists, or palliative care training. Similar issues discussed earlier such as state licensing, kickbacks, safe harbors, and cost allocation on cost reports apply. HOSPICE AND HOSPITAL OR NURSING HOME CONTRACTS FOR INPATIENT HOSPICE CARE UNITS An inpatient hospice unit in a hospital or skilled nursing facility is created by a contract with a hospice for short-term admission of hospice patients for pain control, symptom management, or respite purposes that cannot be managed in other settings. For the general inpatient level of care, the hospice patient must have symptoms that warrant that level of care, and the documentation must support that the general inpatient level of care is necessary. The skilled nursing facility (SNF) must have care provided directly by a registered nurse 24 hours a day, 7 days a week. Hospice maintains professional management responsibility for hospice patients, regardless of setting, and is still involved in providing services required in the hospice plan of care. Hospice pays the hospital or nursing home a per diem rate negotiated between the parties as stated in their contract. These contracts are strictly governed by federal regulations and rules found at 42 C.F.R , (a)(4), (e) and State Operations Manual, Pub. 7. Requirements include that the hospital or nursing home meet the requirements of , including 24-hour nursing services and patient areas. Pursuant to 42 C.F.R (e), the contract must at a minimum state: (Continues on page 12) NewsLine JUNE
6 Regulatory News (Continued from page 9) 1. That the hospice furnishes to the inpatient provider a copy of the patient s plan of care and specifies the inpatient services to be furnished; 2. That the inpatient provider has established policies consistent with those of the hospice and agrees to abide by the patient care protocols established by the hospice for its patients; 3. That the medical record includes a record of all inpatient services and events, and that a copy of the discharge summary and, if requested, a copy of the medical record are provided to the hospice; 4. The party responsible for the implementation of the provisions of the agreement; and 5. That the hospice retains responsibility for appropriate hospice care and training of the personnel who provide the care under the agreement. My sample hospice/hospital contract for inpatient hospice services are found at the Web sites for and MANAGED CARE REIMBURSEMENT OPPORTUNITIES FOR PCP Palliative care providers and hospices may contract with hospitals and other providers, who have contracts with managed care plans to provide comprehensive palliative care services under a capitated rate. With approval from the managed care organization (MCO), the hospital could subcontract or carve out with the PCP or hospice to provide such services at a negotiated rate. Another possibility is for a PCP or hospice to contract directly with the MCO to provide all palliative care services of covered patients. An example is the Support Blue Program of Blue Cross/Blue Shield of Western New York, which is a palliative care HMO program. HOSPICE OR PALLIATIVE CARE NURSE LIAISON IN A HOSPITAL OR NURSING HOME The reason for placing a hospice or PCP liaison nurse in a hospital or nursing home may be two-fold: for intake coordination and/or discharge planning activities. Intake coordination is the management of the transfer of the patient from the hospital to the hospice or PCP. This occurs only after the patient s physician has referred the patient to hospice or the PCP. Coordination activities include: (1) explaining the hospice or PCP s policies to patients and family; (2) creating the plan of care after discharge; (3) assuring that the hospice or PCP is ready to meet the patient s needs at the time of discharge; and (4) communicating and coordinating the post-discharge care. Discharge planning includes review of hospital records and assessing the patient for the purpose of determining the level of care a patient will require upon discharge. Discharge planning is the hospital s responsibility pursuant to the Medicare conditions of participation for hospitals (See 42 C.F.R ). Discharge planning functions are not properly reimbursable to a hospice or PCP because reimbursement for this activity is included in the hospital s DRG rates. The second problem is a cost report issue for the hospice because the hospital s discharge planning activities are not costs related to the care of a hospice patient. The same theory applies for a PCP if it is an entity that files a cost report with Medicare. Including all of the nurse liaison s salary and related expenses on the hospice cost report could be a false claim or false statement violation (See 31 U.S.C et seq.; 18 U.S.C. 1001). These issues need to be examined by health care counsel who may be able to construct the relationship so that a safe harbor to the kickback laws applies. For example, the hospice or PCP employee could be leased to the hospital to provide discharge planning services. The contract should be in writing, specify the services, a schedule on which they are provided, for a term of a year or more, for fair market value, and without consideration of the value or volume of referrals from the hospital. The services contracted for must not promote or counsel a business arrangement or activity that violates any federal or state law. Finally, the services contracted for must be reasonably necessary to accomplish the commercially reasonable business purpose of the services. This contract would meet the Personal Services and Management Contract safe harbor under the kickback law (42 C.F.R (d)). The cost report issue is addressed by the nurse liaison keeping time records to indicate time spent on discharge planning activities versus intake activities. This information is needed to allocate the costs of the hospice or PCP liaison on the cost report between allowable and non-allowable costs for the hospice or PCP. The fiscal intermediary must approve the cost allocation methodology prior to its implementation. The Provider Reimbursement Review Manual Pub. 15, 2113 et al. address the rules relating to education and intake activities versus discharge planning activities. These rules are summarized in a compliance tool on the subject appearing at the Web site of CONCLUSION This article raises issues for you to think about as a provider of palliative care. An exhaustive discussion of all of the issues and possible solutions is not possible. However, you should now have some guidance in figuring out what issues need to be addressed by health care counsel in creating the provider setting for your palliative care program. 12 NewsLine JUNE 2004
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