American Health Lawyers Association Long Term Care and the Law. Potential Government Fraud Concerns in Hospice and Home Health 1

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1 American Health Lawyers Association 2013 Long Term Care and the Law Potential Government Fraud Concerns in Hospice and Home Health 1 Richard L. Shackelford The home health and hospice industries face increasing government scrutiny. For example, the Office of Inspector General of the Department of Health and Human Services ( OIG ) has on several recent occasions expressed its view that home health services are vulnerable to fraud, waste, and abuse 2 and has suggested the same for hospice. 3 Undoubtedly, home health and hospice providers would disagree with OIG. This paper outlines some of the trends with respect to the government s focus in these sectors. I. HOME HEALTH Home health agencies ( HHAs ) provide services to beneficiaries who meet the Medicare definition of confined to the home (i.e., are homebound) and require part-time or intermittent skilled nursing or therapy services. Home health services furnished by HHAs to Medicare beneficiaries are covered by Medicare Parts A and B. Home health services include part-time or intermittent skilled nursing services, physical therapy, occupational therapy, and medical supplies and durable medical equipment, as well as medical social work and speech language pathology services. 4 1 This paper provides general information and should not be construed as legal advice. 2 See Department of Health and Human Services, Office of Inspector General, Inappropriate and Questionable Billing by Medicare Home Health Agencies, OIE (Aug. 2012); Department of Health and Human Services, Office of Inspector General, CMS and Contractor Oversight of Home Health Agencies, OEI (Dec. 2012). 3 Department of Health and Human Services, Office of Inspector General, Medicare Hospices that Focus on Nursing Facility Residents, OEI (July 2011). 4 Social Security Act ( SSA ) 1814(a)(2)(C) and 1835(a)(2)(A), 42 U.S.C. 1395f(a)(2)(C) and 1395n(a)(2)(A). See also SSA 1861(m), 42 U.S.C. 1395x(m).

2 The number of HHAs in the United States continues to rise. Approximately 12,000 HHAs operate in the United States and provide services to about 3.4 million Medicare beneficiaries. In 2010, Medicare paid around $19.5 billion for home health services. 5 A. Home Health Coverage Criteria and Documentation Requirements In general, to qualify for home health services, a Medicare beneficiary must: receive services furnished by an HHA that meets the applicable regulatory conditions of participation; be homebound; be under the care of a physician who establishes the beneficiary s plan of care; be in need of intermittent or part-time skilled nursing care or physical, speech, or continuing occupational therapy services, as certified by a physician in accordance with the applicable physician certification and recertification requirements; and be under a plan of care that is periodically reviewed by a physician Homebound Definition A beneficiary is considered to be homebound if the individual has a condition, due to illness or injury, that restricts his or her ability to leave his or her home except with the aid of supportive devices or the assistance of another person, or if leaving the home is medically contraindicated. 7 CMS authority provides that an individual does not have to be bedridden, but the condition of the patient must be such that there exists a normal inability to leave home, and, 5 MedPAC, Report to the Congress: Medicare Payment Policy, Ch. 8 (Mar. 2012), available at Department of Health and Human Services, Office of Inspector General, Inappropriate and Questionable Billing by Medicare Home Health Agencies, OEI (Aug. 2012) C.F.R U.S.C. 1395n(a)(2)(F). 2

3 consequently, leaving home would require a considerable and taxing effort. 8 Moreover, it is necessary... to look at the patient s condition over a period of time rather than for short periods within the home health stay. 9 As described in the statute and applicable regulatory guidance, whether an individual is considered confined to the home, such that the individual qualifies for the Medicare home health benefit, can be a complex, factually intensive, and highly individualized inquiry. According to the CMS Medicare Benefit Policy Manual, allowable absences from the home include any absence that is infrequent or of relatively short duration, any absence attributable to the need to receive health care treatment, regular absences for the purpose of participating in therapeutic, psychosocial, or medical treatment in an adult day-care program that is licensed or certified by a State, or accredited to furnish adult day-care services in a State, and any absence for the purpose of attending a religious service. 10 In addition, allowable absences from the home may be for nonmedical purposes if the absences are undertaken on an infrequent basis or are of relatively short duration and do not indicate that the patient has the capacity to obtain health care provided outside rather than in the home. Examples of such absences include an occasional trip to the barber, a walk around the block, a drive, and attendance at a family reunion, funeral, graduation, or other infrequent or unique event. 11 As one district court has recently noted, given Congress decision to define the phrase confined to home to include claimants who are able to travel outside the home on an infrequent basis for such non-medical purposes as an infrequent family dinner, an occasional drive or walk around the block, or a church service, the obvious thrust is that the definition of 8 CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 7, Id. at Id. 11 Id. 3

4 confined to home should not serve to imprison the elderly by creating the penalty of a loss of Medicare benefits for heroic attempts to live a normal life Skilled Nursing Services As noted, Medicare covers part-time or intermittent skilled nursing care provided to home health beneficiaries. However, as with the definition of homebound status, the definition of skilled nursing care is also ambiguous. Indeed, the regulations and guidance are subjective and vague, often based on circular logic or reasoning that state, for example, that a service is skilled if the patient s condition requires the services of a skilled nurse. For instance, the CMS Medicare Benefit Policy Manual states: For skilled nursing care to be reasonable and necessary for management and evaluation of the patient s plan of care, the complexity of the necessary unskilled services that are a necessary part of the medical treatment must require the involvement of skilled nursing personnel to promote the patient s recovery and medical safety in view of the patient s overall condition. 13 Similarly, in some cases, the condition of the patient may cause a service that would ordinarily be considered unskilled to be considered a skilled nursing service. This would occur when the patient s condition is such that the service can be safely and effectively provided only by a nurse. 14 Moreover, according to CMS, [g]iving a bath does not ordinarily require the skills of a nurse and, therefore, would not be covered as a skilled nursing service unless the patient s condition is such that the bath could be given safely and effectively only by a nurse. 15 The Medicare Benefit Policy Manual is clear that the issue of skilled need must be assessed in the context of each individual patient, and cannot be generalized across groups of 12 Russell v. Sebelius, 686 F. Supp. 2d 386, 395 (D. Vt. 2010) (emphasis added). 13 CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 7, Id. at Id. 4

5 patients. Medicare recognizes that the determinations of whether home health services are reasonable and necessary must be based on an assessment of each beneficiary s individual care needs. Therefore, denial of services based on numerical utilization screens, diagnostic screens, diagnosis or specific treatment norms is not appropriate. 16 Perhaps there is no greater confirmation of the vague and confusing nature of the regulations and guidance discussing what constitutes appropriate skilled nursing and therapy than the case Jimmo, et al. v. Sebelius. 17 In Jimmo, plaintiffs alleged that the Department of Health and Human Services ( HHS ), Medicare contractors, and administrative review boards were arbitrarily limiting coverage for patients who did not show long-term improvement in their conditions, even though CMS regulations provide that these services should be covered. The settlement agreement submitted by the Department of Justice ( DOJ ) and HHS clarifies the meaning of existing law and regulations to confirm that skilled home health services are reasonable and necessary even where the patient has no restoration or improvement potential. Moreover, the government agreed to revise the Medicare Benefit Policy Manual to make clear that skilled services are reasonable and necessary even when a patient has no restoration or improvement potential, and even where services are only intended to maintain the patient s current condition, or prevent or slow further deterioration. As HHS argued in its briefing to the court, the changes agreed to in the settlement are the correct interpretations of the existing law and regulations, even though Medicare contractors and Administrative Law Judges ( ALJs ) had allegedly been applying a different standard over the years. The Jimmo settlement, approved by the court on January 24, 2013, potentially affects thousands of people with chronic conditions and disabilities who are having difficulties in 16 Id. at Jimmo, et al. v. Sebelius, case no. 5:11-cv-17 (D. Vt. 2012). 5

6 qualifying for Medicare coverage of home health care, skilled nursing stays and outpatient therapy because they are being required to show a likelihood of medical or functional improvement to receive coverage for the services. After Jimmo, skilled services can be reasonable and necessary even when a patient has no restoration or improvement potential, and even where services are only intended to maintain a patient s current condition or prevent or slow further deterioration. 3. Physician Certification The certification by a physician is an important regulatory requirement for home health services. For example, the Medicare Benefit Policy Manual makes clear that the determination of whether the services are reasonable and necessary should be made in consideration that a physician has determined that the services ordered are reasonable and necessary. The services must, therefore, be viewed from the perspective of the condition of the patient when the services were ordered and what was, at the time, reasonably expected to be appropriate treatment for the illness or injury throughout the certification period. 18 Recent case law emphasizes that a physician s opinion as evidenced by the certification and other evidence in the medical record is critical evidence that cannot be lightly disregarded, and that it is error to rely on ex post facto hindsight analysis to question the physician s contemporaneous opinion. For example, in Office of Vermont Health Access v. Sebelius, the ALJ did not give weight to the treating physician s home health certifications and plans of care. The district court reversed the ALJ s decision denying Medicare coverage, finding that the certifications collectively reflect the doctor s sentiment that the services provided were reasonable and necessary, and holding that the ALJ failed to give extra weight to these components of the record that reflect [the physician s] contemporaneous or retrospective opinions and failed to supply the necessary 18 CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 7,

7 reasoned basis for not doing so. 19 As stated in another recent opinion, [t]he touchstone for determining whether skilled services are reasonable and necessary is from the forward-looking vantage point of the physician Face-to-Face Encounter Requirement The Patient Protection and Affordable Care Act ( ACA or Affordable Care Act ) made a significant amendment to physician certification requirements for home health services. As of January 1, 2011, prior to initially certifying the home health patient s eligibility for home health services, the certifying physician must document that the physician himself or herself, or an allowed non-physician practitioner, had a face-to-face encounter with the patient related to the services involved. 21 The face-to-face encounter must occur no more than 90 days prior to the home health start of care date or within 30 days after the start of care. Moreover, if the face-toface encounter occurred within 90 days of the start of care, but was not related to the primary reason the patient requires home health services, then another face-to-face encounter must occur within 30 days after the start of care. The face-to-face encounter documentation requirements include a brief narrative by the certifying physician describing how the patient s clinical condition supports the patient s homebound status and need for skilled services. The encounter must be documented either on the certification itself (which the physician signs and dates) or on a signed addendum to the certification. 22 As discussed below, the face-to-face encounter requirements represent an area of increasing government scrutiny. 5. Home Health Reimbursement 19 Office of Vermont Health Access v. Sebelius, 698 F. Supp. 2d 436, 441 (D. Vt. 2010). 20 Anderson v. Sebelius, 2010 WL , at *5 (D. Vt. 2010) C.F.R ; CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 7, CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 7,

8 The unit of payment under the Medicare home health prospective payment system ( PPS ) is a national 60-day episode rate with applicable adjustments, such as a case-mix adjustment that adjusts payment rates based on characteristics of the patient and the corresponding resource needs, and a labor adjustment based on the patient s site of service. 23 If a patient continues to be eligible for the home health benefit at the end of a 60-day episode, the PPS allows continuous episode recertifications such that the patient may be recertified for subsequent 60-day episodes. 24 An important Medicare payment adjustment is the low utilization payment adjustment ( LUPA ). Medicare reimburses for an episode with four or fewer visits by paying the national per visit amount by discipline (i.e., skilled nursing, home health aide, physical therapy, etc.), adjusted by the appropriate wage index based on the patient s site of service. In other words, if an HHA provides four or fewer visits in an episode, it will be paid a standardized per visit payment instead of an episode payment for a 60-day period. 25 Beginning in 2008, CMS modified the LUPA by increasing the payment by an add-on amount for LUPAs that occur as the only episode or the initial episode during a sequence of adjacent episodes. This change was intended to offset the cost of longer, initial visits in certain LUPA episodes. 26 Also in 2008, CMS discontinued the use of the 10-therapy threshold for the purpose of payment, and instead implemented three therapy thresholds at 6, 14, and 20 visits. The home health PPS adjusts Medicare payment based on whether one of the three therapy thresholds (6, 14, or 20 visits) is met. Accordingly, meeting a threshold can change the payment equation for a 23 Id. at 10, Id. at CMS, Medicare Claims Processing Manual, Pub , Ch. 10, CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 7,

9 particular episode. 27 According to a recent Senate Finance Committee Report, the therapy thresholds potentially incentivize providers to reach the thresholds in order to obtain payment increases corresponding to each threshold. 28 Providers would respond that the thresholds can be viewed to some degree as government-endorsed levels of appropriate therapy, and that, in any event, therapy visit levels are determined ultimately by clinicians. The Affordable Care Act implemented the requirement that patients be assessed by a qualified therapist at the 13 th and 19 th therapy visits to determine whether the patient will in fact benefit from additional visits. 29 CMS intends this additional assessment to serve as a safeguard against using extra therapy visits to gain increased payment. 30 B. Enforcement Areas of Focus 1. OIG Work Plan FY 2013 On October 2, 2012, OIG released its work plan for In the work plan, OIG outlines its enforcement priorities and the issues it will review and evaluate with respect to various healthcare providers and sectors. OIG s priorities for the next year relating to the home health services sector are discussed below. Home health face-to-face requirement OIG has made it a priority in 2013 to determine the extent to which HHAs are complying with the requirement that physicians (or certain non-physician practitioners) who certify beneficiaries as eligible for Medicare home health services have face- 27 CMS, Medicare Claims Processing Manual, Pub , Ch. 10, U.S. Senate, Committee on Finance, Staff Report on Home Health and the Medicare Therapy Threshold, S. Prt (Sept. 2011), at For episodes with multiple therapy disciplines, a qualified therapist must perform the assessment and measure the potential effectiveness of additional visits on one of the three visits prior to the 14 th visit and the 20 th visit. The new requirements that modify the timing of qualified therapist assessments and the coverage of such assessments took effect on January 1, See 77 Fed. Reg (Nov. 8, 2012). 30 MedPAC, Report to the Congress: Medicare Payment Policy, Ch. 8 (March 2012), available at at HHS OIG Work Plan FY 2013 ( 2013 Work Plan ). 9

10 to-face encounters with the beneficiaries. This is a new item in the work plan for 2013 and likely stems from recent OIG findings indicating that face-toface encounters between patients and their physicians are not occurring at high levels. Employment of home health aides with criminal convictions This issue represents another new item in the 2013 work plan. OIG plans to determine the extent to which HHAs are complying with State requirements that criminal background checks be conducted with respect to HHA applicants and employees. This item reflects OIG s concern over a previous OIG review that found that 92% of nursing homes employed at least one person with at least one criminal conviction. In light of OIG s focus, it is prudent for HHAs to review applicable state law and HR policies to ensure appropriate background checks are performed. Missing or incorrect patient outcome and assessment data Federal regulations require HHAs to conduct comprehensive patient assessments and to submit Outcome and Assessment Information Set (OASIS) data. OASIS data includes information on HHAs quality performance, such as helping patients regain or maintain their ability to function and perform activities of daily living. For the second year in a row, OIG has expressed its intention to review OASIS data. OIG plans to review OASIS data to identify payments for episodes for which OASIS data were not submitted or for which the billing codes on the claims are inconsistent with OASIS data. 10

11 Medicare Administrative Contractors (MACs) oversight of claims This topic was also included in last year s work plan. OIG plans to evaluate activities that CMS and contractors performed from January to October 2011 to identify and prevent improper home health payments. OIG also plans to determine the extent to which CMS and its contractors performed activities during that period to identify and address potential fraud among HHAs. Home health PPS requirements In 2013, OIG plans to review compliance with various aspects of the home health PPS requirements, including the requisite documentation to support the claims paid by Medicare. States survey and certification Federal law requires HHAs to be surveyed at least every 36 months. In the coming year, OIG plans to assess how HHA surveys are being monitored, and specifically intends to review the timeliness of HHA recertification and complaint surveys conducted by State Survey Agencies and Accreditation Organizations, the outcomes of those surveys, and the follow up of complaints against HHAs. Trends in revenues and expenses Finally, OIG plans to review cost report data to analyze HHA revenue and expense trends under the home health PPS to determine whether the payment methodology should be adjusted. The 2013 work plan also outlines OIG s priorities with respect to Medicaid reviews of home health services. 32 In the coming year, OIG will review Medicaid payments by states for Medicare-covered home health services to determine the extent to which both Medicare and Medicaid have paid for the same services (i.e., duplicate payments). This focus is new for Work Plan at

12 For the second year in a row, OIG plans to review health-screening records of Medicaid home health workers to determine if workers were screened in accordance with federal and state requirements. In addition, OIG will continue to review HHA claims to determine whether providers are meeting applicable criteria, such as minimum number of professional staff, proper licensing and certification, review of service plans of care, and proper authorization and documentation of provided services. Finally, OIG will review CMS policies and practices for reviewing provisions of Medicaid state plans related to eligibility for home health services, and will review how CMS intends to enforce compliance with appropriate eligibility requirements. 2. Improper Billing by HHAs In 2012, OIG released several reports stemming from its concerns that home health services are vulnerable to fraud, waste, and abuse. In an August 2012 report, Inappropriate and Questionable Billing By Medicare Home Health Agencies, OIG sought to determine the extent to which HHAs submitted claims to Medicare that inappropriately overlapped with claims for inpatient hospital stays or skilled nursing facility stays, or were billed for services on dates after beneficiaries deaths. OIG also sought to identify and describe HHAs that exhibited questionable billing practices. 33 OIG found that in 2010, Medicare inappropriately paid $5 million for home health claims with three specific errors: (1) overlapping with claims for inpatient hospital stays; (2) overlapping with claims for skilled nursing facility stays; (3) billing for services on dates after beneficiaries deaths. The study also describes what OIG considers to be the six measures of questionable billing. The six measures of questionable billing were based on the results of past OIG analyses 33 Department of Health and Human Services, Office of Inspector General, Inappropriate and Questionable Billing by Medicare Home Health Agencies, at 1. 12

13 and fraud investigations related to home health services, as well as on input from CMS staff and contractors. OIG considered an HHA s billing to be unusually high (or questionable) on each of the six measures if it was greater than the 75 th percentile plus 1.5 times the interquartile range. The six measures of questionable billing are: High average outlier payment amount per beneficiary High average number of visits per beneficiary High percentage of beneficiaries for whom other HHAs billed Medicare High average number of late episodes per beneficiary High average number of therapy visits per beneficiary High average Medicare payment amount per beneficiary The OIG study noted that HHAs with questionable billing were located mostly in Texas, Florida, California, and Michigan. In its report, OIG set forth several recommendations to CMS. First, OIG recommended that CMS implement claims processing edits or improve existing edits to prevent inappropriate payments for the three specific errors OIG reviewed. Second, OIG recommended that CMS increase monitoring of billing for home health services. Third, OIG recommended that CMS enforce and consider lowering the 10-percent cap on the total outlier payments an HHA may receive annually. Fourth, OIG proposed that CMS consider imposing a temporary moratorium on new HHA enrollments in Florida and Texas. Fifth, OIG urged CMS to take appropriate action regarding the inappropriate payments OIG identified with regard to HHAs with questionable billing CMS apparently concurred with these five recommendations. However, it disagreed with HHS-OIG s estimate of the inappropriate payments for home health claims overlapping with claims for inpatient hospital stays and skilled nursing facility stays. 13

14 In December 2012, OIG issued another report focused on fraud and abuse concerns in the home health services sector. This report addressed the efficacy of contractor oversight of HHAs. 35 The purpose of the OIG s study was to determine the extent to which (1) CMS and its contractors performed activities to prevent improper payments and to detect and deter potential fraud among HHAs in 2011 and (2) HHAs with suspended or revoked billing privileges received inappropriate Medicare payment in In this most recent report, OIG found that in 2011, the two MACs that were reviewed collectively prevented $275 million in improper payments and referred 14 instances of potential fraud. OIG also found that the four zone program integrity contractors ( ZPICs ) reviewed did not identify any HHA vulnerabilities and varied substantially in their efforts to detect and deter fraud. Moreover, OIG found that Medicare inappropriately paid five HHAs with suspended or revoked billing privileges. In light of this report, OIG made several recommendations to CMS with respect to oversight of Medicare contractors in the area of home health. OIG recommended that CMS establish additional contractor performance standards for high-risk providers in fraudprone areas. OIG also urged CMS to develop a system to track revocation recommendations and respond to them in a timely manner. Finally, OIG stated that CMS should follow-up on and prevent future inappropriate payments made to HHAs with suspended or revoked billing privileges. C. Recent Home Health Enforcement 1. Enforcement Actions and Settlements In recent years, there have been numerous settlements pertaining to allegations of fraud in the home health sector. For example, on September 12, 2011, Maxim Healthcare Services, Inc., 35 Department of Health and Human Services, Office of Inspector General, CMS and Contractor Oversight of Home Health Agencies, at 1. 14

15 a large provider of home healthcare services, entered into an approximately $150 million settlement to resolve criminal and civil charges relating to an alleged nationwide scheme to defraud Medicaid programs and the Veterans Affairs program. 36 Other settlements and enforcement actions include: September 30, 2011 LHC Group Inc., another large home health provider, reached a $65 million settlement with the government, resolving allegations that it violated the False Claims Act for home care billings to the Medicare, TRICARE and Federal Employees Health Benefits programs. The allegations pertained to improper billing for services that were not medically necessary and for services rendered to patients who were not homebound. The relator in this instance received $12 million as her share of the government s recovery. 37 February 28, 2012 A physician and the office manager of his medical practice, along with five owners of Dallas-area home agencies, were arrested on charges related to their alleged participation in a nearly $375 million health care fraud scheme involving fraudulent claims for home health services. CMS also suspended all 78 home health agencies associated with the physician. 38 June 6, 2012 A Detroit-area owner of several home health agencies pleaded guilty for his role in organizing a $13 million home care fraud and money laundering scheme. The scheme involved payment of non-licensed individuals who represented themselves as physicians to Medicare beneficiaries, as well as

16 paying kickbacks to beneficiary recruiters who obtained beneficiaries information needed to bill Medicare for services that were never rendered. 39 June 13, 2012 A co-owner of a Houston-area home health agency was sentenced to 108 months in prison for his participation in $5.2 million Medicare fraud scheme. 40 June 19, 2012 The owner and employee of a Miami home health agency were sentenced to 108 months and 46 months in prison, respectively, for their participation in a $22 million Medicare fraud scheme, which involved payments of kickbacks and bribes to patient recruiters. Restitution in the amount of $14 million and $2 million was also ordered. 41 August 14, 2012 The owner of a Miami home health agency pleaded guilty for his participation in a $60 million home health Medicare fraud scheme, which included accepting kickbacks in return for recruiting Medicare beneficiaries to be placed at a home health agency that purported to provide home health services. 42 August 20, 2012 A Tennessee based home health organization and its related entities agreed to pay $9.75 million to resolve allegations that the entities submitted eight fraudulent cost reports for fiscal years 1999, 2000 and 2001 to support their Medicare billings. 43 October 15, 2012 The owner of a Miami home health agency was sentenced to 120 months in prison for his role in a $42 million home health Medicare fraud scheme, which included conspiring with and paying kickbacks and bribes to

17 patient recruiters for the purpose of billing Medicare for unnecessary home health services. 44 October 26, 2012 A Detroit-area physician, home health agency owner, and patient recruiter were convicted for their participation in a $14.5 million Medicare fraud scheme, which involved using patient recruiters who paid Medicare beneficiaries to sign blank documents for physical therapy services that were never provided or were medically unnecessary. The documents were used to create fake medical records. 45 December 13, 2012 A Houston area physician was convicted in a $17.3 million Medicare fraud scheme involving fraudulent claims for home health services, including falsifying plans of care for Medicare beneficiaries. 46 December 19, 2012 The owners and operators of two Miami health care agencies pleaded guilty for their participation in a $48 million home health Medicare fraud scheme. According to plea documents, the scheme included billing Medicare for unnecessary home health and therapy services, payment of kickbacks and bribes to patient recruiters, and prescriptions, plans of care, and certifications for medically unnecessary home health services. 47 January 17, 2013 Seven individuals were arrested on charges arising from an investigation into an alleged $22 million home health fraud scheme. Law

18 enforcement agents also suspended Medicare payments to four Michigan home health agencies associated with the alleged scheme. 48 II. HOSPICE In general terms, the hospice benefit provides palliative care to Medicare beneficiaries who have been certified to have a life expectancy of less than six months. More than 1.1 million Medicare beneficiaries received hospice services from more than 3,500 providers in Medicare expenditures for hospice care totaled approximately $13 billion in 2010, which equates to approximately 2.5 percent of all Medicare spending. 50 A. Hospice Coverage Criteria and Documentation Requirements Medicare beneficiaries who are entitled to Medicare Part A and certified by a physician to have a terminal illness and a life expectancy of six months or less have the option of electing hospice benefits in lieu of treatment and management of their terminal condition through standard Medicare coverage. 51 The initial certification of a terminal illness for Medicare hospice benefits must be based on the clinical judgment of a hospice physician and the individual s attending physician, if any. 52 Only a medical doctor or doctor of osteopathy can certify or recertify a terminal illness. 53 In certifying patients for hospice, the certifying physician(s) consider, among other things, the patient s diagnosis, the existence of co-morbidities or complications, the patient s clinical history, and current health status. Acknowledging that MedPAC, Report to the Congress: Medicare Payment Policy, Ch. 11 (Mar. 2012), available at 50 Id C.F.R SSA 1814(a)(7). 53 CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 9, 10 (emphasis added). 18

19 predicting life expectancy is not an exact science, Medicare has emphasized that [t]he fact that a beneficiary lives longer than expected in itself is not cause to terminate benefits. 54 The Medicare beneficiary (or an authorized representative of the beneficiary) must elect to receive hospice coverage for the relevant hospice eligibility periods. The hospice eligibility periods consist of two initial 90-day periods and an unlimited number of 60-day periods. 55 For the initial 90-day period, the hospice must obtain, no later than 2 calendar days after hospice care is initiated, (that is, by the end of the third day), oral or written certification of terminal illness by the medical director of the hospice or the physician member of the hospice interdisciplinary group and the individual s attending physician if the individual has an attending physician. 56 For subsequent periods, the hospice must obtain, no later than two calendar days after the first day of each period, a written recertification statement from the medical director of the hospice or the physician member of the hospice s interdisciplinary group. 57 If the hospice cannot obtain written certification within two calendar days, it must obtain oral certification within two calendar days. 58 A written certification must be on file in the hospice patient s record prior to submission of a claim to the Medicare contractor. 59 The written certification must include: The statement that the individual s medical prognosis is that their life expectancy is 6 months or less if the terminal illness runs its normal course; 54 Id C.F.R CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 9, 10; 42 C.F.R CMS, Medicare Benefit Policy Manual, Pub. No , Ch. 9, Id. 59 Id. 19

20 Specific clinical findings and other documentation supporting a life expectancy of 6 months or less; and The signature(s) of the physician(s), the date signed, and the benefit period dates that the certification or recertification covers. 60 Moreover, as of October 1, 2009, the Medicare Benefit Policy Manual requires the written certification to include the physician s brief narrative explanation of the clinical findings that supports a life expectancy of 6 months or less as part of the certification and recertification forms, or as an addendum to the certification and recertification forms. With respect to this requirement, the Medicare Benefit Policy Manual provides the following specific instructions: If the narrative is part of the certification or recertification form, then the narrative must be located immediately above the physician s signature. If the narrative exists as an addendum to the certification or recertification form, in addition to the physician s signature on the certification or recertification form, the physician must also sign immediately following the narrative in the addendum. The narrative shall include a statement directly above the physician signature attesting that by signing, the physician confirms that he/she composed the narrative based on his/her review of the patient s medical record or, if applicable, his or her examination of the patient. The narrative must reflect the patient s individual clinical circumstances and cannot contain check boxes or standard language used for all patients. The 60 Id. 20

21 physician must synthesize the patient s comprehensive medical information in order to compose this brief clinical justification narrative. For recertifications on or after January 1, 2011, the narrative associated with the third benefit period recertification and every subsequent recertification must include an explanation of why the clinical findings of the face-to-face encounter support a life expectancy of 6months or less. 61 Additionally, the Affordable Care Act requires that a hospice physician or nurse practitioner have a face-to-face encounter with every hospice patient to determine the continued eligibility of that patient prior to the 180th day recertification, and prior to each subsequent recertification. 62 A CMS final rule implementing this provision of the Affordable Care Act requires that prior to the beginning of the patient s third benefit period, and prior to each subsequent benefit period, a hospice physician or hospice nurse practitioner must have a face-toface encounter with the individual to determine continued eligibility of the individual for hospice care and attest that such a visit took place. 63 B. Enforcement Areas of Focus 1. Relationships with Nursing Homes In its work plan for 2013, OIG states that it intends to review hospices marketing materials and practices and their financial relationships with nursing facilities. 64 This recommendation follows up on a 2009 report in which OIG found that 82 percent of hospice claims for beneficiaries in nursing facilities did not meet Medicare coverage requirements Id. 62 ACA 3132(b)(2). 63 See Medicare Program Hospice Wage Index for Fiscal Year 2012, 76 Fed. Reg (Aug. 4, 2011) Work Plan at Department of Health & Human Services, Office of Inspector General, Medicare Hospice Care for Beneficiaries in Nursing Facilities: Compliance With Medicare Coverage Requirements, OIE (Sept. 2011). 21

22 Additionally, in a 2011 report, OIG concluded that [s]ome hospices may be seeking out beneficiaries with particular characteristics, including those with conditions associated with longer but less complex care. 66 According to OIG, such beneficiaries are often found in nursing facilities and, by serving these beneficiaries for longer periods, the hospices receive more Medicare payments per beneficiary, which can contribute to higher profits. 67 Thus, OIG intends to devote special attention... to hospices that depend heavily on nursing facilities. 68 In doing so, OIG will likely place special emphasis on the marketing practices these hospices employ General Inpatient Care OIG also states in its work plan for 2013 that it intends to assess the appropriateness of hospices general inpatient care claims. 70 Under the hospice PPS, payment rates are determined with respect to four categories: (1) routine home care; (2) continuous home care; (3) inpatient respite care; and (4) general inpatient care. 71 A general inpatient care day is defined as a day on which an individual who has elected hospice care receives general inpatient care in an inpatient facility for pain control or acute or chronic symptom management which cannot be managed in other settings. 72 General inpatient days command the highest rate under the PPS and OIG states that it will review hospice medical records to address concerns that this level of hospice care is being misused. 73 C. Recent Hospice Enforcement Actions and Settlements 66 Department of Health and Human Services, Office of Inspector General, Medicare Hospices that Focus on Nursing Facility Residents, OEI (July 2011). 67 Id. 68 Id. 69 Id Work Plan at CFR (c). 72 Id (b)(4) Work Plan at

23 The government s increasing focus on hospice is exemplified by several settlements that have occurred in recent years. For example, on March 1, 2012, Odyssey HealthCare, Inc. agreed to pay $25 million to resolve allegations that it submitted claims to the Medicare program for continuous home care services that were unnecessary or that were not performed in accordance with Medicare requirements between January 2006 and January Additional recent significant settlements involving hospices include: June 21, 2012 A Kansas hospice and its parent agreed to pay $6.1 million to resolve allegations that they submitted false claims between 2004 and 2008 for hospice beneficiaries that did not have a terminal prognosis of six months or less. 75 May 31, 2012 An Arizona hospice agreed to pay $3,700,000 to resolve civil allegations that the company s owners submitted claims for payment to Medicare for patients who were either completely or partially hospice ineligible or were provided a higher level of hospice care than was necessary or allowable. 76 July 17, 2012 A Georgia hospice agreed to pay $555,572 to resolve allegations that it submitted false claims for inpatient hospice services. 77 November 20, 2012 A South Carolina hospice agreed to pay $1.3 million to resolve allegations that it billed Medicare for patients that did not qualify for the hospice benefit

24 III. CONCLUSION: FCA CONSIDERATIONS FOR THE DEFENSE As explained above, many aspects of home health and hospice coverage determinations are vague, individualized, and subjective. In the home health sector, for example, homebound status and skilled need requirements are matters of clinical judgment for which reasonable minds may differ. Likewise, for hospice, the determination of terminal illness can be extremely subjective. When the documentation or evidence is such that reasonable minds may in fact differ, there can be no basis for False Claims Act ( FCA ) liability under well developed case law. In other words, where there is affirmative evidence in the patient record that home health services, for example, appropriately qualified for Medicare payment, or where such evidence can be supplied on appeal through the Medicare claims appeal process or during an FCA investigation or litigation, the government should not be able to establish a false claim based merely on conflicting, retrospective clinical analysis of the record. This is because the FCA requires proof of an objective falsehood, and statements as to conclusions about which reasonable minds may differ cannot be knowingly false. 79 This rule has special significance in the area of medical judgment and medical documentation See U.S. ex rel. Morton v. A Plus Benefits, Inc., 2005 WL , at *3 (10th Cir. 2005). 80 See U.S. ex rel Wall v. Vista Hospice Care, Inc., 778 F. Supp. 2d 709, 718 (N.D. Tex. 2011) (noting that a physician must use his clinical judgment to determine hospice eligibility, and an FCA complaint about the exercise of that judgment must be predicated on the presence of an objectively verifiable fact at odds with the exercise of that judgment, not a matter of subjective clinical analysis ); see also U.S. v. Prabhu, 442 F. Supp. 2d 1008, 1034 (D. Nev. 2006) (noting that the only factual issue that has been raised in relation to the medical necessity issue is how the need for services should have been documented. Because those rules are ambiguous... there cannot be any FCA liability as a matter of law. ). 24