Hospice Compliance Risks – Nursing Homes and Suspected Kickbacks

(This is the first of a blog series highlighting hospice compliance risks)

Hospice patients residing in nursing homes are particularly desirable for a number of reasons.   First and foremost, residents of a nursing home represent sizable pool, indeed a stream, of potential hospice patients.  Further, studies have shown that nursing home patients receiving hospice services can generate higher revenues than other patients, because on average, nursing home patients have longer lengths of stay than hospice patients receiving service at home.   Additionally, there can be overlaps in services provided by nursing homes and hospice. The OIG has noted that residents of some nursing homes have received fewer services from hospice than patients in their own homes.

It is well-established that hospice profit margins increase as length of stay increases.   It is also well-established that margins increase as the share of patients in nursing homes increase.   Therefore, an exclusive or an almost exclusive arrangement with a nursing home to provide hospice services to residents can be quite valuable to a hospice provider.  Because of the value associated with a nursing home-hospice relationship, the OIG will closely scrutinize such arrangements to determine whether there are any improper referral inducements. These arrangements, and conduct associated with these relationships, should be carefully structured and monitored on an ongoing basis by both the nursing home and the hospice as part of their respective compliance programs.

Suspected Kickbacks

The OIG has provided guidance that identifies some of the indicia of improper conduct in the relationship between a hospice and a nursing home

  • Offering free goods or goods at below fair market value to induce a nursing home to refer patients to the hospice
  • Paying room and board payments to the nursing home in amounts in excess of what the nursing home would have received directly from Medicaid had the patient not been enrolled in hospice
  • Paying amounts to the nursing home for additional services that Medicaid considers to be included in its room and board payment to the hospice
  • Paying above fair market value for additional non-core services which Medicaid does not consider to be included in its room and board payment to the nursing home
  • A hospice referring its patients to a nursing home to induce the nursing home to refer its patients to the hospice
  • A hospice providing free (or below fair market value) care to nursing home patients, for whom the nursing home is receiving Medicare payment under the skilled nursing facility benefit, with the expectation that after the patient exhausts the skilled nursing facility benefit, the patient will receive hospice services from that hospice
  • A hospice providing staff at its expense to the nursing home to perform duties that otherwise would be performed by the nursing home

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