Kusserow on Compliance: OIG advisory opinion relating to hospice

The HHS Office of Inspector General (OIG) released Advisory Opinion No. 16-08, which involves an arrangement “in which a hospice would make a supplemental payment to the nursing facilities in which the hospice’s dually eligible patients reside when the nursing facilities–instead of the hospice–receive payment for their patients’ room and board expenses.”  The OIG concluded that while this arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute (AKS), it would not impose administrative sanctions under that statute.

The facts presented to the OIG related to a “Proposed Arrangement” in which a hospice would make a supplemental payment to the nursing facilities in which the hospice’s dually eligible patients reside when the nursing facilities—instead of the hospice—receive payment for their patients’ room and board expenses.  The “Requestor” was a non-profit corporation licensed by the state to provide hospice care and the state has developed a “Demonstration Program” to test a fully integrated care system that manages the continuum of benefits for dually eligible beneficiaries. The state selected several “Participating MCOs” to provide services to dually eligible beneficiaries in the Demonstration Program. Under the Proposed Arrangement, Requestor would require a nursing facility to provide evidence of the amounts the Participating MCO pays the nursing facility for patients who have, and patients who have not, elected hospice. For a Dually Eligible Hospice Patient, Requestor would pay the nursing facility a standalone amount that, when combined with the payment the nursing facility would receive from the Participating MCO for the Dually Eligible Hospice Patient, would result in the nursing facility receiving the same amount as it would have received if the patient had not elected hospice.   Requestor certified that these steps would prevent the nursing facility from being reimbursed more than the Participating MCO pays for a patient who has not elected hospice.

The OIG found the Proposed Arrangement would involve the transfer of remuneration by Requestor to potential referral sources, the nursing facilities, in the form of the supplemental payment.  It cited its 1998 Special Fraud Alert that covered a situation in which a hospice remits payment to nursing facilities for Dually Eligible Hospice Patients’ room and board expenses only after first receiving payment for such expenses from a state’s Medicaid program and found the Requestor’s prior arrangement to that situation. The Proposed Arrangement was found to be consistent with that Special Fraud and it would help to ensure that the nursing facility has no incentive to provide a lower level of room and board services to Requestor’s Dually Eligible Hospice Patients or to discourage patients from electing hospice.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2016 Strategic Management Services, LLC. Published with permission.