On November 20, 2024, OIG released new compliance program guidelines for nursing facilities titled, “Nursing Facility Industry Segment-Specific Compliance Program Guidance” (the Nursing Facility ICPG or the Guidance). The Nursing Facility ICPG functions as the first industry-specific guidance published since last year’s General Compliance Program Guidance, which provided a broader overview for the entire healthcare compliance community. Prior to this issuance, OIG had not revised its nursing facility guidance since its 2008 Supplemental Nursing Facility Compliance Program Guidance. While primarily relevant to owners and operators of nursing facilities, this document also provides guidance to hospitals and contractors that work with nursing facilities and their patients, meaning its content may be of relevance to many hospitals that provide Medicare services.
Like other OIG compliance issuances, the Nursing Facility ICPG is a guidebook of best practices and is voluntary. This Guidance covers a broad range of topics. Some of the topics covered include the physician self-referral law, HIPAA, civil rights laws, and related party transactions. However, there were three areas that the guidance discussed in detail: (i) quality of care and quality of life, (ii) Medicare and Medicaid billing requirements, and (iii) the federal Anti-Kickback Statute (AKS).
Quality of Care and Quality of Life
The quality of care and quality of life portion of the Guidance primarily discusses the importance of nursing recruitment and retention through competitive pay and incentives, effective staff management through continual employee assessment, strategies for developing involved resident care plans, and practices for screening staff to prevent resident abuse and neglect. Additionally, this section includes a checklist of necessary steps facilities should take before admitting a patient that includes the following:
- “obtain all clinical, social, and behavioral information including background, diagnoses, and other qualitative information[;]”
- “identify current and foreseeable services that the potential resident would need[;]” and
- “ensure that the facility has the capacity, ability, and resources to provide services to the potential resident as of the admission date.”
Medicare and Medicaid Billing Requirements
The Guidance section discussing Medicare and Medicaid billing primarily acts as a summary of existing regulations. One area that receives particular emphasis is compliance with skilled nursing facility (SNF) prospective payment system (PPS) requirements. The Patient Driven Payment Model (PDPM) is the SNF PPS case-mix classification system, and OIG stressed the importance of facilities developing policies to improve in several “areas of heightened importance under PDPM:
- resident assessments;
- care planning;
- tracking of resident progress and outcomes;
- proper documentation of the services provided (including but not limited to therapy services); and
- appropriate coding of resident characteristics.”
Another aspect of Medicare and Medicaid payment programs that OIG cautions providers about is value-based payment models. Specifically, OIG cautions providers about the risks of participating in such as quality and performance-based payment programs, and encourages providers to “include. . . auditing, monitoring, and training initiatives. . . [to emphasize] the importance of data accuracy” and reduce “the risk of gaming of data to qualify.”
Federal Anti-Kickback Statute
OIG’s Guidance focuses on activities that risk violating the federal AKS. Specifically, OIG warns about several activities that are particularly prone to AKS violations and suggests methods for how to make these activities comply with federal AKS safe harbors:
- free (or below-fair market value) goods and services;
- discounts;
- long-term care pharmacy and consultant pharmacist arrangements;
- hospital arrangements;
- care coordination and value-based care arrangements; and
- joint ventures.
The Nursing Facility ICPG can be found here. Additionally, the November 2023 General Compliance Program Guidance can be found here.
Reporter, Gregory Fantin, Washington D.C., +1 202 626 9271, GFantin@kslaw.com.
OIG Report Finds that the Medicare Program Improperly Paid Acute-Care Hospitals for Outpatient Services Provided to Hospice Enrollees
On November 12, 2024, OIG published a report concluding that the Medicare program overpaid acute-care hospitals an estimated $190 million over five years for outpatient services provided to hospice enrollees.
Audit Overview
OIG’s audit covered $283.7 million in Part B payments to acute-care hospitals for 1.3 million outpatient services billed with condition code 07 and provided to hospice enrollees during the audit period. OIG selected for review a stratified random sample consisting of 100 outpatient service line items. For each sample item, OIG submitted medical records to an independent medical reviewer contractor (medical reviewer) to assess whether the outpatient service palliated or managed the hospice enrollee’s terminal illness and related conditions.
OIG’s Audit Findings
Based on the audit sample, OIG estimated that Medicare could have saved $190.1 million for the audit period if payments had not been made to acute-care hospitals that provided outpatient services to hospice enrollees for services related to the palliation and management of the enrollees’ terminal illnesses and related conditions. OIG also estimated that enrollees could have saved $43.6 million in deductibles and coinsurance that may have been incorrectly collected from them or from someone on their behalf.
OIG’s Recommendations
OIG made six recommendations to CMS to prospectively address the issues identified:
- Improve system edit processes to help reduce improper payments for outpatient services provided by acute-care hospitals to hospice enrollees.
- Educate acute-care hospitals to understand that each hospice enrollee’s hospice election statement addendum is available on request, and educate hospices to provide the addendum if requested to help an acute-care hospital assess whether an outpatient service palliated or managed an enrollee’s terminal illness and related conditions.
- Continue to educate hospices that they should be providing to enrollees virtually all necessary services that palliate or manage terminal illnesses and related conditions either directly or through arrangements.
- Educate acute-care hospitals to analyze not only whether outpatient services palliated or managed enrollees’ terminal illnesses but also whether outpatient services palliated or managed a condition related to a terminal illness.
- Clarify the language in the manual, and in other CMS or MAC guidance documents or educational initiatives, if necessary, to specifically mention “related conditions” so that the language is consistent with federal regulations and the Federal Register in stating that services not related to enrollees’ terminal illnesses and related conditions may be billed to Medicare with condition code 07.
- Direct MACs or other appropriate contractors, such as Recovery Audit Contractors, to: (1) analyze Medicare claims data to identify acute-care hospitals that have aberrant billing patterns for condition code 07, and conduct Targeted Probe and Educate reviews of these acute-care hospitals; and (2) conduct prepayment or post-payment reviews of acute-care hospital claims for outpatient services provided to hospice enrollees and billed with condition code 07.
CMS’s Comments to OIG’s Recommendations
CMS concurred with all but the first recommendation, stating that it has concerns about the feasibility and effectiveness of the type of modifications to the system edits described in the report. After reviewing CMS’s comments, OIG refined its first recommendation by stating, “[i]mproving CMS’s system edit processes could help reduce improper payments going forward.”
A copy of OIG’s report is available here.
Reporter, Michelle Huntsman, Houston, +1 713 7513211, mhuntsman@kslaw.com.
Senators Grassley and Warren Urge IRS to Increase Nonprofit Hospital Oversight Again
On November 19, 2024, a bipartisan pair of senators, Sen. Charles E. Grassley (R-Id.) and Sen. Elizabeth Warren (D-Ma.) united again, a year after a similar letter, to urge the Internal Revenue Service (IRS) to increase oversight of nonprofit hospitals to ensure that those hospitals are operating consistent with their charitable status.
About half of U.S. hospitals are nonprofit hospitals and exempt from taxation, which has drawn legislative oversight recently. For example, in August 2023, a bipartisan group of senators, including Senators Grassley, Warren, Bill Cassidy (R-La.), and Raphael Warnock (D-Ga.), sent a letter to the IRS requesting information on how it scrutinizes tax-exempt community hospitals, as discussed in Health Headlines previously here. Then, in October 2023, Sen. Bernie Sanders, (I-Vt.), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released a report alleging that certain nonprofit hospital systems may not be providing the community benefits required by their tax-exempt status, as discussed in Health Headlines previously here.
The 2024 letter to the IRS from Senators Grassley and Warren is consistent with recent legislative oversight efforts. The letter explained that under current IRS rules, nonprofit hospitals must “primarily benefit the community” to qualify for a federal tax exemption, but that the senators are concerned that some nonprofit hospitals may fall short of this measure. The letter identified that the tax exemptions afforded to nonprofit hospitals will total roughly $260 billion over the next decade, while expressing skepticism that the current community benefit standard for nonprofit hospitals was working given what the letter described as a crisis of medical debt. For instance, the letter asserted that medical debt affects roughly one of every three adults in the United States and accounts for 57 percent of all debt in collections.
The Senators expressed appreciation in their letter for the fact that, in response to a prior letter from the Senators, the IRS plans this year to audit 35 nonprofit hospitals regarding their community benefit activities and issue guidance on the application of IRS Code Section 501(r) regulations, and the Treasury Inspector General for Tax Administration is conducting an audit of nonprofit hospital compliance efforts.
The Senators further urged the IRS to strengthen and enforce regulations under Section 501(c)(3), the tax code section applicable to nonprofits generally, and Section 501(r), the tax code section pertaining to nonprofit hospitals specifically, which also contains specific community benefit requirements for nonprofit hospitals added by the Patient Protection and Affordable Care Act.
Specifically, the letter recommended that the IRS do the following:
- Increase oversight of tax-exempt hospitals to enforce existing requirements and ensure consequences for negligent noncompliance with current requirements.
- Clarify requirements for financial assistance policies, so that patients who qualify for financial assistance under existing hospital policies receive that assistance.
- Prohibit nonprofit hospitals from using aggressive collections practices before comprehensive efforts to determine patient eligibility for financial assistance.
- Issue a new Revenue Ruling reinstating previous guidance requiring nonprofit hospitals provide charity care to the extent of their ability, including guidance on when charity care is appropriate.
A copy of the Senators’ full letter can be read here.
