In recent years, hospice care providers have come under increasing scrutiny from government auditors. As the demand for hospice services continues to grow (and will only continue to do so with an aging population), so too does the need for providers to maintain strict compliance with Medicare billing regulations. Why? Because hospice care provider audits are becoming more frequent and more rigorous, especially when it comes to identifying fraudulent claims, improper billing practices, and incomplete documentation.
For hospices, an audit is not merely a routine administrative procedure–it can be a costly and reputation-damaging situation. That’s why understanding how audits work, recognizing their red flags, and proactively implementing compliance strategies is essential for maintaining operational stability and delivering quality care.
Hospice Care Basics
First, what is hospice care? Hospice is a specialized type of care designed for terminally ill patients, focusing on comfort, quality of life, and symptom management rather than curative treatment. Hospice care providers, including hospice agencies and skilled nursing facilities, play a critical role in delivering this care to patients. The Medicare Hospice Benefit is a comprehensive program that prioritizes dignity and comfort so that patients receive the best possible care during their final stages of life. The program itself is regulated by the Centers for Medicare and Medicaid Services (CMS), with providers needing to adhere to strict Medicare rules and eligibility requirements.
A key element of hospice care and maintaining compliance is related to hospice billing. This is inherently complex and requires precise coding and strict compliance with all Medicare regulations. To review these practices by providers, a cottage industry of independent auditors contracted by CMS has cropped up. Unified Program Integrity Contractors (or UPICs) are auditors who are tasked with making sure the integrity of a particular hospice program is intact, as well as identifying potential risks including fraud and abuse. What UPIC auditors look for are clues such as inconsistent claim submissions and improper billing practices which could indicate potential malfeasance by the hospice providers.
Understanding the Audit Landscape in Hospice
According to an industry journal, many hospices are increasingly facing audit pressures. These include:
- Multiple Concurrent Audits: Approximately 53% of hospice providers reported undergoing more than one audit simultaneously, often involving different types of reviews like Targeted Probe and Educate (TPE) and Supplemental Medical Review Contractor (SMRC) audits.
- Prevalence of TPE Audits: About 77% of respondents indicated they had been subject to a TPE audit in the past five years, with nearly 80% of these audits related to General Inpatient Care (GIP) utilization.
- Audit Duration: Some audits, particularly TPEs, have extended over long periods of time, with approximately 30% of providers experiencing audits lasting between 18 months and two years.
- Redundant Documentation Requests: One-third of providers were required to submit the same patient charts for multiple audits, indicating a lack of coordination among auditing entities and placing clear resource and time burdens on the hospice itself.
UPIC auditors in particular have ramped up reviews of room-and-board billing in nursing home settings. These audits can be especially challenging for hospice providers who serve patients in nursing homes or assisted living communities, or other skilled nursing facilities, as the documentation and coordination of benefits must be crystal clear.
In addition, hospice providers often expressed that audit contractor activities are often so opaque and inconsistent that they are leading to other inefficiencies and inaccuracies. There is also concern that these auditors may lack a comprehensive understanding of hospice care, potentially resulting in erroneous findings. What these insights underscore is the importance for hospice providers to maintain meticulous documentation and stay informed about review processes to navigate an audit effectively, or hopefully, avoid it altogether.
Common Audit Red Flags in Hospice Billing and other Practices
So, what are the red flags that auditors are looking for when it comes to billing (a key reason audits are triggered)?
- Unusual billing patterns, such as consistently billing for the highest level of care or unusually high patient volume.
- Room-and-board billing for nursing home patients that lacks proper coordination and explanation. (As mentioned, these facilities can have hospice services delivered within.)
- Long stays without sufficient documentation supporting the continued terminal prognosis.
- Missing or vague documentation in the clinical record regarding symptoms, decline, and hospice-level care justification.
- Inadequate or incomplete Election Statements or Certification of Terminal Illness forms.
While these red flags don’t necessarily indicate wrongdoing, they do indeed raise questions that may trigger a full audit or result in payment denials or delays.
Key Compliance and Billing Strategies for Hospice Agencies
The good news is that many audit risks can be minimized–or even avoided–by implementing certain sound compliance strategies and adhering closely to CMS regulations. These include:
Strengthen Documentation Protocols
Perhaps the most important strategy is making sure accurate and thorough documentation through a reliable system is kept up. One critical document in this process is the Election Statement, which outlines the specifics of the hospice insurance benefit. Failure to include or obtain the required information on the Statement can lead to technical denials, posing risks to hospice agencies.
Additionally, every patient file should clearly demonstrate:
- A patient’s terminal diagnosis and why hospice is the appropriate level of care.
- Documentation that meets the Medicare requirements for eligibility, especially around the six-month prognosis.
- Billing codes should reflect the care provided.
In many cases, payment denials stem from incomplete or inconsistent records rather than actual fraud. Using resources like the Medicare Claims Processing Manual can help in understanding compliance requirements.
Know Your Medicare Requirements
Staying current on all Medicare regulations is non-negotiable for any hospice agency. For example, the Election Statement Addendum–required since 2020–must be offered to beneficiaries or their representatives upon request and includes important details about services unrelated to the terminal diagnosis. Missing or mishandled addendums can be a compliance pitfall. (Check out the link above to learn more. But as we noted, regulations change and it’s best to keep current. Working with an outside firm, such as a legal or accounting firm knowledgeable in these details, may make the most sense.)
Also, billing errors often arise from misinterpretation of Medicare’s four levels of hospice care (routine, continuous, inpatient respite, and general inpatient). Make sure your team understands which level applies and why.
Conduct Regular Internal Audits
Don’t wait for CMS to knock on your door. Regular internal audits can catch inconsistencies or problem areas early, so it’s smart to give your team the chance to correct them before they escalate. These internal audits should review:
- Claims submission processes
- Eligibility documentation
- Certification and recertification timing
- Physician narratives
- Visit notes from nurses, aides, and social workers
Again, working with a third-party to help with periodic compliance reviews can also be a strategic way to uncover blind spots and validate relevant internal controls.
Train Your Staff Continuously
A compliance program is only as strong as its team. From billing staff to clinical care providers, every role plays a part in maintaining what we call “audit readiness”. Hold regular training sessions and review the following:
- Updates to Medicare rules and forms
- Common billing errors to avoid
- Proper clinical documentation techniques
- How to respond to Additional Documentation Requests (ADRs)
Staff should always know the ‘why’ behind documentation requirements, not just the mechanics. As we mention often in articles on our Walters site, compliance strategy is rooted in real understanding of the “why” and is not just about checking the boxes.
Best Practices to Avoid Costly Penalties
CMS penalties for improper billing can be severe, including recoupment of payments, suspension of billing privileges, and even exclusion from federal programs. And with changes in the current regulatory climate, hospice agencies must be prepared to deal with the financial and legal challenges that come with audits. Here are a few best practices (and reminders noted above) to stay in the clear:
- Track regulatory updates via CMS bulletins so your business gets paid timely and accurately. (Enlist outside help if need be.)
- Use checklists for eligibility documentation and billing forms so you can reduce human error.
- Review your claims before submission and check for missing forms, incorrect codes, or duplicate charges. (Sounds basic, but errors often occur in this key step.)
- Keep a record of all correspondence with Medicare Administrative Contractors (MACs) and UPICs, especially if you’ve received an ADR or audit notice.
- Build a culture of accountability, where staff feel empowered to ask questions and report potential issues. (Remember to train and re-train on an ongoing basis. Regulations not only change, but staff in hospice care facilities often do as well.)
Final Thoughts: Why Proactivity Matters
At the heart of all these strategies is one key principle we like to emphasize at Walters: proactivity. As flawed data extraction and analysis methods used by auditors can at times pose risks for hospice providers, take a proactive compliance approach; it’ll not only reduce audit risk but may protect your overall business. And when billing is accurate and documentation is clear, and audits are avoided, or at least made as efficient as possible, providers can focus more on what matters, such as supporting patients and families during one of life’s most difficult periods.
