Medicare Wastes Taxpayer Money with Comparative Billing Report for Hospices
Medicare hired a contractor — SafeGuard Services — to process the 2009 claims data for a number of reimbursement categories. This has produced a series of reports that compares billing practices for providers, including the hospice sector. As a result, each hospice will receive an individual report by provider number, comparing its 2009 performance to all hospices nationally, as well as to hospices within its Centers for Medicare and Medicaid Services (CMS) region. Although CMS has found this comparative information to have relevance in other industry segments, hospice providers may benefit less than CMS intended.
For this project, the contractor chose to compare units of service billed and delivered per beneficiary (routine, continuous, respite, and inpatient care) across various settings of care (home, skilled nursing facilities, freestanding hospice facilities, and inpatient facilities). The units of service were billed as days of care for all levels, except continuous care, which was billed as hours.
Comparisons Must Be Appropriate and Relevant for Benchmarking to Work
Benchmarking is always a good exercise to help organizations assess their performance levels on key metrics. The comparison, however, must be appropriate and relevant. If your organization isn’t compared to similar providers, the comparison loses its meaning.
As we’ve demonstrated in a previous analysis, there’s a wide variation in hospice utilization rates among states — as much as a 200% to 300% difference in the penetration levels between the lowest and highest hospice utilization states. For example, our research indicates a direct correlation between the level of hospice utilization in a state and its average length of stay (LOS). This makes sense, considering that LOS would be longer as hospice utilization increases. In addition, we’ve also shown that the percentage of non-cancer patients grows with increasing hospice utilization — and that non-cancer diagnoses are more difficult to predict — resulting in longer LOS than cancer patients.
Hospice utilization varies widely on the state level within CMS regions.
Source: 2008 Medicare Claims
Explaining the Differences in Hospice Utilization Rates
As markets mature, the medical community typically becomes more comfortable with the recent operational enhancement to the original concept of hospice, which was of cancer patients dying in their homes. As innovations become more commonplace in your market — such as providing care to long-term nursing home residents or building freestanding hospice residences — referral sources may change their behavior by referring both new and existing types of patients sooner. Our research shows that there are significant differences in these trends among communities.
Too often, legitimate factors either outside or within the control of a hospice can explain differences. If a hospice builds a residence/facility, for example, it’s likely to see an increase in inpatient days billed. By doing so, the hospice is:
- Meeting an unmet need in its community
- Providing a more appropriate level of care for some patients
- Possibly achieving savings for the local healthcare delivery system by taking patients who are within a few days of death away from occupying a hospital bed in an intensive care unit — a high-cost, limited resource.
As we all know, the number of inpatient days billed is limited by regulation to 20% of all billed days. In reality, most hospices never come close to this limit, typically averaging inpatient day rates between 1% and 2% of billings. Even Florida — the state with the greatest number of hospice residences per capita — has an average statewide inpatient day rate of only 4% to 5% of total Medicare days.
Furthermore, respite and continuous care are rarely used — because of strict coverage criteria and poor economics — with most hospices having less than 1% of days billed for either level. In this case, a single outlier patient can skew the results because of such a low normal base.
Medicare Comparative Billing Report May Cause Legitimate Hospices Unnecessary Worry
As stated previously, LOS rises with hospice utilization. So if your hospice is in a high utilization community, you can logically expect the days per beneficiary will be above the national average and peer group for all sites of care. By calculating LOS for nursing home patients, Medicare is trying to highlight their longer LOS. This is yet another subtle example of Medicare bureaucrats’ suspicions regarding hospice in the nursing home setting.
Medicare’s stated intent is to alert providers to the fact that a “statistically significant difference from your peers may be an indication of improper usage.” One could also interpret this as a form of intimidation, since the inference could be: If your hospice ranks significantly above the regional or national norms, your organization could face increased scrutiny from Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), or intermediaries. While this “out-of-the-ordinary” behavior may be totally justifiable, the implications made by the reports may cause legitimate hospices unnecessary worry and angst. Hospices overstepping the regulatory bounds are fully aware of their choices, however, and this report is unlikely to change how they operate.
Do you have questions about the Medicare Comparative Billing Reports? Click here or give us a call at 215-657-7373 today for information about how Healthcare Market resources can help your company use healthcare data effectively.