OIG Advisory Opinion – Hospice Payment to Nursing Homes
July 29, 2016 03:52 PM
The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services recently released Advisory Opinion 16-08 pertaining to hospice payments to nursing homes. As with all OIG Advisory Opinions, the opinion is specific to the facts presented in the case. In this particular case, the question concerned 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. Specifically, the Requestor (the entity requesting the advisory opinion) wanted to know if this arrangement would constitute grounds for the imposition of sanctions under the exclusion authority at section 1128(b)(7) of the Social Security Act (the “Act”), or the civil monetary penalty provision at section 1128A(a)(7) of the Act, as those sections relate to the commission of acts described in section 1128B(b) of the Act, the Federal anti-kickback statute.
The Requestor is in a state where there is a Medicaid Demonstration Project in which the nursing homes are paid 95% of their daily room and board rate for dually-eligible residents electing hospice care directly from a Medicaid managed care organization. Typically, the hospice is billed the daily Medicaid room and board rate but then bills the state’s Medicaid program for this amount and pays this plus an additional 5% to the nursing home. This provides the nursing home with the same payment it would have received had the resident not elected hospice care.
The OIG concluded that, although having an arrangement where the hospice continues to pay the nursing home the additional 5% even when the nursing home is billing and receiving payment for 95% of the daily Medicaid rate could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of Federal health care program business were present, the OIG would not impose administrative sanctions on the hospice, under sections 1128(b)(7) or 1128A(a)(7) of the Act (as those sections relate to the commission of acts described in section 1128B(b) of the Act) in connection with this arrangement. The facts presented by the Requestor to the OIG indicate that the nursing homes would invoice the hospice for the 5% showing what was billed to and received from the Medicaid managed care organization.
While not required, the large majority of hospice providers make the nursing homes whole by paying the 5% difference. This practice is allowed (see Special Fraud Alert : FRAUD AND ABUSE IN NURSING HOME ARRANGEMENTS WITH HOSPICES, March 1998), and now through this OIG Advisory Opinion, we know it is allowed if the nursing home is being paid directly by a Medicaid managed care organization and invoices the hospice for the 5% difference. It is important to note that anytime there is remuneration with the intent to induce or reward referrals of Federal health care program business, it is a violation of the anti-kickback statute regardless of the amount.