OIG gives qualified approval to free hospice program


HHBR Washington Correspondent

The Department of Health and Human Services’ (Washington) Office of Inspector General (OIG) gave its qualified approval for a program proposed by the Hospice Foundation of Martin & St. Lucie that would offer certain services free of charge to hospice patients. But the OIG tempered that approval by noting several safeguards included in the proposed program.

In this case, the hospice asked the OIG whether offering certain services free of charge to patients with terminal illnesses, who have a prognosis of one year or less to live, would constitute grounds for sanctions under the anti-kickback statute. The statute prohibits inducements to beneficiaries in order to influence their selection of a provider for Medicare or Medicaid covered services.

The OIG concluded that the program would potentially generate prohibited remuneration under the anti-kickback statute if it was designed to induce referrals, but that based on all the facts presented by the hospice, it would not subject the hospice to sanctions.

The advisory opinion holds important clues for hospice programs that wish to offer services to patients at no cost. In 1998, the OIG issued a special fraud alert detailing problematic arrangements between nursing homes and hospices and highlighted several practices as potentially suspect.

Those practices included instances where a hospice offered free care to nursing home patients for whom the nursing home is receiving Medicare payment under the skilled nursing facility benefit, with the expectation that after the patient exhausts the skilled nursing facility benefit, the patient will receive hospice services from that hospice.

According to the OIG, the proposed program raises three principal issues. The first is whether the hospice knows or should know that its provision of free services to potential hospice patients will likely influence the patients’ choice of hospice provider. The second is whether one purpose of the program is to induce patients to use the hospice. The third is whether the provision of services to the patients who live in nursing homes may be remuneration to the nursing homes for permitting the hospice access to their patients.

While the OIG said that at least some of the services being provided may have value and constitute remuneration, it would not subject the program to sanctions under the anti-kickback statute for several reasons. First, the services are provided by unpaid volunteers. Second, the benefits of the program are primarily intangible and psychic in that they are designed to help the patients adjust to their illnesses by helping them cope with the day-to-day burdens of life, the OIG said.

Third, the OIG said, the program provides a substantial benefit to a vulnerable patient group. Finally, it said there are "substantial barriers" to a beneficiary’s election of hospice care, including the requirement that they renounce coverage for curative medical treatment for the terminal condition.

The OIG noted that it has additional concerns with the provision of these services to patients in nursing homes. "In particular, we are concerned that the services provided by the hospice could substitute for services the nursing home would otherwise have to provide, thereby resulting in the hospice providing free services to the nursing home," said the OIG.

The OIG also added that it continues to have "serious concerns" regarding the provision of free or below-market value goods to actual or potential referral sources.

"I still think the industry is not yet comfortable with when they can wave copayments and deductibles and provide free services, and when they can’t," warned Thomas Bartrum, a healthcare attorney with Baker Donelson in Nashville.

According to Bartrum, there have already been several advisory opinions on the waiver-of-copayment issue. "Unfortunately, they have been specific to certain types of industries," he said. For example, Bartrum noted, in an advisory opinion prepared for St. Jude Children’s Research Hospital, the OIG determined it was acceptable to waive co-payments because of the nature of St. Jude’s practice and the fact that the hospital has historically provided these services at no charge to all its patients.

"What we still have not seen is a very strong advisory opinion that clearly defines what you can and can’t do regarding the provision of free services to beneficiaries, and when it is acceptable to waive copayments and deductibles," he said. "I really think the industry needs further guidance on this issue."