What’sTrending: A Tad Late

Travel last week took me off schedule a tad so this post, normally scheduled for last Friday, didn’t make it on-line until Monday.  Below is the list of what I am trending (watching) followed by last week’s Fall Outs (worth noting but not worth watching).

Hospice Fraud Redux: This issue is one that I have been watching on and off for the past year.  Last week, news broke via a 10Q filing from Chemed (Qs are a public company’s quarterly financial and operating required reports) that its subsidiary Vitas was once again, the subject of a fraud investigation via subpoenas served by the Office of Inspector General of DHHS.  At issue is the possibility (written tongue-in-cheek) of improper billings to the Medicare and Medicaid programs. As has consistently been the case with these types of investigations, the focus is on patient eligibility, certification, referral development, and compensation as it relates to patient enrollment.  Why this trend is worth following for a bit is simple: I don’t think this is the last of the investigations for Vitas and or other primarily for-profit hospices.  Watchers of the industry, and I am one, predicted that the Texas/Vitas case would have legs and lead to other investigations.  I don’t think we’ve seen the end of where the fraud investigations in the hospice industry will go.  States that I am watching now are Texas, Florida, Virginia and Illinois as each has increased claim reviews and targeted reviews ongoing and each has had issue with false-claims violations before and in some cases, ongoing.  I have written on this subject before, particularly the fraud aspects in-detail (http://wp.me/ptUlY-av and http://wp.me/ptUlY-ak). With hospice, there are truly only a few issues that drive this kind of activity.

• The hospice benefit under Medicare is old, dated and to a certain extent, ripe for exploitation.
• The Medicaid economy and economics drives providers to seek ways to offload expensive patients.
• The number of providers in the hospice industry is far greater than the organic demand for hospice.  This is a very key point.  There simply is not enough “organic” demand for hospice in the form of truly, terminal patients in comparison to the number of hospice providers.  The net result is the constant search for potential patients that “may” fit inside the Medicare benefit.  The key word is “may”.  What results is a stretch of eligibility and enrollment tactics to garner incremental patient days that are truly “questionable” when viewed against the benefit standard of “terminal (probably) in 6 months or less”.  As earnings for the public companies are driven primarily by enrollment numbers managed or butted by length of stay, it’s no wonder the industry continues to see issues of false claims/fraud arise as quite simply, the true patient volume is insufficient to produce and sustain long-term results.

Medicare Rate Season: I mentioned this issue last week and it continues to bear watching, albeit with a twist.  This past week, CMS released its update for Medicare SNF reimbursement effective October 1 – a positive update of 1.8%.  This is good news, sort of.  Coming off last year’s 11% reduction, any increase is positive news.  The sort of element is tied to other operative spending reductions and deficit reduction targets embedded within the ACA and other federal laws that foreshadow further spending cuts over the next ten years.  In untouched or unaltered via other legislation, the probability of further reimbursement erosion under Medicare is “highly likely”.  Couple this with CMS’ stated desire to totally re-work the SNF reimbursement program and I still believe that further revenue attrition from Medicare is going to occur, in earnest.  This however, does not mean that for many SNFs properly positioned and properly managed, that Medicare won’t be a good payer source.  It does mean that the providers that have “bulked” revenues and rate on therapy activity are in for a rude awakening, on a number of fronts.

Fraud at the Forefront: The Obama Administration has unquestionably become the prime actor when it comes to seeking out fraud under the Medicare and Medicaid programs.  Arguably, the results of their efforts in the light of the investments made leave room for debate on the “purposeful activity” premise.  Nonetheless, the Administration is placing an even higher premium on eradicating fraud and taking on provider billing practices.  What this means is that the providers need to step up their own games in terms of cleaning their operations and developing compliant practices.  Not a day goes by that I don’t hear about targeted claims reviews, probes and investigations going on in every industry segment.  I am paying particular attention to hospice (see above) and skilled nursing.  In spite of continued warnings, the SNF industry continues to exhibit overzealous billing of certain therapy RUGs and at even slightly higher levels than last year.  CMS is on this and they are systematically going after these claims as many are purely not justifiable.

The Elections are Coming: I am an admitted policy junky so maybe this trend is less fascinating for my readers than it is for me.  I can’t help but watch the positioning and the rhetoric and what trends as talking points and issues week to week.  Bottom-line for us healthcare people is that this election will have ramifications for the industry regardless of who wins the Oval Office.  The painful reality is that the present federal budget at all levels is an unsustainable mess and federal spending on entitlements is growing faster than all current revenue sources flowing into the federal government.  In short, spending on Medicare, Medicaid and Social Security is greater than all tax revenues.  This leaves every other element in the federal budget subject to debt funding.  Spending cuts on discretionary issues won’t debt the deficit and raising the upper income tax limit does nothing to fix the issue either.  Even combining the two, raising the upper tax limit and reducing discretionary spending does precious little to change the metrics.  The only game-changer is to tackle the entitlements and thus, healthcare spending moves front and center in the policy debates.  It will be interesting to see if any candidate at any level (or candidates with a snowball’s chance in hell of being elected) will tackle the entitlement issue with clarity and honesty.

My Fall Out issues for the past week are;

• Medicaid for now.  I’m still watching but as of now, no specific news or events are triggering my attention.
• The Medicare SNF rate increase – nice but the back story is far more interesting than the rate increase.
• OIG report on Medicare overpayments to Home Health providers.  I love it when the Feds overstate the obvious with another investigative report.  Really?
• The White House released its updated forecast of Medicare and Medicaid spending via its mid-session review of the Federal Budget ( the budget that really doesn’t exist).  Per this review, the White House is forecasting a lower level of Medicare and Medicaid spending over the next ten years than previously forecasted – $121 billion less in Medicare and $123 billion less in Medicaid (compared against totals of $7.1 trillion in Medicare and $4.4 trillion in Medicaid). Really?  Does anyone believe these numbers?  I surely don’t and what’s worse, I can do the math.  These “reductions” are like having one less Skittle in a five-pound bag of Skittles.  Enough said.