Hospice claims for patients in assisted living draw their own scrutiny inside Medicare audit defense, traced straight back to the government's own data. The Office of Inspector General found that Medicare beneficiaries who received hospice care primarily in assisted living facilities (ALFs) stayed on the benefit far longer than beneficiaries in any other setting. A Recovery Audit Contractor (RAC) has an approved audit issue for extended hospice length of stay, because a longer stay produces a larger per-beneficiary payment. For a certifying physician, the risk sits less in the diagnosis than in whether the record proves continued decline, not a stable need for custodial support.
Why Assisted Living Residents Stay on Hospice Far Longer
An OIG analysis of Medicare hospice claims from 2007 through 2012 tied higher ALF payments directly to length of stay (Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities, OEI-02-14-00070, January 2015). ALF beneficiaries received a median of 98 days of hospice care, almost twice as long as beneficiaries in a nursing facility and more than twice as long as beneficiaries at home. Thirty-six percent of ALF beneficiaries stayed more than 180 days, and 18 percent more than a year. The median Medicare payment per ALF beneficiary was $16,195, more than twice the median for a beneficiary at home or in a nursing facility. For-profit hospices drew a median $18,261 over 111 days, against nonprofit medians of $13,941 and 85 days.
The Diagnoses Behind the Pattern
The same report found that 60 percent of ALF hospice beneficiaries carried a terminal diagnosis of an ill-defined condition, a mental disorder such as dementia, or Alzheimer's disease, and were six times more likely to carry one of those diagnoses than a cancer diagnosis. That diagnosis mix does not disqualify a patient from hospice, but it raises the bar on the clinical record, because the line between a hospice-eligible decline and the custodial support an ALF already provides is thinner here than for a patient with metastatic cancer. Medicare also allows only routine home care and continuous home care in an ALF. General inpatient care and inpatient respite care are not permitted there, and a claim reflecting either level while the patient's address of record is the facility does not match the levels of care Medicare permits in that setting.
The Certification a Reviewer Will Test
Medicare coverage of hospice care depends on a physician certifying, at the start of each election period, that the patient is terminally ill, with a life expectancy of six months or less if the illness runs its normal course (42 CFR 418.22(b)). The certification must carry a narrative of the clinical findings and an attestation that they came from the physician's own examination or a review of the medical records. OIG found that in 14 percent of the general inpatient care stays it reviewed, the certifying physician did not meet at least one of those requirements, usually by omitting the required narrative or attestation (Hospices Should Improve Their Election Statements and Certifications of Terminal Illness, OEI-02-10-00492, September 2016). A certification describing only bathing, dressing, or medication help, without a documented decline behind it, reads to a reviewer the same as one never substantiated, a gap addressed in Medical Necessity Denials: Building the Clinical Record.
From a Documentation Gap to an Extrapolated Recoupment
A reviewer who finds this pattern in a sample does not stop at the sample. Extrapolation applies the sample's error rate to every claim in the lookback period, turning a handful of weak certifications into a recoupment many times the sample's size, often measured against a local coverage determination's own required elements.
The clinical record, not the facility, has to show that a patient's needs come from a terminal decline and not from the custodial care the assisted living facility already provides.
Why Early Legal Counsel Is Critical
It is critical that hospice physicians and hospice providers promptly retain experienced healthcare defense counsel upon receiving a RAC, UPIC, or MAC additional documentation request (ADR), or any other government inquiry touching assisted living hospice claims. Early legal intervention can protect the provider's rights, help shape appropriate responses to government requests, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with investigators on the provider's behalf. Delaying legal representation can significantly affect the outcome of a matter and expose the provider to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience. The firm reviews the certifications and visit documentation behind an assisted living hospice claim before it goes back to a reviewer, and builds the record an appeal needs. If your hospice has received a request for assisted living hospice records, contact us for a free, confidential consultation through our hospice and home health audit defense page.
