CMS Issues Warning on Medicare Part D Billing for Hospice Patients

by Morgan Lewis
Contact

Hospices will be expected to be more vigilant in their decisions to cover and pay for prescription medications covered under their Medicare hospice per diem payment.

On December 6, the Centers for Medicare & Medicaid Services (CMS) released a 13-page memorandum (Memorandum) to all Medicare Part D plan sponsors and Medicare hospice providers to clarify the criteria for determining payment responsibility for drugs furnished to Medicare hospice beneficiaries.[1] While the policy clarifies the broad care obligations of hospices, the Memorandum is also aimed at Part D sponsors to ensure that their payment decisions for drugs provided to hospice beneficiaries are correct under Medicare policy. The Memorandum also warns hospices about the use of narrow formularies, noting that hospices are required either to ensure that the formularies are sufficiently broad to cover drugs needed for the palliation of their patients’ terminal conditions and symptoms or to provide off-formulary medications when appropriate. The net result of this CMS clarification is that hospices will be expected to be more vigilant in their decisions to cover and pay for prescription medications covered under their Medicare hospice per diem payments.

Background

In its Memorandum, with instructions effective on March 1, 2014, CMS expressed concern that drugs, particularly analgesics, covered under the Medicare Part A Hospice per diem payment are being billed inappropriately to the Medicare Part D prescription drug benefit, which in many instances results in duplicate payment to a Medicare hospice. Notably, the Memorandum was issued by CMS’s Medicare Part D, Chronic Care, and Program Integrity groups. Through an outside contractor, CMS analyzed 2010 Medicare Part D enrollment and payment statistics, finding that Medicare Part D plans paid claims for analgesics (e.g., pain medication) for 14.9% of hospice beneficiaries. The analysis also demonstrated that the billing for analgesics was concentrated among hospice providers that were primarily for profit, new, and/or rural. In fact, just 10% of hospices nationally accounted for nearly 51% of Medicare Part D claims for pain medications. Of those claims, more than 50% were for hospice beneficiaries residing in nursing facilities.

Clarification of Payment Responsibility

Medicare pays hospices an all-inclusive per diem rate for the provision of all services related to an eligible beneficiary’s underlying terminal condition. For instance, if a beneficiary is suffering from pain or illness as a result of the terminal condition, the hospice is required by Medicare to provide medications used for the palliation of the patient’s symptoms, and the hospice is responsible under its per diem rate to furnish those drugs related to the patient’s terminal illness. However, for conditions unrelated to the beneficiary’s terminal illness, the beneficiary is entitled to coverage of curative procedures and medications by traditional Medicare or Part D. CMS has identified an ongoing practice whereby hospices allow contracted pharmacies to bill Part D plans for drugs not on the hospices’ formularies, even though financial responsibility for the drugs, if related to a terminal illness, rests on the hospices or the beneficiaries. In its Memorandum, CMS states that it views a hospice’s responsibility to provide care as broad and that “hospices are required to provide virtually all the care that is needed by terminally ill individuals.” Because the designation of what care is unrelated to a terminal illness is not prescribed by the statute or regulations, but rather is driven by a beneficiary-specific analysis, CMS leaves it to individual hospices and their Medicare Administrative Contractors to make those coverage determinations.

Since 2012, CMS has encouraged Part D sponsors to place prior authorization requirements on four categories of prescription drugs: (1) analgesics, (2) anti-nauseants (anti-emetics), (3) laxatives, and (4) anti-anxiety drugs. It has also authorized pay-and-chase methods of Part D claim adjudication. However, CMS notes that it recently became aware that the duplicative payment issue goes beyond just the four classes of drugs specified in earlier guidance, and that many hospices were not viewing the hospice benefit as holistically as the agency does.

In the policy clarification memorandum, CMS alerts Part D sponsors and hospices that drugs covered under Part D for hospice beneficiaries will be “extremely rare,” and “[t]herefore, the sponsor should place beneficiary-level [prior authorization] requirements on all drugs for hospice beneficiaries to determine whether the drugs are coverable under Part D.” In those rare instances where a Medicare hospice beneficiary may be prescribed a medication for a condition unrelated to the underlying terminal illness, CMS “expect[s] that the hospice provider or prescriber will immediately provide, to the Part D sponsor, the written documentation necessary to satisfy the [prior authorization].” Because CMS expects Part D coverage of drugs furnished to hospice patients to be rare, it would not expect frequent use of prior authorization by Part D sponsors. Additionally, if hospices are slow to electronically file with CMS contractors the completed hospice Notice of Elections that would have otherwise put Part D sponsors on notice that a beneficiary had elected hospice, a Part D sponsor may seek a refund directly from the hospice without involving the dispensing pharmacy. In instances when a beneficiary agrees to be financially responsible for the furnishing of a nonformulary drug but the drug is nevertheless billed to Part D, the sponsor may seek recovery directly from the beneficiary for the noncovered drug.

CMS Independent Reviewer

CMS is exploring the possibility of incorporating an independent review function as part of the prior authorization process. Specifically, the Memorandum sets forth a mechanism for the resolution of disputes between a hospice provider and a Part D sponsor as to whether a drug is for a condition unrelated to the terminal illness:

  • If the hospice provider and Part D sponsor disagree, then once an independent review process is implemented, either may contact the CMS independent reviewer for a determination of drug payment responsibility.
  • A medical review process would be initiated to determine whether the drug is reasonable and necessary and related to the underlying terminal illness, and thus whether the hospice is responsible for payment. If an item was waived through election of the hospice benefit, it is the beneficiary’s responsibility and, if unrelated to the underlying terminal condition, can be paid through the Part D sponsor.

CMS would expect Part D sponsors and hospice providers to accept the independent reviewer determination as “binding.” The Memorandum notes that the details of the independent review process will be outlined in future guidance. In the interim, however, CMS expects hospices and Part D sponsors to work cooperatively with each other to coordinate benefits and provide and obtain written documentation to fulfill the prior authorization requirements. It also expects Part D sponsors to flag questionable claims and request retrospective determinations of responsibility by the independent reviewer once that process is implemented. Finally, the Memorandum also explains that a beneficiary who disagrees with an independent reviewer’s determination may utilize the Medicare fee-for-service appeals process if the determination relates to Part A or B coverage, and the Part D appeals process if the determination relates to Part D coverage.

Conclusion

Ultimately, this CMS policy clarification requires hospice providers to more thoroughly consider and better document whether conditions and prescribed medications are unrelated to underlying terminal illnesses. CMS articulates that because of the human body’s interconnectedness, the underlying terminal illness is typically the epidemiological cause of a broad spectrum of presenting symptoms, and the hospice is responsible for providing palliative care for those symptoms. While certain conditions, such as pain caused by a broken bone, may be unrelated in CMS’s view, most other symptoms are intended to be treated as part of the Medicare hospice per diem rate. Thus, it is important that hospice providers develop policies, formularies, and robust documentation practices to address medication management related to patients’ terminal illnesses. Failure to do so will put hospices at financial risk of refund demands and possibly other program integrity sanctions.

[1]. View the Memorandum here.

Jacob Harper and Eric J. Knickrehm also contributed to this article.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morgan Lewis | Attorney Advertising

Written by:

Morgan Lewis
Contact
more
less

Morgan Lewis on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.