Hospice Payments Possibly Impacted by OIG Wage Index Recommendation

An August 2020 report by the U.S. Department of Health and Human Services Office of the Inspector General recommended that the U.S. Centers for Medicare & Medicaid Services (CMS) revamp its use of the hospital wage index to determine payments for health care providers.  The hospital wage index is used, in conjunction with other information, to calculate hospice per diems paid by Medicare.

The proposed action was third on OIG’s Top 25 unimplemented recommendations for 2020.  Data from the hospital wage index data allows CMS to adjust payments to hospice providers in different geographic regions based on estimated labor costs.  “OIG identified significant vulnerabilities in the wage index system for Medicare payments.  For instance, CMS lacks authority to penalize hospitals that submit inaccurate or incomplete wage data, and Medicare administrative contractor (MAC)-limited reviews do not always identify inaccurate wage data,” the report stated.  “Additionally, wage indexes may not always accurately reflect local labor prices, thus Medicare payments to hospitals and other providers may not be appropriately adjusted to reflect local labor prices.”

The recommendation’s potential impact on hospice providers is uncertain.  Because geography plays a role in payment calculations, some providers may benefit from increased payments while others could see payment reductions.

Importantly, an overhaul of the hospital wage index system by CMS would require congressional authorization.  Legislators have not acted on OIG’s recommendation, but the White House’s proposed federal budget contains provisions for extensive revisions to the index.

The OIG report also provided updates on the implementation of previous recommendations made during the last two years that affect hospice providers.  One recommendation was that provide consumers with additional information about hospices’ performance via Hospice Compare.  “CMS has published information from complaint surveys conducted by state agencies on its Quality, Certification, and Oversight Reports website.  However, the information will not be posted on its Hospice Compare website,” the report states.  “CMS currently requires statutory authority to make public information from accrediting organizations on its websites. We note that the President’s FY 2021 Budget includes a legislative proposal to allow CMS to make public survey results from accrediting organizations.”

Last year, OIG recommended that CMS take steps to reduce perceived duplicate payments received by hospices for prescription drugs.  OIG determined that some providers were billing Medicare Part D for medications that should have been covered through the Medicare Hospice Benefit, amounting to $160.8 million.

According to OIG, CMS has not yet addressed issue, saying that the agency believes that its current efforts would address the problem without disruption services to Medicare beneficiaries.  CMS also does not plan to work directly with hospices to ensure that they are providing drugs covered under the hospice benefit.

For more information, please contact Jason E. Bring .