HOSPICE PRICING UNDER SCRUTINY

Pricing arrangements between Missouri nursing homes and providers of hospice services have come under scrutiny of Attorney General Jay Nixon's office.

The attorney general's staff has launched an investigation into pricing agreements that raise questions about possible kickbacks among some officials within the health-care industry.

At issue are agreements between providers of hospice services and nursing homes that fall under Medicaid reimbursement programs. Medicare requires the hospice provider to bill Medicaid for the nursing home's room-and-board costs whenever a Medicare patient becomes a nursing-home patient in need of hospice care.

Hospice care generally is for patients who are terminally ill. Hospice services are mostly provided by private contractors.

Medicaid only reimburses hospice providers for 95 percent of the cost of nursing-home care. In many areas of Missouri nursing facilities have been reluctant to accept a 5 percent reduction in their daily rates.

By 1995, some hospice providers began offering to pay nursing homes 100 percent of the room-and-board rates, even though Medicaid was only reimbursing 95 percent of the cost.

A survey of hospice providers in scattered areas of the state has found that some of the providers are offering to pay nursing homes a 5 percent premium over the room-and-board costs for their hospice patients.

Asked why a hospice provider would agree to pay a nursing home more for room-and-board services than the actual costs, one nursing home administrator replied that it was basically "for the volume of patients a nursing-home contract could potentially bring to a hospice."

There don't appear to be any written restrictions against the pricing arrangements being made between some hospice providers and nursing homes. But Department of Social Services officials say there should be documentation that clearly states why extra funds are needed.

Some of the arrangements where hospice providers are paying 5 percent above actual costs for a nursing home's hospice patients are occurring in regions of heavy competition among providers.

One official with a hospice company is concerned that the premiums being paid for hospice patients could escalate to a point that the practice begins to endanger the solvency of the providers. Even worse, he said, is the possibility that hospice services to patients might be decreased in an effort to recover losses caused by such pricing agreements.

Many nursing homes now are demanding that hospice providers pay 105 percent -- or more -- of the nursing homes' room-and-board charges for hospice patients.

The issues also is being referred to appropriations officials in the General Assembly as budget hearings get under way. Medicaid payments are funded by the state.