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Sender Name (b)(6), (b)(7)c
Sender Phone

San Diego Hospice & Palliative Care
4311 3rd Avenue
San Diego, CA 92103-1407

Zone Program Integrity Contractor, Zone 1
1055 West 7th Street, Suite 600
Los Angeles, CA 90017
Fax: (213) 553-5292
www.safeguard-servicesllc.com
L-Zone1-0040 Final Notice of Post Payment Review v05.doc
SGS Internal

 February 25, 2014

San Diego Hospice & Palliative Care
4311 3rd Avenue
San Diego, CA 92103-1407

RE:
FINAL RESULTS OF POST PAYMENT REVIEW
WMM Number: 510TS00064119
Dear Sir/Madam:
SafeGuard Services (SGS) LLC, Zone Program Integrity Contractor (ZPIC), Zone 1, has
completed the review of your claims submitted to Medicare. This letter is to inform you of the
finalized results of our post payment review.
Background
During the time period of January 1, 2009 through November 30, 2010, 4,950 claims for 251
beneficiaries were paid under your Medicare Provider Transaction Access Number (PTAN). A
total of $32,973,247.23 was billed and $24,464,413.01 paid. Because of the number of
beneficiaries in this universe, a sample or a Statistically Valid Random Sample (SVRS) of 152
beneficiaries was drawn from the overall universe for review.
A letter dated February 24, 2011, was provided to your agency while SGS was onsite requesting
all medical records relevant to the claims being reviewed. The documentation that we requested
is essential for our post-payment review, as the documentation provides the means by which we
can review claims submitted by you in order to determine whether money was paid in accordance
with the Centers for Medicare & Medicaid Services’ (CMS) policy and applicable federal law.
The medical records were received on March 25, 2011.
Our request for medical records served as our notification to you of our intent to reopen your
claims. This action is supported in Title 42 of the Code of Federal Regulations (C.F.R.)
§405.980 which states claims may be reopened within 1 year from the date of the initial

Zone Program Integrity Contractor, Zone 1
1055 West 7th Street, Suite 600
Los Angeles, CA 90017
Fax: (213) 553-5292
www.safeguard-servicesllc.com
L-Zone1-0040 Final Notice of Post Payment Review v05.doc
SGS Internal

 San Diego Hospice & Palliative Care
February 25, 2014
Page 2 of 5

determination or redetermination for any reason or within 4 years for good cause as defined in 42
C.F.R §405.986.
The following is a brief review of the findings.
Review Findings
Total ICNs reviewed: 241
Beneficiary count: 151
Total claims denied: 118
Total claims allowed: 123
Primary denial code: 55P04 “Terminal prognosis not supported base on review”
Average length of stay on hospice is 2 years with many over 2.5 years and still receiving services
at the time of this review. Many of the beneficiaries reviewed qualified for hospice initially but
records showed no decline and some with actual improvement but continue on services.
Examples:
(b)(6), (b)(7)c

Hospice election of February 24, 2009 with a
diagnosis of
high functioning, lives at home with husband, independent in
ADL’s, Karnofsky 60. Plan of care of February 25, 2010 states she desires to be a full code. SN
summary note for recertification dates of February 21, 2009 through February 21, 2010 show
beneficiary home with husband, cooking meals, oxygen off when desires (prn), weight gain of
30lbs and goals of aggressive treatment unclear at this time. Beneficiary qualified for hospice
initially, but the records show no decline with actual improvement in 2 years on hospice plus
beneficiary is unclear about palliative vs. aggressive treatment.
(b)(6), (b)(7)c
Beneficiary is

(b)(6), (b)(7)c

Hospice election of November 10, 2006 with a
diagnosis of
Based on the medical records
received, beneficiary status is essentially unchanged since recertification of December 12, 2008.
Karnofsky score 40, Severity Index 28, ECOG 3. He has ongoing stiffness and rigidity with
difficulty speaking, chewing and swallowing. SN note for recertification of June 9, 2009 is
similar to June 13, 2008. Ambulation status has changed to needs assistance and is mostly
wheelchair bound. Emotional and physical symptoms controlled with medication. Beneficiary
qualified for hospice initially, but the records show an extreme slow decline having been on
services for 2 ½ years and beneficiary continued to receive services until he revoked the election
of hospice effective November 21, 2012, as his prognosis was extended and then died
approximately 9 months later on (b)(6), (b)(7)c
(b)(6), (b)(7)c

 San Diego Hospice & Palliative Care
February 25, 2014
Page 3 of 5

(b)(6), (b)(7)c

Hospice election of May 19, 2009 after hospital
stay for seizure event and IV antibiotics. Diagnosis (b)(6), (b)(7)c
Beneficiary
lives alone at home, son and grandson bi-weekly provide care, prepare food and offer
transportation. Beneficiary is ambulatory with a front wheeled walker, independent in
administration of medications, feeds herself, alert and oriented times 3, continent of bladder and
bowels and calls Hospice when her medications need refilling. Charting did not reflect decline
or weight loss. Karnofsky rated at 40% and probably higher. Beneficiary is too high functioning
to qualify for the diagnosis of terminal status. Beneficiary continued to receive services until
November 22, 2012 when the beneficiary was discharged due to stable condition. As of
November 1, 2013, the beneficiary is still alive.

Issue of Notice
The criteria for determining that a provider knew that the services were excluded from coverage
are determined under 42 C.F.R §411.406(e). The section states “It is clear that the provider,
practitioner, or supplier could have been expected to have known that the services were excluded
from coverage on the basis of the following: (1) Its receipt of CMS notices, including manual
issuances, bulletins, or other written guides or directives from Medicare Administrative
Contractors (MACs), or QIOs, including notification of QIO screening criteria specific to the
condition of the beneficiary for whom the furnished services are at issue and of medical
procedures subject to pre-admission review by a QIO.”
It has been determined that Medicare's policy regarding the issues discussed were made available to
you through Current Procedural Terminology (CPT) definitions, National Coverage
Determinations, Medicare Newsletters, Medicare Bulletins, and special policy issues. These
manuals, bulletins, and written guides serve as notice to providers.
A Hospice Center can be found under Regulations and Guidance, Provider Type, on the CMS
website at www.cms.gov. The Hospice MAC, National Government Services (NGS), has a
website at www.ngsmedicare.com with a home page dedicated to hospice. The following is a
partial listing of local coverage determinations (LCD), bulletins, and/or legislation related to the
issues mentioned above that were made available to all providers between the time you joined the
program and when the services were rendered:


Hospice: CMS Pub 100-2 Chapter 9, CMS Pub 100-4 Chapter 11, LCD L25678 and 42
CFR Part 18

Limitation of Waiver of Liability/Without Fault
Section 1879 of the Social Security Act permits Medicare payments to be made to providers on
assigned claims for certain services otherwise not covered, if neither the beneficiary nor the
provider knew, or could reasonably be expected to know, that the services were not covered.

 San Diego Hospice & Palliative Care
February 25, 2014
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Services affected are those disallowed as not medically reasonable or necessary for the diagnosis
or treatment of illness or injury, or to improve the functioning of a malformed body member.
Beneficiaries may not be billed for any overpayment amount that is refunded by offsetting
against future Medicare payments payable to you by reason of assignment. Under provisions of
Section 1879 of the Social Security Act, beneficiaries are waived of any liability for services,
which they did not know (or could not have reasonably been expected to know) would not be
allowed and paid by Medicare.
Section 1870 of the Social Security Act permits Medicare to not recover inappropriate payments
with respect to an individual deemed without fault in having caused the overpayment. For the
“without fault” provision to apply, the individual must have complied with all pertinent
regulations and instruction materials. These include CPT procedure code definitions and
Medicare Bulletins. The individual is expected to have had a reasonable basis for assuming the
payments received were correct or, if there was reason to question payment, to promptly bring
such question to the contractor’s attention. In addition, the individual is expected to have made
full and accurate disclosure of material facts.
It is important that the management of any medical practice treating a significant number of
Medicare beneficiaries understand the conditions governing which services will be reimbursed
under the Medicare Program. Pertinent information was available from the law and regulations,
and from Medicare Bulletins. Lacking any information that the provider is “without fault” and
your failure to provide the requested documentation, we have found that Section 1870 of the
Social Security Act does not apply and that you are liable for the overpayment.
A Brief Description of Statistically Valid Random Sampling (SVRS)
The Supreme Court has long recognized that the federal government possesses an inherent right
to recover moneys illegally or erroneously paid out. The common law right to recover federal
funds has been specifically recognized as being fully applicable to the Medicare Program.
Moreover, the courts have also recognized that extrapolation based on a sample is a valid audit
technique in cases arising under the Social Security Act.
Statistically Valid Random Sampling (SVRS) is a mathematically sound method by which an
accurate determination of specific items may be made on the basis of careful examination of a
portion of the units under scrutiny. It is a method widely used by: 1) industry in quality control;
2) audit agencies in the performance of audits; 3) public relations firms in determining public
opinion, etc. It is acceptable in courts of law in the presentation of evidence.
One sampling methodology used is stratified random sampling. The technique of stratified
sampling creates divisions in population to focus on like characteristics; for the purposes of
Medicare reviews, like characteristics are dollar values. For instance, strata may contain
differing numbers of sampled beneficiaries depending upon the Medicare payments made on
their behalf. Another method is simple random sampling, where each beneficiary in the target

 San Diego Hospice & Palliative Care
February 25, 2014
Page 5 of 5

population has an equal chance of being chosen. The method of sampling used in this case is
based on the homogeneity of the beneficiaries.
The number of beneficiaries to be sampled is determined by the population data that meets the
criteria defined by the analyst. The sample is then generated by the statistician using simple
random sampling within each stratum (or within the population if the design is simple).
All sampled beneficiaries’ claims and the corresponding medical records are reviewed and any
Medicare payment adjustments are individually identified. Audit adjustments are totaled by
stratum and overpayments, if any, are then calculated for each stratum using a simple
mathematical equation: The average overpayment for beneficiaries in each stratum is multiplied
by the number of beneficiaries represented by the respective strata (sub-universes). The
estimated total overpayment is then found using a confidence interval.
Overpayment
We have estimated that you have been overpaid $10,514,624.36 by Medicare. A spreadsheet
with a list of specific claims that have been determined to be fully or partially non-covered, the
specific reasons for denial and the amount of the overpayment is available to you upon written
request.
Conclusion
This letter is educational in regards to the appropriate submission of Medicare claims. You will
be contacted in writing by the MAC regarding any overpayment assessed as a result of this
review and your appeal rights. Any concerns related to an overpayment assessed by the MAC
must be addressed to them.
Sincerely,
(b)(6), (b)(7)c

Fraud Investigator
Zone Program Integrity Contractor (ZPIC), Zone 1
SafeGuard Services, LLC

(b)(6), (b)(7)c