The End of the GIP Building Era

In the early years of my work as a hospice consultant, I spent a great deal of time conducting hospice facility feasibility studies. Many of my clients were freestanding non-profits, i.e., hospices that were not part of a hospital system or larger entity. The common wisdom at that time was that while hospice inpatient facilities were unlikely to break even on the basis of their operating revenue, they nevertheless fulfilled a need for patients and families. In addition, they were seen as visible symbols of service to the community and reliable magnets for fund raising.

One of the biggest questions in these projects was always how big to build it. (Rarely was the question whether to build.) I had a number of rules of thumb in helping clients plan these facilities. While typical hospices without a GIP facility might expect to see 1% to 2% of their patient days at the GIP level of care, hospices with facilities routinely exhibited much higher proportions. Utilization as high as 6% was much more typical, and usually the metric I used to estimate the need for beds in new facilities. In fact, even after using that aggressive planning target, one of my clients reported after an expansion project that their occupancy rate was running far ahead of projections.

My, how times have changed.

These days I find myself advising disappointed clients not to build at all. One client had already lined up donated land and was set to launch the capital campaign. However, when shown the size of the probable operating deficit their proposed facility would carry year after year, the board decided to put the project on indefinite hold.

So what happened? I attribute the change directly to the transformed environment for compliance oversight and increased scrutiny of general inpatient level care. The OIG study released in March this year was titled, “Hospices Inappropriately Billed Medicare for $250 Million for General Inpatient Care.” Only in their document, that title is in ALL CAPS. There is no doubt this analysis is guiding their enforcement action. Since June of this year, two hospices have been assessed civil monetary penalties for misuse (read over-use) of GIP level care. I expect there will be more to come. In addition, we’re hearing from hospices across the country that their MACs are aggressively rejecting claims and requiring much more thorough documentation of the appropriateness of each day of GIP level care.

So what do we do about it? We’ve already built the facilities using a different set of assumptions about their use. If we assume that today’s tight scrutiny is here to stay, how do we ensure that our facilities receive their best and highest use while remaining compliant with Medicare regulations?

I’ll be publishing more about this topic over the coming weeks. In the meantime, I urge you to consider attending our upcoming event devoted to this topic. On October 30, prior to the start of The Intensives conference, I’ll be facilitating the NHPCO Edge Thought Leader Forum. Our focus is “Optimizing Freestanding Hospice Facilities: Stemming Losses in an Era of Shrinking GIP Utilization.” We’ll gather leaders in hospice facility management from around the country to share what works, what doesn’t and how they are adjusting to the new reality. For more information, see the event announcement here. 

Sue Lyn Schramm, MA
Director, Consulting Services, NHPCO

See the previous NHPCO Edge Blog article, "Community-based Palliative Care."