OIG Puts the Pressure On as Hospice Fraud Cases Pile Up

In March 2018, Health and Palliative Services of the Treasure Coast and two of its businesses paid $2.5 million to settle a False Claims Act (FCA) case related to hospice billing.

A month later, Horizons Hospice agreed to pay more than $1.2 million to resolve allegations that the company fraudulently billed Medicare and Medicaid for services to patients who did not have a life expectancy prognosis of six months of less.

Both settlements came more than a year after Chemed Corporation (NYSE: CHE) and various wholly-owned subsidiaries—including Vitas Hospice Services and Vitas Healthcare, the biggest for-profit hospice chain in the country—agreed to pay a whopping $75 million to resolve a government lawsuit with similar allegations.


As utilization has increased and companies have more widely shifted toward high-margin profit models, claims of fraud, waste and abuse in the hospice industry have become increasingly common.  So much so that, in fact, the U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG) has made hospice investigation a substantial portion of its active work plan.

Since the end of 2016, OIG has announced or revised plans for at least seven different hospice-related audits, evaluations and inspections, a Home Health Care News review found.

“The Medicare hospice program is an important benefit for beneficiaries and their families at the end of life,” the watchdog organization stated. “OIG and others have identified vulnerabilities in payment, compliance and oversight, as well as quality-of-care concerns, which can have significant consequences both for beneficiaries and for the program.”


Patients and taxpayers are at the front lines of those affected by the rise in fraud and improper billing, but scrupulous hospice providers are also being hurt.

For the many businesses that are free of red flags, it’s becoming more difficult to go up against competitors who aren’t exactly playing by the rules, an executive from a West Coast family-owned home health and hospice company with nearly 3,000 patients told HHCN.

“Some of the companies out there kind of just want to come in, see an opportunity to maybe generate a little bit more capital for themselves, and they’re really just rendering services that aren’t within the benefits of hospice,” the exec, who asked for anonymity to avoid backlash, said. “It gives the whole industry a black eye.”

The ‘cost of doing business’

The list of U.S. Department of Justice FCA cases against hospice companies in recent years is long and rapidly growing. Other prominent examples include Genesis HealthCare’s $53.6 million settlement in 2017, Evercare Hospice and Palliative Care’s $18 million settlement in 2016 and Guardian Hospice of Georgia’s $3 million settlement in 2015.

The number of civil cases against hospice providers also appears to be steadily trending upward.

“Right now, as we speak, I’m working on about five hospice fraud cases,” Mark Schlein, an attorney with Los Angeles-based law firm Baum, Hedlund, Aristei & Goldman, told HHCN. “In the past—even just six or seven years ago—that was only one case, at most, at a time. From my perspective, my hospice and fraud practice has grown dramatically, which reflects the problem in the health care fraud arena and is a small example of what’s going on nationwide.”

Mike Bothwell, attorney and founder of Georgia-based Bothwell Law Group, also has a hefty load of FCA cases targeting hospice providers, he told HHCN. Sometimes, identifying a suspect hospice company seems as easy as throwing a dart toward a map of  providers, he said.

“I think that I have filed something along the order of 15 different hospice fraud cases,” Bothwell, who represented whistleblowers in the 2015 Guardian Hospice case, said. “I think that I did my first hospice case in the late 90s or early 2000s—they didn’t really used to come up on my radar.”

The most widespread type of hospice-related fraud or improper billing is providers wrongfully admitting patients who are ineligible for care, according to the attorneys. Currently, to meet Medicare eligibility requirements, patients need to have their hospice doctor and primary care physician certify that they have six months or fewer to live. Patients also need to choose palliative care over curative care, except in certain demonstration programs.

Closely related to improperly admitting patients is improperly retaining patients when they are clearly not actively dying, though hospice rules do require hospices to regularly assess patient conditions.

“By improperly admitting and improperly retaining, the corrupt hospice company increases its patient census, which, of course, means more money to the hospice company,” Schlein said. “The more patients you have on hospice, the more that the government pays you.”

Besides accepting and keeping ineligible patients, other common types of hospice wrongdoing include the use of kickbacks to bolster referrals and the tactic of unnecessarily or fraudulently categorizing patients in more intensive care levels with higher reimbursement rates, such as for general inpatient care, typically referred to as GIP.

Routine home care services during a patient’s first 60 days of being on hospice were reimbursed at a rate of $190.55 per day last year, according to the National Hospice and Palliative Care Organization (NHPCO). GIP, meant for pain control and symptom management that can’t be handled in other non-facility settings, was reimbursed at $734.94 per day.

“Sometimes, you see GIP stays that are really extraordinary for certain diagnoses,” the West Coast hospice executive said. “There are certainly individuals who play that game.”

Fraud is inherently deceptive, meaning the total cost of all hospice fraud is almost impossible to calculate and largely unknown at this point.

What is known: Just the act of fraudulently placing patients in higher care categories costs Medicare hundreds of millions of dollars each year. Hospice providers billed about one-third of all GIP stays inappropriately in 2012, costing Medicare $268 million, the most recent OIG report on the issue found.

Overall, the Department of Justice opened 967 new criminal and 948 new civil health care fraud investigations during its 2017 fiscal year, according to a joint annual report with HHS.

“It’s fair to say that most companies engaging in fraud or cheating the government recognize that getting caught and paying a fine has become a cost of doing business,” Schlein said.

NHPCO response, OIG recommendations 

As a demographic group, baby boomers have helped drive attention paid to hospice, seeing value in being able to better control how, where and when they die. The market has seen that value as well, reflected by a string of recent hospice acquisition deals with sky-high valuations.

Fraud and improper billing may exist in the industry, but it isn’t “rampant,” Edo Banach—president and CEO of NHPCO, a not-for-profit hospice and palliative care organization—told HHCN.

“The fact is there are bad players in hospice, as there are in home care and nursing homes, certainly, and hospitals,” Banach said. “Rampant implies it exists across the board, and my experience is [that’s] not the case.

Any instance of improper billing is one instance too many, he said. With that in mind, NHPCO works diligently with Congress, the Centers for Medicare & Medicaid Services (CMS) and its members to make sure hospice providers are providing appropriate care and unlikely to make compliance mistakes.

“A lot of times when I see someone in the news being called out for … defrauding of Medicare, I am both chagrined and somewhat relieved to find out they are not a member of ours, to be honest,” Banach said. “Folks who join associations and take part in educational sessions are less likely to be out and flouting the rules. Where we do see some of our members getting into trouble is because of a difference of opinion about what is medically necessary and what’s not.”

OIG has made several recommendations to CMS to improve hospice oversight.

CMS should reform hospice payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays, OIG recommended. Medicare should also adopt a hospital transfer payment policy to lower hospital reimbursement for beneficiaries who are discharged early to hospice care and seek regulatory changes to establish more specific requirements for the frequency of hospice certification, according to the watchdog.

The FCA is often cited as the most effective means for holding fraudulent providers accountable, Schlein said. Even so, penalties recovered from FCA cases are often far less than the payments improperly received by a hospice, he said.

Treasure Coast hospice, for instance, was accused of defrauding Medicare by up to $72 million, but settled for only $2.5 million without admission of liability, TC Palm reported.

“[Whistleblowers play an incredibly important role in holding providers and companies accountable for committing fraud against the government,” Schlein said. “Still, when fraud is caught, in many cases, they get back only pennies on the dollar.”

How rampant fraud actually is—and what the most effective ways of combating it are—may be up for debate. Nonetheless, it’s safe to say that hospice providers should plan ahead for increased oversight and new policies in the coming months and years.

Written by Robert Holly

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