Medicare Hospice Fraud – How to Spot it and How to Stop It

Hospice – dignity-focused, palliative care for the dying – has unquestionably improved the plight of countless patients who might otherwise have died in isolation, fear, and pain. An absolute entitlement under the Medicare program, however, it has also heavily-lined the pockets of venturers and has become a breeding ground for Medicare fraud. When most people think of hospice, they think: volunteers, soft-spoken nurses and ministers. The majority of twenty-first century hospice care in this country, however, is controlled by big-business interests.

Obviously, profit in and of itself is not a bad thing – it is the foundation of our economy. But when massive profits are made with taxpayers picking up the lion’s share of the bill, the eyebrows raise. And when those massive profits are made through Medicare reimbursements for people who aren’t dying and don’t qualify for the Medicare Hospice Benefit, then that is the definition of fraud. And when that fraud causes unsuspecting patients and families to forgo much-needed curative treatment that could improve or save their lives, then the people behind the fraud have to be stopped. Period.

Without admitting fraud, some major hospice companies have ponied-up large settlement dollars to quell allegations that their business models include admitting and readmitting non-terminal hospice patients and falsely billing Medicare and Medicaid. In 2006, mammoth national hospice provider, Odyssey Hospice, paid $12.9 million and kept doing business as usual. In 2009, national hospice provider SouthernCare paid nearly $25 million as a result of a qui tam lawsuit filed and litigated by the author of this article. But paying such high settlement dollars seemed to only prove the heavy profit to be found in healthcare for the dying. The Odyssey and SouthernCare settlements seemed to be nothing more than a blip on the radar of the for-profit hospice machines. Odyssey’s census and profit margins inexplicably grew rather than shrunk after they agreed to purge and stop admitting non-terminal patients. According to reports filed by the company, Odyssey’s average daily census grew by over 100 patients the year after the settlement and by nearly 4,000 after two years. Likewise Odyssey admissions grew by over 200 the first year and by over 14,000 by the second year. Their net patient revenue jumped by almost ten million the same year that they settled with the government – the initial year rise in revenue almost paying for the cost of the settlement. By year two under the Corporate Integrity Agreement, Odyssey increased its net patient revenue by more than $230 million. Last year – year five of the corporate integrity agreement – Odyssey grew its net patient revenue to $686 million, up $300 million after its settlement with the government of fraud allegations. The lesson: hospice is big business.

Unfortunately, where there are hefty profits to be made, people who will game the system can also often be found. One of the most common places to spot Medicare hospice fraud is in nursing homes. According to a recent report of the Department of Health and Human Services Office of Inspector General, 82% of hospice claims for beneficiaries in nursing facilities did not meet at least one Medicare coverage requirement and 33% of claims did not meet election requirements. A whopping 66% of claims did not meet plan of care requirements – a particularly disturbing statistic indicating problems with patient care. Almost a third of all Medicare hospice claims were for fewer services than required by the plan of care.

The only way to clean up the U.S. hospice industry and return it to its noble roots is for the people inside these companies to come forward and say enough is enough. Nurses, marketers, and managers on the ground who are being pressured to admit and readmit inappropriate patients must refuse to do so. They must report the fraud up the chain of command and demand that it change. Upper management must listen and report. Under the federal false claims act, companies can substantially limit their damages and avoid civil penalties through self-reporting. And if those measures don’t produce change, then whistleblowers must come forward and report directly to the government. Under the federal and some state false claims acts, whistleblowers can share in as much as 25% (and in some cases as much as 30%) of the settlement or jury award. The SouthernCare whistleblower lawsuit brought by the author of this article on behalf of a concerned former hospice nurse set the record at nearly $25 million, produced a whistleblower reward of nearly $5 million, and caused the industry to pause and take notice. But it is not enough that one or two brave souls come forward. If you are aware of Medicare Hospice Fraud, now is the time to speak up. The sanctity of hospice care, the future of the Medicare Hospice Benefit, and the safety and dignity of the terminally-ill depend upon you.

© 2010 James F. Barger, Jr.

Jim Barger, Jr. is a nationally recognized trial lawyer who handles hospice near los angeles   complex federal litigation, particularly qui tam cases under the False Claims Act. Jim achieved his first seven-figure civil result within two years of practice and his first eight-figure civil result within five years of practice. One of the most often cited legal scholars on qui tam and False Claims Act litigation, Jim’s writing in some cases has actually shaped the law itself. He has been cited by state legislators in adopting state False Claims Acts, by other attorneys in court pleadings litigating False Claims Act cases, and by scholars in legal treatises and law reviews such as Alabama Law Review, Boston University Law Review, Cardozo Law Review, Columbia Law Review, and others. In 2009, Jim Barger represented nurse whistleblower Nancy Romeo in the largest Medicare Hospice case in U.S. history resulting in a record return of nearly $25 million.

 


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