OIG Cracks Down on Hospice Provider Fraud

Hospice fraudLast year, the HHS Office of the Inspector General stated the hospice fraud was rampant and that it would be an enforcement priority for the agency. The OIG found that some hospice operators, doctors and staff were recruiting patients to maximize profits, even when in some cases the patients didn’t need hospice care. Their illegal activities amounted to hundreds of millions of dollars.

This month, we are seeing the results of OIG’s crackdown. On July 6 alone, the U.S. Department of Justice announced three cases involving hospices and healthcare fraud totaling approximately $15 million.

One case involved the defunct Home Care Hospice, Inc. (HCH), a Philadelphia-based company that the feds said falsely claimed and received taxpayer dollars for hospice services that either were unnecessary or never provided. The case grew out of a whistleblower suit filed against the owners and operators of Home Care Hospice.

The company’s owners and other executives, identified as Matthew Kolodesh, Alex Pugman, Svetlana Ganetsky, and Malvina Yakobashvili agreed to pay $8.8 million to settle the False Claims Act allegations. A total of 22 individuals employed by or associated with HCH were criminally convicted in the Eastern District of Pennsylvania.

Another case involved Compassionate Care of Gwynedd Inc., a hospice provider based in Bensalem, Pa., and a subsidiary of Compassionate Care Hospice Group Inc., a Florida corporation with its principal place of business in Parsippany, New Jersey. It was alleged that the hospice admitted patients who did not need hospice care and billed Medicare for medically unnecessary services. The government alleged that the company admitted patients by using a diagnosis of “debility” that was not medically justified.

The hospice agreed to pay $2 million to settle the allegations. This case also was initiated by whistleblowers.

In a third case, Compassionate Care Hospice Group, Inc., also agreed to pay $2.4 million to resolve allegations that it, and its subsidiary Compassionate Care Hospice of Atlanta, LLC, submitted or caused the submission of false claims to Medicare and Medicaid by engaging in improper financial relationships with contracted physicians.

The government alleged that CCH Group and CCH Atlanta paid illegal remuneration to five physicians to induce them to refer patients to CCH Atlanta for hospice services and certify individuals as eligible for hospice services. The government also alleges that CCH Atlanta and CCH Group submitted or caused the submission of claims to Medicare and Medicaid for services provided to the individuals who had been referred by the physicians because of the kickbacks. The illegal remuneration took the form of payments to a medical director in exchange for referrals and sham contracts with associate medical directors in exchange for referrals.

In 2013, Medicare paid $15.1 billion for hospice care for 1.3 million beneficiaries.

Two key requirements of the Medicare hospice benefit are for the beneficiary to elect hospice care and for a physician to certify that the beneficiary is terminally ill. When electing hospice care, the beneficiary signs an election statement that is written by the hospice. The election statement is intended to ensure that the beneficiary understands the hospice benefit particularly that hospice care is palliative, not curative—and that the beneficiary waives the right to Medicare payment for treatment of the terminal illness except for services provided by the hospice.

Hospice care operators would be well advised to create compliance programs to address in-house procedures for submitting claims to Medicare. As evidenced by these whistleblower claims, failure to do so could result in former or current employees filing a qui tam lawsuit under the False Claims Act. In addition to fines and remuneration, hospice providers face the prospect of being excluded from the Medicare program, or even jail time.

The Health Law Offices of Anthony C. Vitale represents the interests of hospice providers and can assist with issues relating to Medicare and Medicaid.