Between incentives for whistleblowers, federal agencies joining forces to go after bad actors, and new algorithms applied to electronically submitted Medicare payment claims that can detect and reject filings that show patterns of improper billing, it’s not a good time to attempt to defraud Medicare fee-for-service reimbursement programs—especially the hospice care benefit.
Consider two cases last year in which hospices in Pennsylvania and Nevada became the subject of state and federal investigations as the Department of Health and Human Services and the Department of Justice (DOJ) ramped up investigation of fraudulent providers applying for reimbursement from federal health plans.
In the case of Horizons Hospice of Altoona, Pa., the chief operating officer was charged with orchestrating a scheme of directing staff to place nonqualifying, inappropriate patients into hospice care, and the medical director was charged with recertifying the patients for continued care.
In November 2014, Horizons Medical Director Oliver Herndon pleaded guilty to one count of health care fraud; in July 2015 he was sentenced to 33 months in federal prison.
Horizons Chief Operating Officer Mary Ann Stewart received a five-count sentence for fraud and false statements in February 2015. Stewart faces a maximum total sentence of 10 years in prison on the health care fraud count and five years in prison and/or a fine of $250,000 on the making false declarations before a grand jury count.
After receiving a tip from two Creekside Hospice employees around the same time last year, DOJ, under the False Claims Act, filed a lawsuit that alleges that the Las Vegas hospice submitted ineligible claims for hospice services and inflated claims for patient visits.
DOJ filed its lawsuit against the hospice after it received information about the hospice practices from both a current and a former clinical manager who filed a complaint under the whistleblower protection provisions of the False Claims Act and a comparable Nevada law. Under these statutes, a private citizen can sue for fraud on behalf of the U.S. government and Nevada and share in any recovery.

Surveillance Heightened

Scrutiny of this medical specialty has been high since lawmakers in 1982 adopted end-of-life care as a covered benefit into the federal health plan. A patient’s clinical charts might show signs of a terminal illness, but determining life expectancy of six months or less, the criteria for hospice care enrollment, is far from an exact science.

Susan Miller of Brown University says, “There’s no clear, definitive way” to predict life expectancy for hospice enrollment. Almost 12 percent of patients admitted to hospice care in 2013 remained in the care for more than the six months allowed under the Medicare provision, according to the National Hospice
and Palliative Care Organization (NHPCO).

And a recent report in the Journal of Palliative Medicine found that in 2010 more than 182,000 hospice patients lived to be discharged.

The diverse care settings in homes, hospitals, and long term care facilities, as well as the evolution of specific care techniques of the discipline and uncertainty on how they should be measured, also have made the benefit subject to review.

An increased potential for fraud seemed to enter this medical specialty when the organizational tax status of hospice care organizations shifted from majority nonprofit to for-profit, some observers note.

In 2013, about 66 percent of hospice care was operated as for-profit entities, with 30 percent as nonprofit and 5 percent government-owned programs. Researchers at NHPCO have found higher rates of live discharge at newer for-profit hospices, where it has averaged 32 percent.

CMS On The Case

In fiscal year 2012, the Centers for Medicare & Medicaid Services (CMS) implemented its fraud prevention system, a system of predictive algorithms and other analytics against Medicare fee-for-service claims prior to payment.

In 2013 CMS took administrative action against 938 providers and suppliers on charges of five-to-one dollar returns on investment for fake patients, upcoding, and improper billing patterns.

“CMS has more tools than ever before to move beyond a ‘pay-and-chase’ approach and implement strategic changes in preventing and detecting fraud, waste, and abuse,” the agency wrote in a June 2014 report to Congress.