In 2014, an estimated 1.6 to 1.7 million patients received services from a hospice provider. The Medicare hospice benefit is the predominate source of payment for that care. According to a study by the National Hospice and Palliative Care Organization, the percentage of hospice patients covered by the Medicare hospice benefit versus other payment sources was 85.5% in 2014.  Given that the Medicare reimbursements for hospice care ranges from about $150 per day for routine hospice services up to over $800 per day for continuous care, the costs to the Medicare program for hospice are now upwards of $15 billion per year.

Unfortunately, the vital and necessary end-of-life services provided by hospice programs are now yielding an increasing number of fraud, waste, and abuse cases. In 2015, the federal government prosecuted over 60 cases of fraud related to hospice providers with a cost to the Medicare program of hundreds of millions of dollars.

Based on recent hospice fraud, waste, and abuse cases, the types of illegal schemes seen in the hospice care industry fall into several broad categories:

  • Kickbacks paid to physicians and other healthcare providers for hospice referrals
  • “Recruiting” hospice patients who are not medically eligible for hospice care
  • Classifying patients as requiring a higher level of care than medically necessary
  • Providing more treatment than medically necessary

Examples of these schemes abound. Last fall, a Pittsburgh-area hospice’s chief operating officer was sentenced to 15 months in prison for her role in inflating the patient census (and thus the Medicare reimbursements flowing to the facility) at Horizons Hospice by recruiting patients who were not, in fact, terminally ill.  The COO, Mary Ann Stewart, went so far as to send hospice employees on recruiting missions around Pittsburgh’s inner city bus stops, looking for potential hospice patients.

Illinois hospice chain owner Seth Gillman of Passages Hospice LLC received a six-and-a-half-year prison sentence, while a subordinate administrator will serve 28 months for a hospice fraud scheme that cost Medicare $20 million.  They will split responsibility for paying $9 million in restitution. In the case of Passages Hospice, Gillman and administrator Gwen Hilsabeck developed a “bonus program” in which Passages staff was financially rewarded for the number of patients that were placed in a higher level of care each day. Medicare billings bloomed and Hilsabeck alone took home $1.4 million in salary and bonuses.  In a failed attempt to pass a Medicare audit, patients’ medical records were altered to reflect the higher level of care.

Finally, in a case that hits all of the types of fraud listed above, in addition to accusations of euthanasia, 16 people have been indicted in Texas in a multi-million Medicare and Medicaid fraud scheme at one of the state’s largest hospice chains. The two owners of Novus Health Services and Optim Health Services Inc., married couple Bradley Harris and Amy Harris, along with five doctors, five nurses and two others are accused of running a scheme that defrauded the federal programs of more than $60 million over a 5-year-period.  The Novus and Optim defendants are accused of recruiting ineligible hospice beneficiaries, paying kickbacks to physicians for the referrals, and for falsifying medical records (in some cases, the physicians were signing off on personal patient evaluations when other records showed them to be vacationing in Hawaii and Mexico). The defendants are also accused of submitting false claims by bumping patients into a higher level of care than they actually required and administering treatments that were not medically necessary. Those medically unnecessary treatments involved the administration of morphine that allegedly led to the fatal overdosing of several patients, in essence euthanizing them. The indictments were handed down at the end of February 2017, with trial dates as of yet, unscheduled.