Lieff Cabraser Civil Justice Blog

Whistleblowers Expose Medicare Fraud by For-Profit Hospice Corporations

Whistleblowers Expose Medicare Fraud

Hospice care is intended to be a holistic way for terminally ill people to end their lives in a dignified manner in the comfort of their own homes. For many years, small nonprofit organizations were the main providers for this type of healthcare. More recently, hospice care has become a multimillion dollar industry dominated by large for-profit corporations.

However, the interests of for-profit corporations and dying patients are not necessarily aligned, especially when new research shows that more than one in three patients end their hospice service before dying. Although it is typical for a hospice to release around 15% of their patients before death due to an unexpected health improvement, “researchers found that at some hospices, and particularly at new, for-profit companies, the rate of patients leaving hospice care alive is double that level or more,” according to the Washington Post.

There is a financial incentive to find patients well before they are about to die, which MedPAC, a watchdog group created by Congress, says is costing Medicare billions of dollars a year. While some patients stay longer in hospice care simply because they outlive their prognosis of six months, the Washington Post suggests the increase in numbers is largely due to the financial incentive. Medicare pays a hospice approximately $150 a day per patient for routine care, so healthier patients who need less help and live longer are more profitable.

The article states that this practice is an open secret in the industry – because of the method of payment, the way to run a hospice profitably is to enroll patients who will stay for a long time. In 2000, 70% of hospices were run by nonprofits or government agencies while today nearly 60% are for-profit companies. This graphic shows how the average profit per patient has grown steadily since 2002, with net operating profits increasing from $25 million to $265 million.  In addition, the average patient in a nonprofit hospice resides for 69 days, compared to the average for-profit hospice patient of 102 days.

As of December 2013, four of the ten largest hospices in the U.S. are being sued by whistleblowers alleging that patients were getting care that they didn’t need. The lawsuits describe an industry full of competitive for-profit companies who aggressively solicit doctors and hospitals and cruise nursing homes to recruit new patients. A lawsuit against AseraCare alleges that there was steady pressure for managers to find more patients. “An executive who did not meet a quota was penalized, according to the lawsuit, and the company offered a massage chair for the person who brought in the most hospice patients,” reports CBS News.

Additionally, according to the lawsuit, when the hospices were making too much from patients and coming up on Medicare’s cap on payments, Asera­Care would do whatever it could to bring its numbers down by dumping patients and telling them they were no longer eligible, or even seeking out “last-breath” patients (those who would die quickly) in order to bring their average down.

Whistleblower lawsuits such as these have ended schemes and misconduct designed to defraud the Medicare and Medicaid programs and exposed other types of health care fraud. Learn more about how Lieff Cabraser assists whistleblowers in stopping fraud in government programs.

By Robert Nelson.