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Health Care Blog

OIG Report Indicates Areas of Hospice Fraud Vulnerability and Issues a Warning to Hospice Providers

Authored by John H. Fisher, II
John H. Fisher, II
Attorney
Wausau Office

Posted on January 27, 2017
Filed under Health Care

The HHS Office of Inspector General recently released a report indicating deficiencies in hospice election statements and physician certification of patient eligibility for hospice care.  Medicare hospice care provides help to patients who are terminally ill continue life with minimal disruptions.  In order to qualify for hospice benefits, a physician must certify the patient is terminally ill.  Additionally, the patient must sign an election statement that acknowledges certain Medicare covered services are being waived in favor of palliative care.

The OIG found that hospice election statements lacked required information or had other statement vulnerabilities in more than one‐third of the cases examined.  Election statement deficiencies included an absence of required acknowledgement of waiver of certain Medicare covered services.

The OIG found physician certification requirements were not met in 14 percent of examined cases.  Physicians are required to compose a narrative when certifying a patient is terminally ill.  In many cases there appeared to be very little actual involvement by the certifying physician.

Based on this study, the OIG clearly stated that hospice providers must improve their election statements and ensure physicians meet their requirements for certifying eligibility for hospice benefits.  Additionally, the OIG recommended the Center for Medicare and Medicaid Services take certain actions to strengthen oversight and assure compliance with these requirements.  The OIG recommended that CMS (1) develop and disseminate model text for the election statement patients must sign before receiving hospice benefits, (2) instruct surveyors to focus their review on the adequacy of election statements and compliance with physician certification of terminal illness,  (3) educate hospice providers about the requirements for election statements and certification of terminal illness, and (4) provide guidance to hospice providers on the impact on beneficiaries when they revoke previously made elections for hospice care.

Hospice providers should be attentive to this report.  This is not the first time the OIG has investigated and reported on these program integrity issues involving hospice providers.  We can expect the OIG to increase its enforcement in this area and there is likely to be an increase in cases brought against hospice providers who do not integrate the various regulatory requirements into their compliance activities.

The OIG report mentioned recent hospice fraud cases as illustrating the potential consequences of not following the certification rules.  The cases described are relatively extreme cases involving deliberate attempts to cheat the system by manufacturing patient eligibility.  The participants in these cases went to jail for these activities.  In a Mississippi case, the hospice provider used patient recruiters and submitted fraudulent claims to Medicare for patients who were not appropriate for hospice.  These beneficiaries had no idea they were in hospice care.  This case resulted in the owner of the hospice  being sentenced to 3 years in prison and ordered to pay $1.1 million in restitution to Medicare.

A second case involved a hospice provider who submitted false claims to Medicare and altered patient records to make patients appear eligible for hospice services when they were not. To increase enrollment, the hospice owner also paid health care professionals for referring patients to his hospice care even though they were not appropriate to receive hospice benefits.  The owner was found guilty of health care fraud, sentenced to more than 14 years in prison and ordered to pay $16.2 million in restitution to Medicare.

Even though these cases involve egregious violations that resulted in jail time, more subtle cases of non-compliance can present risk to hospice providers.  Failure to adequately document and certify the need for care can result in investigation, large overpayment obligations, and potential False Claims Act liability.  These consequences can be very extreme and penalties involved can be enough to put a hospice operation out of business. 

Management of these organizations should also be cognizant of Federal policy changes that focus investigations, and criminal and civil liability against responsible individuals.  In some cases, prosecution will be sought from individuals and the organization may be allowed to remain operational because of significant need for their services.  After all, in the cases cited above, individual managers are serving jail time for their activities.