Report Uncovers Widespread Medicare Fraud in Hospice Care
Policy + Politics

Report Uncovers Widespread Medicare Fraud in Hospice Care


For the countless families that have used the service, hospice care of dying loved ones is an indispensable gift. Trained nurses and social workers step in to support patients in their final months, with an eye towards making them comfortable, alert and relatively pain free rather than attempting a cure.

In 2013, Medicare paid $15.1 billion for hospice care for roughly 1.3 million people who were treated by 3,925 for-profit and non-profit programs throughout the country.

Under federal rules, the patient or a guardian must sign an election statement accepting the hospice care, and the attending physician must certify that the patient is terminally ill and beyond a cure.

 Doctors and Nurses Charged in Massive $900 Million Medicare Fraud

Now, a disturbing new report by the Office of Inspector General of the Department of Health and Human Services claims some unscrupulous hospice operators, doctors and staff are aggressively recruiting patients for their programs in an effort to maximize profits – even when in some cases the patients shouldn’t be in hospice. The improper and fraudulent activities amount to hundreds of millions of dollars.

In a third of the cases examined, the hospice election statements lacked required information or failed to adequately state the implications of the withdrawal of most medical care. Moreover, in 14 percent of the cases, the physician did not meet requirements when certifying that the beneficiary was terminally ill. Those doctors appeared to have “limited involvement” in determining that the beneficiary was appropriate for hospice care.

And in a number of cases, the patients outlived standard hospice care, which usually assumes a patient won’t live much longer than six months. That suggests that the patients were inappropriate candidates for the program, and as a consequence may have missed out on needed medical care.

With more than $15 billion of Medicare funds spent on the program every year, the temptation for cheating is great. The Washington Post reported last week that the federal government in recent years has sought to recover more than $1 billion from hospices that “illegally billed Medicare patients who were not near death.”

The Inspector General’s office has investigated a number of recent fraud cases that highlight the need for more vigilance in policing the system.

Related: Billions in Medicare Fraud Still Rampant Despite Federal Crackdown

In one case, the owner of a hospice in Mississippi used “patient recruiters and submitted fraudulent claims to Medicare” for patients who were not appropriate candidates for hospice.  Investigators discovered that the beneficiaries had no idea they were in hospice care. The owner was subsequently convicted and sentenced to three years in prison and ordered to pay $1.1 million in restitution to Medicare.

Another case had to do with a Philadelphia hospice owner who submitted false claims to Medicare and “altered patient records to make patients appear to be eligible for hospice services when they were not.” In order to boost enrollment, the hospice owner also paid health care professionals for referring patients to the hospice, even though they should have not been in the program. The owner was convicted and sentenced to more than 14 years in prison and ordered to repay Medicare $16.2 million, according to the report.

Meanwhile, the former head of a Pittsburgh-area hospice company pleaded guilty to using patients who weren’t terminally ill to collect millions of dollars in false Medicare and Medicaid billings, according to the Home Health Care News. Mary Ann Stewart, a 48-year-old from Carrolltown, Pa., and the former chief operating officer of Horizons Hospice, was indicted last year on one count of health care fraud and four counts of lying to a federal grand jury, according to the U.S. Attorney’s Office of the Western District of Pennsylvania.

As part of the scheme, she ordered her staff to admit patients who weren’t terminally ill to the hospice and then billed Medicare and Medicaid. The government said that she defrauded Medicare and Medicaid out of millions of dollars. A physician, Dr. Oliver Herndon, was also charged in the scheme and pleaded guilty in November 2014 to submitting claims for patients who weren’t terminally ill or for services that weren’t provided, as Associated Press first reported.  The doctor was sentenced to 33 months in federal prison in July, while Stewart is facing as much as 10 years in prison and a $500,000 fine.

Related: Audit Uncovers $124.7 B of Overpayments and Fraud in Medicare and Medicaid

To be eligible for Medicare hospice care, a beneficiary must be entitled to Part A of Medicare and be certified as having a terminal illness with a life expectancy of six months or less if the disease runs its normal course. Patients who choose hospice care are entitled to receive care for two 90-day periods, followed by an unlimited number of 60-day periods. The Washington Post first reported in 2014 that the number of patients who outlived hospice care had increased markedly, “in part because hospice companies earn more by recruiting patients who aren’t actually dying.” 

The inspector general’s office said that it based its latest study on a random-sample review of hospice election statements and certifications of terminal illness for hospice general inpatient stays in 2012.

“The findings in this report make clear that hospices should improve their election statements and ensure that physicians meet requirements when certifying beneficiaries for hospice care,” the IG’s study concluded. “In 35 percent of . . . stays, hospices’ election statements lacked required information or had other vulnerabilities. It is essential that hospices provide beneficiaries and their caregivers with accurate and complete information, especially about the palliative nature of hospice care and the benefits they are waiving.”