HNF Stories
11:22 am
Tue July 2, 2013

Hospices Under Feds' Microscope

Medicare’s huge false-billing lawsuit against Miami-based Vitas Healthcare signals that federal scrutiny of hospices is going strong behind the scenes – especially in Florida. 

Hospices are paid to care for patients with terminal illness.
Hospices are paid to care for patients with terminal illness.
Credit National Institutes of Health


Federal agents are investigating whether hospices have systematically billed Medicare for patients not eligible for the care  or over-billed for “crisis care” that patients didn’t need, industry officials and attorneys say.

A May 2 lawsuit accused Vitas, the nation’s largest hospice, of collecting “tens of millions of taxpayer dollars” through unjustified and inflated bills. Health care attorneys estimate the over-billings could reach hundreds of millions.

The action came after four years of investigation in which 11 smaller hospices paid $88 million to settle Medicare over-billing suits. In addition, the government in January joined a lawsuit accusing Hospice of the Comforter near Orlando of an estimated $11 million in phony billings.

“Hospice has escaped tough scrutiny over the years,” said Paul Ledford, executive director of the Florida Hospice & Palliative Care Association. “Now they are paying more attention to us. I don’t think hospices in Florida are committing fraud. But hospices in Florida are huge, because of our population. They are big targets for the government.”

Medicare now accounts for 90 percent of hospices' revenue.

Ledford noted that the federal Inspector General’s office overseeing Medicare listed hospice overcharges among its investigative projects for the year. What’s more, the government last month proposed tightening billing codes that hospices have used to boost Medicare payments six-fold since 1998.

Where Senate President Made His Fortune

Vitas is owned by Chemed Corp., owner of Roto-Rooter. Vitas dwarfs the 41 other hospices in Florida, enrolling 17 percent of 115,000 annual hospice patients in the state, Ledford said. Vitas operates in 18 states and took in $1 billion last year.

The company was started in the early 1980s by Florida Senate President Don Gaetz, R-Niceville, and two partners. They sold it to Chemed for $406 million in 2004, making Gaetz one of the Legislature’s wealthiest members with a net worth of about $25 million.

The federal lawsuit says Vitas’ false billings go back to 2002, while Gaetz was still vice chairman of the board. Gaetz told The Associated Press in May that despite his position on the board, he had no role in company operations after 2000, when he became Okaloosa County school superintendent.

Gaetz told AP that he does not now “own a single share of stock and I have no role with the company in any capacity.”

Hospices serve patients who are thought to be within six months of dying from a terminal illness and who agree to a shift from aggressive treatments appropriate when there is a chance of a cure to palliative care,  designed to ease pain and make the most of the patient’s remaining time.  If patients live beyond six months, the doctor and hospice must reassess to see if they still qualify for the care.

The federal lawsuit says Vitas routinely signed up patients who were not really terminally ill, enrolling patients whose own doctors indicated they did not qualify.

More significantly, the lawsuit says that in a large number of cases, Vitas falsely billed Medicare for expensive “crisis care,” which is intensive nursing during emergencies so patients can remain at home.
The agency pays $160 a day for standard care and $1,000 a day for crisis care.

“One Vitas nurse stated that, on more than one occasion when Vitas sent her to the homes of patients whom she was told needed crisis care, she arrived ready to perform intensive nursing care only to find that the patients were at church, the beauty parlor or playing bingo,” the suit says.

A Pattern of Overcharges?

Vitas paid bonuses to sales staff who enrolled a lot of crisis-care patients and pushed medical staff to recommend it, the lawsuit says. As a result, Vitas collected $1 billion in crisis care since 2002, twice as much as all other U.S. hospices combined, the suit says. Vitas took in 15 to 17 percent of its revenues from crisis care, compared to the national average of 1.6 to 1.8 percent.

In one example, the suit says Vitas billed extra for crisis care provided to a Florida woman identified only as R.B. during July 2007. The crisis proved to be routine shortness of breath that ended within a day, the suit says, but Vitas billed at the higher rate for 12 days and made an extra $9,000.

Then in 2009, Vitas billed $16,000 in crisis care for the same woman, who had no emergency other than forgetfulness, the suit says.

Vitas declined to comment beyond a statement from Chemed denying any wrongdoing.

“Chemed and Vitas have made significant investments in controls, systems and procedures to uphold the highest industry standards and to maintain compliance with all regulatory requirements. Our compliance efforts are designed to ensure our services are provided only to eligible patients. Chemed and VITAS intend to defend this lawsuit vigorously,” the statement said.

Ledford, of the hospice association, said Vitas officials told him alleged overcharges were isolated mistakes, not a pattern of over-billing. “I think what you would find is that these are anomalies,” Ledford said.

Comforter hospice, in Seminole County, regularly enrolled patients who were not terminally ill, the federal lawsuit says. While being investigated, Comforter discharged 150 patients, some of whom were Medicare hospice patients for nine months, the suit says.

Latour Lafferty, Comforter’s attorney, declined to comment. Ledford said the company was negotiating a settlement.

'Debility' in Eye of Beholder?

Medicare has been looking at hospice care for several years since billings began climbing, from $2.2 billion in 1998 to $12 billion in 2009. Part of the increase was success in getting the word out that beneficiaries can use the service, as more than 1 million a year now do.

But a Medicare report also cites a big jump in patients enrolled with “ill-defined” diagnoses such as “debility,” a syndrome marked by unexplained weight loss, malnutrition, functional decline and multiple chronic conditions.

In 1998, hospices signed up 8,534 patients with debility. By 2009, it was the leading hospice diagnosis at 120,631 cases. Similar patterns were seen in non-Alzheimer’s dementia, the No. 2 diagnosis at 119,872 cases, and “failure to thrive” at 70,337.

New regulations proposed by Medicare last month would deny payments for debility and failure to thrive without proof of terminal illness.

Ledford said the diagnoses are not being misused, they are used when doctors can’t tell what single thing makes a person terminally ill.

But health care consultant Reginald M. Hislop III said in a blog that hospice needs to be reformed so it can help patients and save money without the “push-the-envelope growth evidenced in the Vitas complaint.”