Recent Developments in Hospice Fraud and Abuse

Recent Developments in Hospice Fraud and Abuse


The past week has seen some interesting developments for hospice providers in the world of fraud and abuse. 

First, on March 31 in the closely watched False Claims Act (FCA) case brought against AseraCare Hospice, the U.S. District Court for the Northern District of Alabama entered summary judgment for AseraCare.  As those who have watched this case know, this is just the latest twist in an already interesting case.  At the outset of the litigation, the Court bifurcated the trial into two stages, the first being the falsity of the claims at issue.  After the jury found for the United States, the Court determined that it had “incorrectly instructed the jury on the falsity element” in that stage and ordered a new trial.  In doing so, the Court gave notice that it would sua sponte consider summary judgment, and gave the Government an opportunity to identify evidence, other than the testimony of its medical expert, that proves falsity.  In response, both the government and AseraCare submitted briefs. 

In ruling for AseraCare, the Court stated that a “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA.”  The Court went on to state that because the United States presented no “evidence of an objective falsehood for any of the patients at issue” it had failed to prove falsity under the FCA, and summary judgment should be granted to AseraCare.  This ruling is not precedential in other FCA actions and there is little doubt that the Department of Justice will appeal to the 11th circuit.  Nonetheless, this is a blow to the DOJ’s efforts to bring, and try, similar cases predicated on medical necessity reviews.  It’s also sure to provide support for the notion that differences in clinical judgment alone – particularly those based on second guessing original clinical decisions –cannot be used to prove that a particular claim is “false” for the purposes of the FCA.  

In the second development, on the same day that the Court in AseraCare issued its ruling, the Office of Inspector General (OIG) issued a report finding that hospices overbilled Medicare for $250 million for General Inpatient Care (GIP).  This report was commissioned because of recent investigations showing hospices inappropriately billed Medicare for GIP in a number of instances. This included care being billed but not provided and beneficiaries receiving care they did not need. 

A little background on GIP: it is the second most expensive level of hospice care and, next to routine home care, is the most commonly used.  GIP is intended as short-term care and may be provided only at a hospice inpatient unit, a hospital, or a skilled nursing facility.  It is designed for situations where the beneficiary has pain or acute or chronic symptoms that be managed in other settings where the hospice benefit is offered, such as the home.  Despite the inpatient setting, however, a physician’s order is not required for GIP. As with all covered hospice services, hospices are required to provide GIP if it is needed by the beneficiary. While they can enter into arrangements with facilities to provide GIP, the hospice retains oversight of staff and services.

The OIG’s report focused on a medical review of a stratified sample of 565 GIP stays drawn from the entire universe of all Medicare GIP stays in 2012.  Based on the results of the review, OIG concluded that one third of all GIP stays were billed inappropriately costing Medicare approximately $265 million.  In addition, the OIG determined that the highest percentage of inappropriately billed GIP stays occurred in skilled nursing facilities.  The report also focused on the ownership structure of the hospices at issue, claiming that for profit hospices were more likely to inappropriately bill GIP stays.  Finally, the OIG highlighted the interplay between palliative drugs that are required to be provided by the hospice and other drugs provided by Part D plan sponsors, recommended that such sponsors consider putting into place beneficiary-level prior authorization requirements on analgesics, antinauseants, laxatives, and antianxiety drugs – four categories of drugs that are typically used by hospice beneficiaries.

The OIG issued a series of recommendations to respond to the problems they identified.  These included:

  • Increase its oversight of hospice GIP claims and review Part D payments for drugs for hospice beneficiaries
  • Ensure that a physician is involved in the decision to use GIP
  • Conduct prepayment reviews for lengthy GIP stays
  • Increase surveyor efforts to ensure that hospices meet care planning requirements
  • Establish additional enforcement remedies for poor hospice performance
  • Follow up on inappropriate GIP stays, inappropriate Part D payments, and hospices that provided poor-quality care

Hospice operators and inpatient facilities that contract with hospice operators (particularly skilled nursing facilities) would be well served to pay attention to these findings and the OIG’s recommendations and consider how they may interact with the facility’s or hospice’s compliance program. OIG reports like this one often serve as a road map for the DOJ, OIG agents, ZPICs, and whistleblower counsel looking for potential qui tam actions.  Indeed, the results of this report have already been picked up by the national press and were featured in the New York Times. As a result, hospice providers can and should expect additional regulatory scrutiny of GIP stays, especially particularly long length GIP stays.  

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