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Articles Posted in Hospice

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Two cases brought against an Alabama-based hospice company will result in an almost $6 million settlement payment. In two whistleblower complaints filed in 2013 by two former employees, one of which who worked as a clinical director in a Pennsylvania branch, SouthernCare Inc. is accused of wrongly billing Medicare for unnecessary hospice care. When the federal government decided to intervene in September of 2016, the cases were combined.

The complaints against SouthernCare include allegations that the company put patients in their hospice program who weren’t terminally ill in order to submit claims for the more expensive treatment to the government health insurance plan for seniors. SouthernCare denies the claims but did promise to pay almost $6 million to clear up the allegations. The two whistleblowers, Dawn Hamrock and Patricia Beegle, will share slightly more than $1 million of that, according to the settlement agreement.

Hamcock, the former Pennsylvania clinical director who resigned from the company in 2012, raised questions prior to her resignation regarding the way in which SouthernCare was handling Medicare claims.

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After a ten week trial, a federal court in Alabama has granted a hospice care provider, Aseracare Inc.’s motion for a new trial in a False Claims Act (FCA) case. The Government alleged that this hospice care provider knowingly submitted false claims to Medicare for patients who were not terminally ill and thus did not qualify for hospice benefits. However, the Alabama federal court determined that there was reversible error in the jury instructions that left out that the FCA requires proof of an objective falsehood and that a minor difference in opinion is not enough to show falsity. At this time, the court is considering summary judgment given that the government maintains its only evidence for proving falsity is expert testimony and medical records of the patients at issue.
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On October 3, 2012, the OIG released its Work Plan for the FY of 2013. Throughout the week, we will be posting on various aspects of the Work Plan pertinent to our clients and our readers in the following areas:

• Hospitals • Home Health Agencies • Hospices • Evaluation and Management Services • Imaging Services • Diagnostic Testing • Sleep Testing
• Medical Equipment and Supplies
• Medicare Audits and the Appeals Processes
Check back every day for updates!
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Recently, CMS released a related change request (CR) 7838, which informs Medicare contractors about a new addition to the “Medicare Benefit Policy Manual,” Chapter 9, Section 90, which is titled, “Caps and Limitations on Hospice Payment.”

A summary of the key provisions of the new Chapter 9, Section 90 of the “Medicare Benefit Policy Manual,” can be found by clicking here. The implementation date to enforce these provisions is set for July 2, 2012.
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Hospice provider AseraCare is accused of submitting “false and fraudulent” Medicare claims for payment to the U.S. It has been alleged that the hospice has been claiming charges to the Federal Government for those patients who were not admitted to hospice. Hospice care is provided to Medicare recipients who have a prognosis of six months or less to live and need hospice care.

The complaint stems from a whistleblower lawsuit filed by two former employees in 2009; originally filed by Dawn Richardson and Marsha Brown, named United States ex rel. Richardson and Brown v. Golden Gate National Senior Care LLC dba Golden Living et al., No. 2:09-cv-00627 (N.D. Ala.).

The False Claims Act allows private citizens with knowledge of fraud to file whistleblower suits on behalf of the United States and to share in any recovery. The U.S. is seeking three times the damages and a penalty of $5,500 to $11,000 per claim.

According to the lawsuit, Aseracare, owned by Golden Living, (one of the largest nursing home chains in the U.S.) is based in Fort Smith, Arkansas and runs 65 hospice centers in 19 states, including Alabama, Georgia, and Wisconsin. The federal complaint is part of an effort by the Justice Department of Justice (DOJ) and the Office of the Inspector General (OIG) at the U.S. Department of Health, to crackdown on suspected hospice fraud in the Medicare program.

This case is U.S. v. Golden Gate Ancillary LLC, 09-00627, U.S. District Court, Northern District Court of Alabama (Birmingham).
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In an indictment unsealed on October 12, Matthew Kolodesh (a/k/a “Matvei Kolodech”) was charged with a laundry list of crimes, including 1 count of conspiracy to commit healthcare fraud, 21 counts of healthcare fraud, 2 counts of mail fraud and 11 counts of money laundering of monetary instruments over $10,000. Kolodesh set up, controlled and operated Home Care Hospice, Inc. wherein he allegedly “authorized the submission of claims to Medicare totaling approximately $14.3 million, which claims defendant Kolodesh and A.P. knew were false and fraudulent.” “A.P.” is the name given in the indictment to Kolodesh’s business partner.

The government alleges, in part, that in committing healthcare fraud Kolodesh paid for referrals, paid for certifications of hospice eligibility, authorized fabrication of patient records and supporting documentation, created phony schedules of continuous care visits to patients who were not qualified for continuous care or were never provided continuous care, falsified records submitted in connection with a Medicare audit and siphoned funds from Home Care Hospice that were “fraudulently obtained Medicare payments” to unjustly enrich himself and his family.

According to the Department of Justice press release, “if convicted of all charges, Kolodesh faces a statutory maximum sentence of 370 years in prison. The government will also seek restitution to Medicare in the amount of $14.3 million and proceeds from the money laundering.”
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By way of Transmittal No. 2316 issued on October 7, 2011, CMS clarified the claims processing procedures for hospice services when a required face-to-face encounter does not timely occur. This clarification creates additional administrative burdens to hospice providers when the required face-to-face encounter does not timely occur. Note that the implementation date of the clarified procedures is January 9, 2012.

Pursuant to 42 C.F.R. § 418.20, to be eligible for the Medicare hospice benefit, a beneficiary must have Medicare Part A and must be certified as terminally ill. A Medicare hospice certification is comprised of numerous elements, including a physician’s prognosis, a physician’s narrative, and clinical information or other documentation supporting the diagnosis. Additionally, as of January 1, 2011, a hospice physician or nurse practitioner must have a face-to-face encounter with each patient prior to the start of the 180th-day recertification and each subsequent recertification in order to determine the beneficiary’s continued eligibility for the hospice benefit. The face-to-face encounter must occur prior to, but no more than 30 calendar days prior to, the third benefit period recertification.

Pursuant to Transmittal No. 2316, “If the required face-to-face encounter is not timely, the hospice would be unable to recertify the patient as being terminally ill, and the patient would cease to be eligible for the Medicare hospice benefit. In such instances, the hospice must discharge the patient from the Medicare hospice benefit because he or she is not considered terminally ill for Medicare purposes… The hospice can re-admit the patient to the Medicare hospice benefit once the required encounter occurs, provided the patient continues to meet all of the eligibility requirements and the patient (or representative) files an election statement in accordance with CMS regulations.”

Note that this position is a departure from CMS’ previous stance on the procedural requirements for processing hospice claims when hospice certification requirements are not satisfied and increases the administrative burden to hospices. Pursuant to the Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 9, Section 20.1, if a certification of the beneficiary’s prognosis of six months or less is not obtained within the timeframes established by the regulations, “no payment is made for the days prior to the certification. Instead, payment begins with the day of certification.” CMS policy does not require that a patient be discharged and re-admitted in this instance; rather, CMS policy simply requires that the dates of service prior to the certification not be billed.

Also of note, Transmittal No. 2316 further states, “Where the only reason the patient ceases to be eligible for the Medicare hospice benefit is the hospice’s failure to meet the face-to-face requirement, we would expect the hospice to continue to care for the patient at its own expense until the required encounter occurs.”
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Medicare beneficiaries with a terminal illness may choose to receive palliative care instead of curative treatment under the Medicare hospice benefit. In recent years, the Office of Inspector General (“OIG”) has raised some concerns about the Medicare hospice care received by nursing facility residents. As a result, a number of OIG reports are anticipated to address these concerns.

The first report of the series, released in July 2010, describes the growth of hospice care from 2005 to 2009. Specifically, the report focuses on hospices which assisted a large portion of nursing facility residents in 2009.

The primary findings of the report state that:

• From 2005 to 2009, Medicare payments for hospice care provided to nursing facility residents have grown from $2.55 billion to $4.31 billion, a 69 percent increase.
• In 2009, 263 hospices (almost 8 percent of all hospices) had more than two-thirds of their beneficiaries in nursing facilities. Seventy-two percent of these hospices, referred to as high-percentage hospices, were for-profit. These high-percentage hospices “received more Medicare payments per beneficiary and served beneficiaries who spent more time in care.” Further, these “hospices typically enrolled beneficiaries whose diagnoses required less complex care and who already lived in nursing facilities.”

As a result of its findings, the OIG recommended that CMS “[m]onitor hospices that depend heavily on nursing facility residents” and “modify the payment system for hospice care in nursing facilities.” CMS concurred with the two OIG recommendations. The OIG recommendations result from a belief that some hospices may seek out Medicare beneficiaries with particular characteristics because certain conditions require longer but less complex care and could result in higher profits for those hospices.
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The Centers for Medicare & Medicaid Services (“CMS”) recently released the final regulation regarding the hospice wage index for the fiscal year (“FY”) 2012 (“Final Rule”). As a result of the Final Rule, a 2.5 percent increase in Medicare payments to hospices serving Medicare patients will be implemented for FY 2012.

In addition, the Final Rule includes key changes to the way CMS counts hospice patients beginning with the 2012 cap accounting year. The change comes in the wake of recent lawsuits successfully challenging the hospice cap calculation methodologies and the CMS-1355-R Ruling. The Final Rule allows for retroactive calculations under the new methodology in some circumstances and permits hospice providers to elect to continue using the current counting method.

The Final Rule also includes revisions to the hospice face-to-face requirement. Under the regulation, the hospice physician who performs the face-to-face encounter would not necessarily be the same physician who certifies the patient’s terminal illness.

Lastly, the Final Rule implements a hospice quality reporting program. The program stems from Section 3004 of the Affordable Care Act. Hospices will be required to begin quality data collection in October 2012 and will need to submit the data in 2013. Hospices have the option of earlier voluntary data collection (beginning in October 2011) and submission (2012), but hospices which fail to report quality data in 2013 will be penalized.

The entire text of the Final Rule may be viewed here.
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In Zia Hospice v. Sebelius, CV 09-0055 CG/LFG and CV 09-1108 CG/ACT, the New Mexico District Court followed the trend set by numerous other courts, including the 5th and 9th Circuit Courts, in relation to the hospice cap regulation, 42 C.F.R. §418.309(b)(1). The Court held 42 C.F.R. §418.309(b)(1) invalid because the regulation does not comply with the relevant federal statute, 42 U.S.C. §1395f(i)(2).

According to the Court, the statute requires the Department of Health and Human Services (“HHS”) to “count hospice care beneficiaries proportionally over the number of years in which they received such care.” The regulation, on the other hand, allows HHS to only count “hospice care recipients in the year in which they received the bulk of their hospice care.” Based on the plain language of the statute, the Court determined that since Congress has spoken to the exact matter of the hospice cap calculation, no deference was due to the regulation. The Court rejected the Defendant’s argument that the statute is ambiguous.
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