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An In-Depth Look at the Fraud Charges Against Vitas Hospice Services    

05.15.13

Earlier this month, the United States Department of Justice (“DOJ”) filed a suit against Vitas Hospice Services, L.L.C. and its subsidiary entities (“Vitas”) alleging that Vitas submitted false claims for hospice services which were excessive, unnecessary, or not provided, and also alleging that Vitas admitted patients to hospice who were not terminally ill.

Hospice Care

Hospice care is provided to terminally ill patients who have elected to forego curative treatment in exchange for palliative, comfort care in their own homes.  Hospice care is intended to make available the medical services necessary for a patient to be able to remain in his or her home without the need to run to the emergency room every time uncontrollable symptoms arise. Most hospice agencies derive a significant portion of their revenue from Medicare Part A for services provided to program beneficiaries, including Vitas, whose revenue is historically 90% derived from Medicare.

In order to be eligible for hospice care, a patient must be terminally ill with a prognosis of six months or less if the patient’s illness runs its normal course. Hospice care is provided at four levels of care: routine home care, continuous home care (also called crisis care), inpatient respite care, and general inpatient care, with each level of care being reimbursed at vastly different rates. Specifically, in fiscal year 2013, Medicare’s daily reimbursement for continuous care was $742 more per patient than the daily reimbursement rate for routine home care. Hospice care is not intended to be an around-the-clock service but rather intermittent care provided by a range of clinical and non-clinical personnel who make visits to a patient’s home several times a week.

Continuous or “Crisis” Care

The need for crisis care arises when a patient’s symptoms become uncontrollable and require nursing care on a continuous basis for a brief period of time, which could range from eight hours (the minimum amount of continuous care necessary to bill for the higher rate) to several days. The first part of the DOJ’s complaint focuses on allegedly inappropriate and excessive billing for continuous care services. The DOJ alleges that Vitas set quotas for the percentage of crisis care which it expected its agencies to meet.  In one instance, for example, Vitas’s Vice President of Operations allegedly emailed a marketing employee and general manager demanding to know why the agency’s crisis care margins had dropped in a particular month.

The DOJ’s complaint alleges that Vitas conditioned its patients and their families to expect crisis care by misleading them into believing that the Medicare hospice benefit routinely covers around-the-clock care.  Because of this alleged marketing ploy, the DOJ surmises that patients sometimes chose Vitas over other providers. The complaint also alleges that Vitas disseminated written materials to its staff which incorrectly trained the staff on how and when to initiate crisis care. According to the complaint, several staff members gave investigators explanations of crisis care which were inconsistent with Medicare requirements.

According to the complaint, many patients failed to meet the eligibility requirements for crisis care. One Vitas nurse allegedly told the DOJ that, on more than one occasion, she would arrive at a patient’s home to provide crisis care, only to learn that the patient was at church, the beauty parlor, or playing bingo. According to the complaint, an internal audit conducted by Vitas itself showed that only 50% of the continuous care records reviewed contained clinical documentation consistent with the Medicare requirements for such care. According to the DOJ, when compared to other hospice providers, Vitas bills Medicare for twice as many crisis care days as all other hospice providers combined. The complaint also alleges that Vitas’s crisis care billings were almost six times what would be expected if its crisis care statistics were in line with the national average.

The complaint also alleges specific instances of inappropriate use of continuous care, including treating a patient’s back pain with a heating pad, performing daily dressing changes, and continuing to provide continuous care for patients whose acute symptoms had been treated and stabilized. According to the complaint, in one unfortunate incident, a Vitas nurse allegedly failed to recognize that a patient was suffering from opioid neurotoxicity and continued to administer higher levels of morphine to the patient, which only increased her pain and led to seizures. The complaint goes on to allege that Vitas then billed Medicare for 16 days of crisis care for the patient, whose critical condition was created by Vitas itself. On another occasion, Vitas allegedly offered crisis care to another patient simply because the patient was considering aggressive curative therapy instead of continuing hospice care.

Inappropriate Admissions

The second part of the DOJ’s complaint focuses on inappropriately admitting patients to hospice when such patients did not meet the Medicare criteria for hospice eligibility. The complaint alleges that Vitas’s corporate culture promoted increasing its agencies’ censuses without regard to whether services were actually necessary. Vitas allegedly paid bonuses to its non-clinical staff based on the number of patients enrolled in the program, and Vitas took adverse employment actions against marketers who failed to meet monthly admission goals. According to the complaint, one former manager told investigators that his bonuses were based on the number of patient admissions and the length of time that he could get a patient to stay on hospice services.

The DOJ further alleges that Vitas’s medical staff reported that they felt pressured by Vitas to admit or readmit patients who were inappropriate for hospice services. The complaint details an alleged incident in which one former Vitas admissions nurse said that if he did not admit a patient whom he found to be ineligible, he would be pressured to reconsider his decision until he finally determined that the patient was eligible. Another Vitas nurse purportedly stated that, at weekly meetings, discharging more than four patients per meeting was frowned upon by business managers, and medical staff were told to stop discharging patients even if patients were not eligible for hospice care. The same nurse also allegedly reported to investigators that Vitas instructed her to falsely write in the medical record that a patient experienced symptoms which he did not actually experience and further instructed her not to write in the medical records that a patient’s health was improving.

According to the complaint, several Vitas physicians reported being under pressure from management to increase the number of patients admitted to hospice care and were often  overruled when they did not believe that patients were eligible for hospice or when they determined that patients should be discharged because they were not dying. The complaint includes a detailed description of several instances when, according to the DOJ, the medical record clearly did not support the need for hospice care.

Damages Sought by DOJ

Based on all of its allegations, the DOJ charges Vitas with knowingly presenting or causing to be presented false or fraudulent claims to Medicare in violation of the False Claims Act and seeks unspecified damages, which would be trebled as required by law. Finally, the DOJ also includes as causes of action payment by mistake and unjust enrichment.

Lessons for Providers

The allegations against Vitas are of course just that – merely allegations. But if proven to be true, some of Vitas’s practices  are obviously flawed: don’t instruct staff to falsify medical records; don’t provide a higher level of service than is necessary; don’t base discharges on non-clinical reasons. Some of Vitas’s alleged business practices, however, are not obviously problematic. From a business standpoint, what more accurate way is there to measure a marketer’s performance than by looking at the number of admissions which she generates? What would be completely benign business practices in any other profession could subject someone to great civil and criminal liability in the healthcare arena.

Hospice providers are encouraged to use the DOJ’s complaint as a learning tool for understanding what types of issues and business practices are likely to attract the attention of investigators (and whistleblowers). Understanding the issues and potentially problematic business practices up front should enable providers to design compliance policies and procedures that will help them avoid some of the pitfalls that have befallen Vitas.

For additional information, please contact Stephen Page, Sheila Sawyer, Richard Westling, Anca Adams or any member of the Waller Healthcare Department at 800.487.6380.


The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.

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