Kaiser Health News reported the disturbing but all too common story of Medicare fraud involving hospice and nursing homes.  A whistleblower accuses AseraCare of improperly cycled patients through nursing homes and hospice with a goal of making as much profit as possible from Medicare.  Federal attorneys also sued alleging it milked Medicare’s hospice benefit by pressuring its employees to enroll people into hospice who weren’t dying and resisted discharging them despite evidence they weren’t deteriorating. 

Critics of Medicare’s hospice benefit have said that the way the government pays providers gives them financial incentives to abuse the system. AseraCare, a Fort Smith, Ark.-based hospice company operating in 19 states.  The company is owned by Golden Living, a national for profit chain that operates nursing homes.

The whistleblowers contend that AseraCare first recruited patients eligible for skilled nursing care –also provided by Golden Living— for 20 days, for which Medicare pays the entire bill. After 20 days, when Medicare requires patients pick up a part of the tab, AseraCare had the nursing homes send the patients to hospice, according to the lawsuit. In hospice, AseraCare would collect a flat payment from Medicare for each day they are enrolled.  AseraCare sent employees to “patrol hospitals,” ride along with “Meals-on-Wheels” and go “door-to-door” in housing run by the Department of Housing and Urban Development, according to the lawsuit brought by the whistleblowers, who are represented by Birmingham attorney, Jim Barger. In a separate suit settled in 2009, Barger won the largest settlement in a hospice care case against SouthernCare, and is also representing whistleblowers suing Vitas HealthCare.

“Typically, a patient admitted into Defendant’s web of operations will be referred and re-referred until that patient has received—and Medicare has been billed for—the maximum number of days of skilled nursing care, including rehabilitative therapy … home health care, and hospice care,” says the lawsuit, brought by Dawn Richardson, an AseraCare nurse manager, and Marsha Brown, who ran several AseraCare offices in Alabama.


The government complaint accuses AseraCare of intensely pressuring employees to enroll as many hospice patients as possible, setting high targets. A regional sales director in 2007 was placed on a correction action plan in part because his region failed to admit at least 33 people each week for hospice care. In June 2006, the company offered a massage chair as a prize to the employee who "wins the game" by meeting its admission goal and being the first to admit a patient in July, according to the complaint.

An outside auditor hired by AseraCare in 2007 warned that the corporate policies were affecting clinical decisions. He said that since the company laid employees off when the number of hospice patients dwindled, workers were “resistant to patient discharge” even if the patients no longer were eligible for Medicare hospice benefits. 

The government’s complaint outlined several cases in which AseraCare allegedly kept elderly people despite evidence they weren’t dying.  Medicare has tried to discourage hospices from enrolling long-stay patients by placing a cap on how much they can collect on average for a patient. Hospices that exceed the cap have to repay the money. The whistleblowers contend AseraCare avoided exceeding the cap — $22,386 in 2008 — by recruiting “last breath” referrals, or patients expected to die within a few days, so that the average would stay low. In its quest for new patients, The whistleblowers contend that large numbers of AseraCare hospice patients are discharged while alive: 48 percent of those cared for by the Monroeville, Ala., branch and 79 percent of patients enrolled in the Mobile, Ala., branch. “It is hardly plausible that such a high percentage of Defendants’ hospice enrollees would be discharged alive unless such patients were nonterminal and fraudulently enrolled from the outset,” the lawsuit charges.

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