A glaring hospice fraud worth studying

A Pennsylvania hospice provider was sentenced to 176 months in prison and ordered to pay $16.2 million in restitution and $16.2 million in a forfeiture money judgment for executing a Medicare fraud scheme, the U.S. Department of Justice announced last week.

Matthew Kolodesh, owner of Home Care Hospice, Inc. (HCH), filed about $16.2 million in false claims for patients ineligible for hospice benefits and people who never received the level of care billed, the DOJ noted. Ineligible beneficiaries were either not terminally ill or stayed on hospice services for more than six months.

Nurses and other staff joined the scheme by altering medical records to make patients look sicker than they were, the announcement stated. Kolodesh directed staff to rewrite nurses' notes citing infections, fever, weight loss and other health problems meant to throw auditors off the scent. HCH staff destroyed old medical records and pocketed money for documenting 24-hour periods of intensive hospice care never provided, the DOJ noted.

Further, Kolodesh paid healthcare professionals to refer patients to his company, even when beneficiaries didn't qualify for hospice services. To hide kickbacks, Kolodesh said these professionals served as medical directors, advisors or hospice physicians at HCH.

And Kolodesh used $7.77 million dollars in business funds for personal gain, setting up his spouse as a fake CEO who collected unearned salary and bonuses, the announcement stated.

Growing use of hospice benefits has been accompanied by spikes in questionable billing practices nationwide; but attorney Sean McKenna told FierceHealthPayer: Anti-Fraud how important it is for payers to distinguish hospice documentation errors from fraud. "Many resources are wasted attempting to transform or elevate documentation lapses into civil or criminal fraud allegations," McKenna said in an exclusive interview.

But the HCH case wasn't about unintentional error that morphed into a giant overpayment. This was a web of fraud, conspiracy, money laundering, kickbacks and lies to hide crime. The misconduct was clear.

Healthcare professionals should know it's wrong to falsify a medical record, never mind getting paid for it to further the goal of collecting insurance money inappropriately. That Kolodesh was able to recruit corruptible co-conspirators is sad but common. Fraud flourishes when criminals find like-minded allies hungry for money. And they have no qualms about taking it, even when that money is meant to help the dying.

Moreover, this is another case showing criminal behavior generalizes. Kolodesh also orchestrated a scheme that cheated the Philadelphia Development Corporation out of millions of dollars meant to stimulate job growth in the city, according to Home Health Care News. He was a bad actor on two fronts, and his schemes merit study by anti-fraud professionals.

As ethicist Marianne M. Jennings, J.D., wrote, "Fraud is not a natural market correction! ... To prevent fraud, one must be willing to lop consequences onto perpetrators."

So it's good that the government didn't settle for civil fines and restitution here. As FBI Special Agent-in-Charge Edward J. Hanko said in the DOJ announcement, Kolodesh's sentence "sends a clear message to anyone looking to game the [healthcare] system and steal taxpayers' money: We will catch you, and we will put you away." - Jane (@HealthPayer)