Editor’s Corner: The difficult false claims question facing the hospice industry

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headshot of Evan Sweeney

In 1972, Elizabeth Kubler-Ross, a psychiatrist and author of the groundbreaking book “On Death and Dying,” testified before the Senate Committee on Aging during hearing in which legislators discussed, for the first time, how to improve the country’s approach to dying. During her testimony, Kubler-Ross advocated convincingly for dying patients to be treated at home rather than institutions.

“We live in a very peculiar, death-denying society,” she said. “We isolate both the dying and the old, and it serves a purpose, I guess. They are reminders of our own mortality.”

It took another decade for Congress to approve a provision that would allow Medicare to pay for what would be known as hospice services, a benefit that was made permanent four years later, but Kubler-Ross's testimony helped lay the groundwork. 

Hospice has come a long way since then, but even during those initial discussions 34 years ago, legislators grappled with the definition of dying. In his introductory statement during the 1972 hearing, Sen. Frank Church (D-Idaho) noted that one nagging question clung to any discussions about hospice care: “When is an illness truly so hopeless that no fight should be made against it?”

The answer, Church added, is usually different among patients, for family members, and even among physicians.

More than three decades later, that question isn’t any easier to answer, but it’s at the heart of a False Claims Act (FCA) lawsuit that could redefine the hospice industry and the way physicians submit claims to Medicare. 

Earlier this year, an Alabama judge dismissed the government’s claims that the hospice provider AseraCare submitted more than $200 million in false claims for patients who were ineligible for hospice services. The judge noted that the government’s allegation “boils down to conflicting views of physicians.” Under Medicare rules, in order to qualify for hospice services, a physician must certify that the patient has less than six months to live.

The Department of Justice appealed the decision, and now the case is before the 11th U.S. Circuit Court of Appeals, with a lot at stake.

In many ways, America’s ability to embrace hospice care has transformed the way we view death and how we care for patients with terminal illnesses. Nearly 1.7 million people received hospice services in 2014, up from 1.38 million in 2010, according to the National Hospice and Palliative Care Organization. Studies show family members of dying patients on hospice are more emotionally prepared for the death of a loved one and possess better coping mechanisms in the aftermath.

At the same time, fraud and improper billing has emerged as a dark undercurrent within the industry. In September, the Office of Inspector General called for better oversight of hospice payments by the Centers for Medicare & Medicaid Services (CMS), doubling down on a report released earlier this year that found Medicare spent more than $268 million on hospice services that were not necessary, sometimes because there was no evidence the beneficiary had a terminal illness whatsoever. Additionally, the infiltration of for-profit providers in the hospice industry has raised questions about cherry-picking patients based on profitability.

Recent legal cases have provided more details. In July, a Minnesota hospice provider agreed to pay $18 million to settle claims that it billed Medicare for patients who weren’t terminally ill. In March, the owner of a Pennsylvania hospice provider was sentenced to more than 14 years in prison for $16.2 million scheme in which he billed Medicare for ineligible hospice patients.

The AseraCare case has not gone unnoticed by the provider community. In an amicus brief filed by the American Medical Association as well as several hospice associations, providers argue that sometimes there can be more than one reasonable medical conclusion, which is particularly true when trying to diagnose a patient with a terminal illness. A decision against AseraCare would have a ripple effect across the medical community, leaving physicians to diagnose only the most obviously terminal cases out of fear of litigation.

AARP made a similar argument in its amicus brief, noting that although fraud and abuse is a concern, patients and families need to be able to secure hospice services early on in order to reap the benefits.

These are salient points that the court will have to grapple with. Hospice care has come a long way since 1972, and holding hospice providers liable for FCA penalties over diagnoses that amount to a difference in clinical judgement could be a significant blow to patients who need those services. At the same time, there’s no denying that some providers have taken advantage of this system in way that can harmful to both taxpayers and patients.

Now the court has the unenviable task of trying to define a long-unanswered and admittedly blurry line: When is someone considered terminal? Given the potential implications of this legal decision and the long history of integrating hospice care, there’s no doubt there will be a lot of people interested in the answer. - Evan @HealthPayer

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