History of Hospice Fraud Enforcement: Schemes the Government Had Already Identified

The history of hospice fraud enforcement reaches back to federal warnings in the 1990s about who entered hospice and why providers wanted them there. Later civil cases returned to the same business decisions: admitting patients to meet targets, changing their records, paying for referrals and billing for care the patient did not need or receive. A nurse who has seen improvement disappear from a chart, or a medical director whose pay follows referrals, may recognize the practices behind those cases.

Hospice fraud has a particular economic setting. Medicare pays routine care by the enrolled day, while the hospice controls admissions, assembles the clinical record and receives the payment. The government described that tension during Operation Restore Trust. By 2026, its response included a nationwide pause on new hospice enrollment. The names changed. The incentive to put enrollment ahead of the patient’s condition kept returning.

The Daily Payment Behind the Enforcement History

Medicare’s hospice benefit pays a provider to take responsibility for care related to a patient’s terminal illness, including nursing, drugs, equipment and supplies. Routine home care pays by the day. General inpatient care and inpatient respite also carry daily rates, while continuous home care pays by the hour for qualifying crisis care.

The original design favored a daily rate partly because officials thought paying for each visit could encourage too many services. Costs were based on a demonstration involving cancer patients. A payment chosen to restrain the volume of care also gave providers an incentive to seek patients who needed less of it.

The rules governing long stays changed. Congress repealed the old 210-day limit for services beginning January 1, 1990. In 1997, it established two 90-day benefit periods followed by unlimited 60-day periods, with recertification. The clinical requirement remained a prognosis of six months or less if the illness followed its normal course. Each recertification required the patient’s condition to support that prediction again.

The end of the old limit moved the financial burden of longer stays from the hospice to Medicare. The provider could continue receiving payment through successive benefit periods. Admission decisions, recertification packets and discharge recommendations became central to the government’s inquiries.

The annual aggregate cap adds another incentive around admissions and discharges. It limits total Medicare payments to a hospice using a cap amount and the hospice’s beneficiary count. Additional qualifying beneficiary shares raise that ceiling. A June 2013 MedPAC analysis found higher live-discharge rates at hospices above the cap: a greater share of patients leaving hospice alive.

For benefit periods beginning on or after January 1, 2011, Medicare introduced a face-to-face encounter with a hospice physician or nurse practitioner before the third benefit period and each later recertification. The requirement made a fresh clinical encounter part of the paperwork supporting a longer stay.

The Centers for Medicare & Medicaid Services changed routine payment in January 2016, introducing a higher rate for the first 60 days, a lower rate afterward and an additional payment for direct care near death. Its explanation recognized that the long, inexpensive middle of a stay could be especially profitable. The change addressed the same financial attraction the early audits had exposed: keeping a patient enrolled while the cost of visits remained low.

Operation Restore Trust and the First Warning Cycle

Operation Restore Trust brought hospice eligibility under federal scrutiny from 1995 through 1998. The Office of Inspector General issued its Medicare Advisory Bulletin on Hospice Benefits in November 1995, followed by a Special Fraud Alert on nursing-home arrangements with hospices in April 1998 and Compliance Program Guidance for Hospices in October 1999. The warning cycle already encompassed both enrollment and the relationships that supplied patients.

The November 1997 audit of large hospices examined twelve providers in Illinois, Florida, Texas and California. Six belonged to one unnamed national chain. Physicians reviewed the records of 2,109 selected beneficiaries who had stayed beyond 210 days or had been discharged after reaching that threshold. They concluded that 1,373 had been ineligible at admission because they were not terminally ill under Medicare’s definition.

The business details explain why that audit still matters. The unnamed chain used marketing that downplayed or omitted the prognosis requirement. It paid sales commissions based on how long patients stayed. Its nursing-facility payments also gave it a recruiting advantage over hospices that paid the facilities less. The prospect of another enrolled day reached all the way back to the sales compensation plan.

What the Broader Evaluation Found

The April 1998 evaluation, Medicare Hospice Beneficiaries: Services and Eligibility, gave a much more favorable account of the program. In 99% of the records its medical reviewer examined, the documentation showed that patients and families received services indicated by their care plans.

That evaluation found 7% of sampled beneficiaries ineligible overall. Ineligibility was much more common among sampled nursing-home beneficiaries than among those living elsewhere. The inspector general’s overall assessment was that the program seemed to be working as intended.

Together, the broader evaluation and the targeted long-stay audit showed a benefit delivering planned care broadly and an eligibility problem concentrated in particular patients and settings. The long-stay audit also exposed the commercial machinery around enrollment.

The Practices That Returned in Later Civil Cases

Later civil cases put company names and internal decisions beside the problems the early oversight work had exposed. Eligibility, records, referrals and delivery of care each provided a different way for the business to collect a payment the facts did not support.

Admission Targets Overriding Eligibility

Hospice eligibility fraud allegations led to Caris Healthcare’s $8.5 million settlement in June 2018. The Justice Department’s announcement described aggressive admissions and census targets, patients whose records did not support a terminal prognosis, and continued billing after internal warnings.

The alleged warnings came from inside the clinical operation: internal audits, the chief medical officer and nurses who had examined the patients. The government said Caris kept billing and failed to take meaningful action to identify earlier overpayments. Someone had already told the business where the problem was.

Good Shepherd Hospice’s 2015 settlement concerned a similar connection between enrollment and pay. The government alleged bonuses for marketers, admissions nurses and executive directors based on patients enrolled, along with pressure to meet census targets. It also alleged that medical directors were selected for their ability to refer patients, particularly through nursing-home relationships.

The parallel with the early audit is the incentive reaching the person who supplies or assesses the patient. For an insider, a census target becomes much more revealing beside the clinical objection it overrode.

Changing Records and Manipulating Hospice Elections

Changing the record can keep a claim payable when the patient’s condition tells another story. At Creekside Hospice, the government alleged that staff were discouraged from documenting improvement. Its November 2014 announcement said staff called those entries “Chart Killers.”

The allegations reached beyond omitted improvement. Staff allegedly changed records after claims had been submitted and made physician visits appear to have occurred. Management also allegedly discouraged staff from allowing patients or their families to revoke their hospice elections. The patient record and the patient’s choice both affected how long the payments continued.

At Hernando-Pasco Hospice, whistleblowers alleged that the paperwork could manufacture a patient’s departure and return:

The same complaint alleged that staff backdated revocation paperwork to a hospital admission even when the patient had not signed it then or learned of the revocation until later. Hernando-Pasco’s July 2013 settlement resolved allegations covering eligibility, misleading records, higher billing rates and free services for nursing-facility referrals.

Referral Payments Dressed as Medical Work

Allegations of hospice referral kickbacks led to a $1.4 million settlement with Tapestry Hospice in June 2024. The Justice Department alleged that medical directors received monthly stipends and a signing bonus, with compensation rising when they referred more patients and falling when they did not.

The title on the agreement was medical director. The alleged basis for changing the pay was patient referrals. The contract, work performed, payment history and referral count let an insider explain that difference.

The early nursing-home warnings and this later case concern different arrangements, but they meet at the same business decision: what a hospice will pay to secure access to patients. Medicare pays for care, while the alleged referral payment buys access to the patient.

Care on the Bill That the Patient Did Not Receive

Hospice billing fraud allegations involving continuous home care produced Odyssey HealthCare’s $25 million settlement in March 2012. The government alleged that the company billed for crisis care that was unnecessary or did not meet Medicare’s requirements. The billed level was the route to the extra payment.

Missing care raises a different question. In the 2015 Compassionate Care Hospice of New York case, the government described nurses routinely missing required visits at the Bronx operation and falsifying notes at management’s direction. The settlement recorded acceptance of responsibility. The paperwork concealed a gap in the care patients received.

For a nurse or biller, the distinction is practical. One account compares the patient’s needs and delivered hours with the level billed. The other compares a visit recorded in the chart with whether anyone made it.

What Later Studies Found About the Incentives

Later studies examined why particular settings and patients were financially attractive. The Office of Inspector General’s 2015 report, Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities, analyzed Medicare hospice claims from 2007 through 2012. Beneficiaries receiving hospice in assisted living in the final year had a median total stay of 98 days across that period, more than twice the median for beneficiaries at home.

The report put the weekly economics of assisted living facilities plainly:

The finding explains the appeal of a setting where a hospice can collect daily payments through a long stay with relatively few visiting hours.

Hospice Medicare Margins, a 2019 Milliman report commissioned by the National Partnership for Hospice Innovation, compared claims and cost reports by ownership. It found longer median stays at for-profit hospices, more nursing and social-worker visits per patient day at nonprofits, and more aide visits at for-profits.

Care oversight supplied another part of the picture. In Hospice Deficiencies Pose Risks to Medicare Beneficiaries, published in 2019, the inspector general found deficiencies at 87% of the 4,563 hospices surveyed during 2012 through 2016. A serious deficiency appeared at 20%. The report described failures to address patients’ needs, including delayed reassessment as pain escalated. For the patient, missing care has a consequence before anyone examines the billing.

From Repeated Warnings to the 2026 Enrollment Freeze

The oversight response expanded from reviewing patient eligibility to examining who could enter and control a hospice business. Starting in July 2023, the Centers for Medicare & Medicaid Services placed newly enrolling hospices in Arizona, California, Nevada and Texas under enhanced oversight, including review before payment. It extended prepayment review to existing providers in those states in September 2024. Georgia and Ohio joined the enhanced-oversight program in December 2025.

The 2024 enrollment changes moved hospices into the high-risk screening category and added closer owner screening. Administrators and medical directors became reportable managing employees. The agency also extended the ownership rule requiring a fresh enrollment and survey for specified rapid changes in majority ownership. It said some hospices were being sold shortly after enrollment so the buyer could avoid a survey. The business could change hands faster than oversight followed it.

The policy history includes a reversal. The agency finalized the Hospice Special Focus Program in 2023, then ceased its implementation for calendar 2025 effective February 14, 2025.

On May 13, 2026, CMS imposed a six-month nationwide moratorium on new Medicare hospice enrollment, including ownership transactions that required a new initial enrollment. This was a national restriction on entry after targeted controls in selected states. The policy response had reached the front door of the business.

What Hospice Insiders Recognize in This History

Hospice insiders see where the patient’s condition, the care delivered and the claim stop agreeing. The cases in this history make those connections concrete: the nurse’s assessment beside the edited chart, the discharge recommendation beside continued billing, or the medical director’s payment beside referrals.

Hospice fraud whistleblowers can explain how those records came to disagree. A clinical manager may know who removed improvement from the packet. A biller may know why the higher level continued. A compliance employee may know which warnings reached management and what happened afterward. That knowledge gives the paper trail its meaning. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When the Old Pattern Is Happening Around You

If the admission target, rewritten chart or referral payment in this history resembles what you see at work, speak with our hospice fraud whistleblower experts. We put clinical and Medicare payment expertise to work with you to build your strongest case. We stay with you through the decisions ahead and bring in hospice fraud whistleblower lawyers who understand how the patient record becomes a claim.