Compassionate Care Hospice of Atlanta: The Referral Payments Behind the Medical-Director Contracts

The Compassionate Care Hospice Atlanta settlement required Compassionate Care Hospice Group and its Atlanta operation to pay $2.4 million to resolve allegations of physician referral kickbacks tied to hospice eligibility certifications. The government alleged that payments went to five physicians through a medical-director arrangement and sham associate-medical-director contracts. For an insider who knows what those physicians actually did, the distance between the contract and the work is the heart of this case.

The Department of Justice announced the settlement on July 6, 2017. Two former Atlanta employees brought the hospice fraud case. The government’s allegations covered payments from April 3, 2007, through April 29, 2011. The hospice was allegedly paying the doctors who helped open the door to care to send patients through it.

Compassionate Care’s separate New York case concerned nursing services and falsified records, while its Gwynedd operation faced eligibility allegations in Pennsylvania.

Do Doctors Get Kickbacks for Referrals?

The government alleged that Atlanta hospice physicians received referral kickbacks disguised as compensation for medical-director work. The alleged payments bought both patient referrals and certifications that those patients qualified for hospice care.

The alleged arrangements took distinct forms: payments to a medical director in exchange for referrals, and sham contracts with associate medical directors. The contract supplied a clinical title. According to the government’s account, the money bought patient referrals and eligibility certifications.

The case connects the money paid to a physician with the patients entering the business and the medical approval supporting their enrollment. The question behind the job title is what the hospice was paying for.

Taxpayers fund the resulting services, while the referral source has a financial reason to send the patient to the paying hospice.

What Are the Responsibilities of a Hospice Medical Director?

A hospice medical director helps decide whether a patient is terminally ill and signs the certification supporting Medicare coverage. That clinical judgment matters both when a patient enters hospice and when the hospice seeks to continue coverage.

Under Medicare’s hospice coverage manual, the hospice medical director or physician member of the care team certifies terminal illness for the first benefit period, alongside the patient’s attending physician when the patient has designated one eligible to certify. The hospice physician handles later recertifications. Eligibility depends on a prognosis of six months or less if the illness runs its normal course.

This is why a medical-director payment reaches deeper into the business than a fee for introducing a customer. The hospice-side physician helps supply the clinical judgment on which payment depends. Atlanta’s alleged arrangement touched both the arrival of patients and the certification of their eligibility.

The physician’s account of the patient’s condition also matters in cases involving unsupported eligibility certifications. Medicare requires an individualized narrative reflecting the patient’s clinical circumstances. For someone reviewing a physician’s paid duties, that clinical work gives substance to a title on a contract.

Why a Referral Could Keep Paying

Medicare pays routine hospice care by the enrolled day, including days when nobody visits. A referral that becomes an admission can therefore produce a continuing stream of payments. The Medicare Payment Advisory Commission’s account of hospice payment explains the daily structure. The costs of providing care follow a different pattern: they are highest around admission and death, with a less intensive period between them.

Milliman’s July 2019 report, Hospice Medicare Margins, found median stays of 24 days at for-profit hospices and 13 days at nonprofit hospices in its fiscal year 2017 analysis.

The report also found that visits were more intensive at the beginning and end of a stay. Those industry findings explain why access to patients can carry value beyond the first bill.

The Pattern Beyond One Atlanta Company

Later Georgia settlements alleged medical-director compensation that moved with referral volume. In its Tapestry Hospice announcement, the Justice Department described monthly stipends and a signing bonus, with compensation allegedly rising when referrals increased and falling when referrals stopped. The department described the same alleged relationship in the Creative Hospice settlement.

A payment may appear in the accounts as physician compensation, while its movement follows the flow of patients. Reading the pay history alongside the referral history can reveal what the title conceals.

The competitive harm reaches other hospices, too. In a 1997 review of hospice enrollment, the Inspector General found that a chain paying nursing facilities more than competing hospices put those competitors at a disadvantage in recruiting patients. It illustrates the commercial pressure behind referral spending: the hospice offering more money can gain access that another provider loses.

What an Insider Can See

The useful account connects the physician’s compensation, actual duties, patient referrals, certifications and the claims that followed. Each part answers a different question about what the hospice bought and how it turned into revenue.

We examine what the medical-director contract promised alongside the work the physician performed. Payment records show when compensation changed. Referral and admission records connect a physician to patients entering care, while certification records show the medical basis offered for coverage. The bills complete the connection to public money.

Different employees may know different parts. Marketing and intake staff see referral relationships and admissions. Clinical staff see the patient information reaching the physician. Finance staff see the payments. For hospice fraud whistleblowers, that everyday knowledge can explain a healthcare arrangement that looks routine when each record is read alone.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Physician Was Paid to Do

If you saw a medical-director contract used to buy referrals or eligibility certifications, speak to one of our whistleblower experts about what the arrangement bought. We build your strongest hospice whistleblower case around the connection between compensation, clinical decisions and health care claims, bring in hospice fraud whistleblower lawyers who know referral-payment cases, and stay beside you through the case.