Evercare–Optum Hospice: When Discharging a Patient Threatened the Census

In the Evercare hospice settlement, the company agreed to pay $18 million over allegations that it billed Medicare for patients whose records did not support terminal illness. The government’s complaint described a hospice fraud case in which management pushed to admit patients and resisted letting them leave. A physician’s decision to discharge someone could run into a business objection: the patient count was too low.

Minnesota-based Evercare Hospice and Palliative Care operated under the name Optum Palliative and Hospice Care by the time of the July 13, 2016 settlement. The allegations covered claims from January 1, 2007 through December 31, 2013. Former employees brought qui tam cases, and the United States joined them in federal court in Colorado.

The hospice eligibility fraud allegations concerned a benefit for patients with a life expectancy of six months or less if their illness runs its normal course. Patients who elect hospice give up Medicare coverage for health care intended to cure their terminal illness and related conditions. At Evercare, the government alleged that management challenged or disregarded physicians who said patients no longer qualified. The people responsible for the census were pressing the people responsible for the prognosis.

Admissions Open, Discharges Under Review

Evercare allegedly made turning a patient away harder than admitting one. The government’s consolidated complaint said most, if not all, locations required a site manager’s approval before staff could reject a referral. When the first nurse found a patient ineligible, management frequently sent a second nurse before asking the medical director for an opinion. The complaint described no matching practice of second assessments for patients initially found eligible.

The financial incentives reached both sales and clinical staff. According to the complaint, Community Outreach Representatives, the company’s sales employees, received bonuses per admission, while clinical employees could receive extra compensation when their sites met admission and census targets. The company allegedly rewarded the same result from different sides of the patient file.

A regional director’s email supplied the government’s description of the business model:

That alleged policy reached physicians who refused to recertify patients. When an Ohio medical director declined to recertify three people, a regional director told the executive director in a December 2010 email to tell her she was out of step with company philosophy and might have to leave. A decision about whether patients were dying had become a question about whether their doctor belonged at the company.

The complaint also described a patient’s wife repeatedly questioning whether her husband needed hospice. When she asked to end his enrollment, the response recorded in the chart concerned the business:

The alleged instruction put the company’s count first.

What the Audits Found Inside the Charts

Evercare’s own audits allegedly showed that its charts did not support the eligibility decisions it was billing on. The government described a 2010 Boston review in which nine of ten charts lacked documentation supporting terminal prognosis and initial certification. A 2012 review in Dayton, Ohio found unsupported recertification in four of nine charts.

The chart problem mattered because medical directors relied on nurses’ reports and patient records when recertifying patients. The government alleged that the information reaching them was often incomplete, inaccurate or copied from earlier notes. A signature at the end of that process could carry forward a problem that began before the doctor saw the file.

One Maryland patient’s case made that allegation concrete. The government said staff duplicated the same description of her condition across case conference notes over four months. Later notes recorded that she had not declined since admission and had remained stable through successive recertifications. Evercare eventually discharged her. The complaint connected those clinical entries to particular Medicare claims and payments for care the government alleged she did not qualify to receive.

Timing mattered too. According to the complaint, an internal Houston audit found that no nursing notes in its review were completed on the day of the visit. A regional director told senior clinical and operational staff that delays in nursing documentation could exceed two weeks. The government alleged that those leaders knew about both the delays and the copying of notes.

Medicare claim denials gave management another warning. The complaint cited a November 2010 email attachment showing that Evercare decided not to appeal 20% of claims denied by Medicare contractors. It also alleged that Evercare never considered refunding payments for patients whose records did not support a terminal prognosis.

The same warning-and-billing pattern appeared at Caris Healthcare. In that separate settlement, the Justice Department alleged that Caris continued billing after internal audits, its chief medical officer and nurses raised eligibility concerns. In both accounts, warnings came from inside the provider. What management did with those warnings was part of the alleged conduct.

Evercare, Optum and the Parent Companies

Evercare’s hospice network included Arizona and Colorado. The Justice Department’s intervention announcement said one of the employee suits also named parent companies, including UnitedHealth Group.

The court’s September 2015 order described the whistleblowers’ allegations that managers employed by Ovations and OptumHealth Holdings pressed census goals and created hurdles to discharge. The alleged pressure reached beyond the local hospice.

How Much Is a Whistleblower Case Worth?

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

The court awarded the two original Evercare whistleblowers $3.6 million, or 20% of the settlement, on February 7, 2017.

The court described the employees’ contribution in concrete terms: information about denied Medicare claims, patient rosters, internal policies, company emails and people who could explain the practices. It also recorded that the government would have been unaware of the alleged fraud without their case. Their knowledge of the business gave investigators a way into the patient records and the decisions behind them.

Why Keeping Patients Could Keep Revenue Coming

Medicare’s daily hospice payment helps explain the financial attraction of a larger census. During the period examined in the government’s case, a hospice could collect for enrolled days while the amount of care varied. Care costs tend to be higher near admission and death, with fewer services in the middle of a stay. More days in that middle stretch could make a patient more profitable.

The Office of Inspector General examined the incentive in its January 2015 study, Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities. Its analysis of Medicare hospice claims from 2007 through 2012 found longer care and higher payments for beneficiaries in assisted living facilities than in other settings. Its explanation of the payment incentive was blunt:

Evercare’s alleged retention pressure fits that financial incentive. The government’s complaint specifically alleged that the company sought patients who required fewer resources and lived longer. A discharge decision threatened to end the payments attached to that enrollment.

What Evidence Is Needed to Prove Fraud?

In the Evercare case, the useful evidence connected the patient’s condition, the admission or recertification decision, management’s instructions and the Medicare claim. Internal audits and emails helped explain what the company knew. Patient records showed what supported, or contradicted, the prognosis used for billing.

The government’s complaint followed that chain into the hospice billing records. It described claims identifying the patient, diagnosis and dates of service, then set out patient examples with the claims and payments alleged to be false. The award order also described the government’s medical expert reviewing patient records and investigators developing evidence about the unreliable information physicians received.

Different healthcare employees can explain different parts of that process. A nurse may know what changed in the chart. A medical director may know why a discharge decision met resistance. A billing or compliance employee may know that a denied claim or adverse audit reached management while the patient stayed on the rolls.

When the Census Overruled the Clinical Decision

If you saw hospice admissions pushed through, discharge decisions overridden or chart problems left unresolved, speak to one of our whistleblower experts about what happened inside the provider. We build your strongest hospice whistleblower case around the clinical and business decisions you know, bring in hospice fraud whistleblower lawyers who understand eligibility and Medicare billing, and stay beside you through the pursuit of a recovery.