Good Shepherd Hospice: Once Terminal, Always Terminal

In the Good Shepherd Hospice 2015 settlement, the company agreed to pay $4 million over allegations that it billed Medicare for patients who were not terminally ill. The government’s account reached across the business: marketers, admissions nurses and executive directors allegedly received enrollment bonuses, while the company allegedly selected medical directors for their referral connections. The people bringing patients through the door and the people assessing them had a financial reason to keep admissions moving.

The Justice Department announced the settlement on February 6, 2015. Good Shepherd was a for-profit hospice headquartered in Oklahoma City, with operations in Oklahoma, Missouri, Kansas and Texas. Two former employees brought the hospice fraud case in the Western District of Missouri. Their complaint described what happened when staff tried to discharge patients, questioned an admission or looked for the paperwork behind a claim.

Each of the five Good Shepherd companies agreed to its own five-year corporate integrity agreement with HHS-OIG as part of the settlement.

How Admissions Bonuses Became a Medicare Issue

The government alleged that Good Shepherd pressured staff to meet admissions and census targets, paid bonuses based on enrollment and failed to train staff properly on hospice eligibility. The alleged pressure reached the clinical decision itself. An admissions nurse assessing a patient also stood to receive a bonus for bringing patients onto the service.

Medicare’s hospice benefit requires a prognosis of six months or less if the illness runs its normal course. Patients elect comfort-focused care for the terminal illness and give up Medicare coverage for treatment intended to cure that illness. An unsupported hospice admission can therefore change the patient’s access to treatment as well as generate a bill to taxpayers.

The payment model explains why census mattered. Medicare pays a hospice for each enrolled day, including days without a visit, while costs tend to be highest at admission and near death. Keeping a patient enrolled keeps the daily payments coming.

In its January 2015 report, Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities, the Department of Health and Human Services Office of Inspector General put the incentive plainly:

For assisted-living residents receiving routine home care in 2012, the report found that hospices typically provided fewer than five hours of visits a week while receiving about $1,100 a week per beneficiary. The complaint described Good Shepherd serving patients at home and in long-term-care, assisted-living and residential-care facilities.

Medical Directors and Nursing-Home Referrals

The government alleged that Good Shepherd hired medical directors for their ability to refer patients, especially physicians with nursing-home ties. Those connections gave the hospice access to residents who might become patients.

The whistleblowers’ complaint put work and compensation beside each other. It alleged that medical directors worked about two hours a month, attended a team meeting and received about $3,000 monthly. Continued employment allegedly depended on bringing in referrals. One former executive director described instructions to tell a physician that he could be replaced if he did not refer patients.

The complaint also alleged referral inducements through nursing-home labor. Hospice nurses allegedly performed the work of an extra nursing-home employee beyond caring for their assigned hospice patients. That arrangement gave the facility something it would otherwise have had to supply itself: staff time.

Access to a nursing home could also become a reason to keep an existing patient. The nurse alleged that Good Shepherd repeatedly recertified an ineligible patient because that person was its only hospice patient in a particular nursing home. Keeping the patient allegedly preserved the company’s opportunity to market there. The value of the admission extended to the next referral.

What the Complaint Says Happened in the Files

The complaint connected enrollment pressure to specific patient reviews, software choices and billing dates. The employees behind it had seen different parts of the same operation: one was the Kansas City executive director, and the other was a registered nurse who had worked in admissions before moving into quality control and clinical supervision.

A Failed Assessment Became an Observation Period

The executive director alleged that she reviewed 79 active files when she began the job and found as many as 30 without sufficient medical documentation to establish eligibility at admission. The charts had doctors’ certifications, but some lacked clinical records and plans of care. She said she discharged almost all of those patients.

The nurse described another way patients got onto the service: a company-created “30-day observation” period for people already found ineligible. She alleged that management ordered admissions through that category even after she had assessed patients as unsuitable for hospice. In that account, a failed clinical assessment became an administrative route into enrollment.

The Discharge Option Disappeared

According to the complaint, patient numbers fell after face-to-face reviews identified people who did not qualify. Management responded with an urgent conference call. The president told executive directors to stop the losses, and around the same time the discharge menu lost its “no longer eligible” option.

The complaint attributed this instruction to a regional nurse consultant on the call:

The alleged instruction made the original admission decision permanent. The software change made it harder to record the clinical reason for letting someone leave. Together, they show how a census target could reach both a staff meeting and the patient record.

Records Changed and Billing Started Early

The nurse also alleged that admission documents were changed after a patient died without a required face-to-face encounter. The revised documents made the patient appear actively dying at admission, an attempt to excuse the missing encounter. She further alleged that a colleague was told to hide the admission paperwork and that incomplete patient files were moved to remote locations to avoid state auditors.

Another allegation connected the admission record to the first billed day. An executive director at the Grove, Oklahoma operation reportedly described patients signing a notice of election on Friday, receiving the nurse’s admission visit on Monday and being billed from Friday. The complaint also alleged that staff changed diagnoses to keep billing after Medicare denied payment following a documentation review.

Census Pressure Reached the Clinical Record Elsewhere

Hospice Care of Kansas and its parent, Voyager HospiceCare, agreed to a $6.1 million settlement in 2012 over allegations that included compensation tied to census and admissions, delayed discharges and instructions to document patients misleadingly. The government’s account of that case connects the same business incentives to the people writing the charts.

In Good Shepherd’s case, referral access allegedly brought patients in, and controls over discharge helped keep them there. The alleged discharge controls put the census target ahead of the clinical assessment.

The Whistleblower Case and Reward

The two former employees brought this health care fraud case under the False Claims Act’s qui tam provisions. The Justice Department announced that they would share in the recovery. Their account illustrates what hospice insiders can contribute: knowledge of the patients together with the instructions, compensation and records behind the claims.

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

When You Saw the Decision Behind the Chart

If you work in healthcare and saw admissions bonuses drive clinical decisions, referral demands attached to a medical-director job or records changed to keep patients enrolled, speak to one of our whistleblower experts about what you saw. We work with you to build your strongest hospice whistleblower case around those decisions and bring in hospice fraud whistleblower lawyers who understand eligibility, referral payments and Medicare billing. We stay beside you as your knowledge of the business becomes a case for recovering public money.