Medicaid Hospice Billing Fraud: When the Claim Hides Who Should Pay

Medicaid hospice billing fraud involves claims for care patients did not need, unsupported enrollment and payments kept after internal reviews exposed the problem. For someone in hospice billing or nursing home administration, the telling discrepancy may sit between the clinical chart, the facility contract and the payment. The patient stays in the same bed while different organizations bill for different parts of the care. Someone inside the business knows what each payment was supposed to buy. Taxpayers fund care for dying patients, not a higher rate the patient never needed.

Why Medicaid Hospice Payments Need Both Payers in View

Medicaid hospice payments sit within a federal and state program, and a resident eligible for both Medicare and Medicaid can have care financed by both. The state Medicaid agency, the hospice and the nursing facility each see a different part of the account. That makes the payment path central to this form of hospice fraud.

The ADvancing States paper De-Mystifying Data: How Medicare Data Can Support Medicaid Agencies, published in 2020, places hospice among the benefits for which Medicare is the primary payer for people enrolled in both programs. It separately identifies Medicaid coverage for custodial or long-stay nursing home care. The hospice benefit and the resident’s accommodation create different payment responsibilities.

For an insider reviewing health care payments, the facility agreement can explain why money went to the nursing home while the hospice billed for care. The payment terms can also explain why one hospice gets access to residents over another.

What Are the Criteria for a GIP Hospice?

General inpatient care covers symptoms that cannot be managed in another setting. For residents enrolled in both programs, Medicare is the primary payer for hospice care and pays a higher daily rate for inpatient care than for routine care. The clinical need has to support the billed days, including the days after the immediate crisis has passed.

In its March 2016 review of inpatient hospice billing, the Department of Health and Human Services’ Inspector General found that some patients needed general inpatient care for only part of their stay, while others never needed it. The medical review also found stays without evidence of a hospice election or terminal-illness certification. The review projected $268.1 million in inappropriate Medicare general inpatient care payments for 2012, representing 26 percent of payments for those stays.

That Medicare finding supplies a concrete comparison for billing a higher level of hospice care: the symptoms, the treatment and the days charged at the higher rate. A patient can remain eligible for hospice while the need for inpatient symptom management ends. The biller may see the expensive rate continue after the clinical team has recorded the improvement.

What Is the 80/20 Rule in Hospice?

The Medicare inpatient cap limits inpatient days to 20 percent of a hospice’s total Medicare hospice days. Payments for excess inpatient days fall to the routine home care rate. The calculation operates across the provider’s patients and days. The clinical review asks why a particular patient needed a particular level on a particular day.

Medicaid Room and Board Runs Through the Hospice

Ordinary nursing home room and board has a separate Medicaid payment path for qualifying residents enrolled in both programs. Medicaid pays the hospice, which pays the nursing facility under their agreement. The facility’s accommodation payment sits alongside the Medicare hospice benefit.

HHS-OIG’s November 1997 report, Hospice and Nursing Home Contractual Relationships, described Medicaid paying the hospice at least 95 percent of what the state would have paid the nursing facility. In that report, the state rate was the reference point for the room-and-board payment. The contract records what the hospice actually agrees to pass along.

Among the contracts detailed enough to assess, some required payments to facilities above the full Medicaid daily rate.

A separate OIG audit published that November explained the commercial attraction. Chain hospices receiving the discounted payment were paying nursing facilities the full amount they had received before residents enrolled in hospice. OIG found that this gave those hospices a competitive advantage in recruiting patients over hospices passing along only the discounted amount.

The nursing home could keep its previous payment while a new provider collected the hospice benefit. That helps explain why a facility contract belongs beside the patient record. The arrangement has a commercial purpose as well as a care purpose, and its payment terms can help explain which hospice gets access to residents.

Medicaid Duplicate Billing and Nursing Home Room and Board

Medicaid duplicate billing can mean charging Medicaid for a service Medicare has already paid for. In hospice nursing home room and board, the question is what each payment bought: the resident’s accommodation, hospice care or the same service billed again. The facility contract and the claims show whether an extra charge repeats something already paid.

The referral side adds another question: what did the facility receive in exchange for sending residents to the hospice? OIG’s 1998 alert on hospice nursing home arrangements identified excess payments, free staff and discounted services among suspect arrangements. Those benefits can put hospice referral kickbacks beside the room-and-board account. The contract, staffing arrangement and referral history explain the transaction behind the invoice.

State Claims Controls Need the Other Program’s Data

A Medicaid claims system can miss overlapping payments when it sees only Medicaid’s side of a resident’s care. The ADvancing States paper explains why the information gap matters:

The paper describes comparing Medicare and Medicaid service use so states can avoid paying for services Medicare covers. A state seeing only its own claims can miss the overlap. Inside the hospice, billing instructions and internal correspondence can show what the provider knew when it sent a claim or kept a payment.

MJHS Shows Why the Federal and State Shares Matter

MJHS Hospice and Palliative Care faced allegations of billing Medicare and Medicaid for unsupported continuous home care during 2011 through 2015. Continuous home care is crisis care delivered at home. Medicare pays by the hour and requires at least eight hours of predominantly nursing care. The government’s general inpatient care allegations concerned Medicare patients during 2012.

A whistleblower brought the case, and the United States and New York settled the allegations. The agreement accompanying the Justice Department’s August 19, 2020 announcement allocated $4,600,000 to Medicare, $250,000 to the federal Medicaid share and $375,000 to the state Medicaid share. The same provider’s settlement reached different care levels and different public payers.

The whistleblower’s amended complaint described the alleged inpatient practice plainly:

The allegation concerns how long the higher care level stayed on the account. That is a question a nurse and a biller may see from opposite sides: one sees the patient’s condition, the other sees the payment category. Their records can explain whether the rate continued after the clinical reason for it ended.

When an Internal Review Finds Payments the Hospice Keeps

Keeping payments after internal warnings can become a separate allegation from the original claim. In the Avalon case, the United States and Tennessee alleged that the hospice retained Medicare and Medicaid payments after complaints and audits identified patients who were not hospice-eligible.

The government’s June 2021 account connected the payment problem to what management had already been told. The allegations included pressure over admissions and census, discouraged discharges, and incomplete or inaccurate information reaching certifying physicians. The eligibility decision and the later decision to keep the money both depended on information inside the business.

The Gentiva settlement announced in July 2024 resolved allegations that included Avalon’s ineligible-patient billing and retained overpayments. An internal audit has a history beyond its findings: who received it, what claims it identified and what happened afterward. For someone in compliance or billing, that history may be the part of the case nobody outside the provider can see.

What Billing Insiders Can Explain

Billing insiders can connect the patient’s care to the claim, the payment and the decisions behind both. The clinical chart explains the need for hospice and the level of care. Election and certification records explain the enrollment. Facility contracts and payment records explain the room-and-board arrangement. Internal reviews and correspondence explain what happened when someone questioned the account.

A hospice whistleblower may know why the higher rate continued, why the nursing home received an extra payment or why a flagged account never led to money being returned. That knowledge gives the documents their meaning. We help insiders turn that knowledge into their strongest hospice whistleblower case.

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

You Know What the Payment Was For

If you have seen hospice claims, nursing home payments or internal findings that management cannot square with the care, speak with our hospice fraud whistleblower experts. We build the case strategy around your knowledge of the payment and bring in healthcare fraud whistleblower lawyers who understand Medicare and Medicaid billing. We stay beside you as the case develops, with the clinical record, the money and the decisions kept together.