Nursing Home Hospice Fraud: When Access to Residents Has a Price

Nursing home hospice fraud involves buying access to residents with free staff or inflated facility payments, then billing for care the hospice never provided. The arrangement reaches people who see different parts of the same business: the administrator negotiating the contract, the nurse covering the shift and the biller submitting the claim. The facility controls access. A hospice willing to absorb the facility’s expenses can turn that control into a source of referrals.

This form of hospice fraud puts the facility’s operating costs inside the referral decision. In its July 2013 settlement announcement, the Justice Department said HPH Hospice agreed to pay $1 million to resolve allegations that included free services to skilled nursing facilities in exchange for referrals. The allegations also included admitting ineligible patients, delaying discharge and billing at higher rates than the hospice was entitled to receive. Access to patients and the claims that followed belonged to the same case.

Why Nursing Homes Control Hospice Referrals

A nursing home can limit which hospices serve its residents. That gives the facility something valuable to sell before a hospice has provided any care.

The HHS Office of Inspector General described this leverage in its March 1998 Special Fraud Alert. A nursing home offers a pool of potential patients in one location. An exclusive or nearly exclusive arrangement can therefore have substantial financial value to the hospice. The alert identified the danger on both sides: a facility can request benefits for access, and a hospice can offer them. Bought referrals distort medical decisions and put residents’ quality of care at risk.

The competitive pressure was already visible in an OIG audit published in 1997. A national hospice chain received a reduced room-and-board payment from Medicaid but paid nursing facilities the full amount they had received before the residents entered hospice. The Inspector General said that put hospices paying the lower amount at a disadvantage when recruiting patients.

The facility kept its income. Absorbing the difference gave the hospice a recruiting advantage over competitors paying the lower rate. An administrator negotiating those terms and a finance employee booking the payments would see the arrangement from opposite ends.

The same audit described marketing materials that downplayed or ignored the terminal-prognosis requirement and sales commissions tied to how long a patient stayed. That is where the referral arrangement meets hospice eligibility fraud: the business wants the admission and the continuing payment, while the clinical record must support a prognosis of six months or less if the illness runs its normal course.

Does Medicare Pay for Room and Board for Hospice Patients?

Medicare’s routine hospice payment does not cover ordinary nursing-home room and board. A resident who also qualifies for Medicaid can have that expense paid through Medicaid, with the money passing through the hospice to the nursing facility.

The Inspector General’s alert describes the room-and-board payment as at least 95% of the state’s daily nursing-home rate. Medicaid pays the hospice, and the hospice pays the nursing home. What the daily rate includes varies by state. Medicare separately pays the hospice for hospice care.

When a hospice pays a nursing home for room and board, the Medicaid duplicate billing question is simple: did the facility get paid again for work its daily rate already covered? The facility contract, state payment terms and hospice care plan should describe the work before the ledger and claims show who was paid for it.

The written hospice-facility agreement assigns room and board to the facility and leaves the hospice in control of the resident’s hospice care. The hospice remains responsible for managing services it contracts out. A nursing-home address does not turn the hospice’s responsibility into an extra task for whoever happens to be on the facility’s shift.

The Inspector General’s 1997 review of hospice and nursing-home contracts found hospices paying nursing homes 105% and 120% of the Medicaid daily rate.

The useful comparison is the amount the facility would otherwise have received, the extra payment it received from the hospice and the additional work it actually performed. Calling the extra money room and board does not explain what it bought.

Seven Ways Hospice Payments Can Buy Nursing Home Access

Free staff and below-cost services become hospice referral kickbacks when offered to buy access to residents. The Inspector General’s alert identified seven suspected kickback practices:

1. Free or discounted goods. The hospice supplies goods free or below fair market value to induce nursing-home referrals.
2. Excess room-and-board payments. The hospice pays more than the nursing home would have received directly from Medicaid for the resident.
3. Paying again for included services. The hospice pays the facility separately for work Medicaid already includes in the room-and-board payment.
4. Overpaying for additional services. The hospice pays above fair market value for additional non-core services outside the Medicaid room-and-board payment.
5. Trading referrals. The hospice sends its patients to the nursing home to induce referrals back to the hospice.
6. Free care before hospice enrollment. The hospice supplies free or below-market care while Medicare pays the nursing home under the skilled-nursing benefit, expecting the patient to enter that hospice afterward.
7. Staff on the hospice’s payroll doing the facility’s work. The hospice pays workers to perform duties the nursing home would otherwise have to provide.

The free-staff arrangement is particularly recognizable to someone managing a nursing-home schedule. In a whistleblower complaint involving AseraCare, the whistleblower alleged that the hospice promised a full-time employee once a skilled nursing facility had several AseraCare hospice patients. The promised worker connected the facility’s staffing benefit to its hospice patient count.

When a hospice supplies a nursing facility with below-cost services, the kickback question follows the benefit: whose expense disappeared, what the hospice expected in return and which referrals followed. An invoice can describe a service accurately and still leave the referral bargain elsewhere, in the contract, staffing promise or instructions to the marketing team.

Does the Anti-Kickback Statute Only Apply to Medicare?

No. The Inspector General’s alert explains that the Anti-Kickback Statute reaches Medicare and Medicaid referrals. It addresses knowingly and willfully offering, paying, requesting or receiving something of value to induce referrals for services a federal health care program pays for.

That matters in a nursing home because the arrangement can involve Medicare hospice payments and Medicaid room and board at the same time. We trace the benefit offered to the facility alongside the referrals and the claims it produced. The payer’s name on one invoice is only part of that account.

When Hospice and Skilled Nursing Billing Overlap

Hospice and skilled nursing duplicate billing involves charging for the same care under different benefits. A separate problem arises when the hospice collects its payment while relying on facility employees to do the work it promised.

The whistleblowers in the HPH case alleged the billing overlap directly:

The same complaint alleged backdated hospice admissions after patients left skilled care, creating claims for hospice services never provided. That makes the transition date consequential. The election, admission record and care notes show when hospice began. The skilled-nursing and hospice claims show what each program was billed for those days.

A complaint against Odyssey Healthcare described the staffing side:

That allegation gives the staffing roster a different significance. It can show whose workers supplied the care for which the hospice collected payment. The hospice plan of care, visit notes and facility assignments connect the promised services to the people who actually delivered them.

These are concrete hospice billing fraud questions. A claim reviewer sees the billed day. A nurse may know that the hospice worker never arrived, or that facility staff covered the promised care. Bringing those accounts together connects the payment to the work.

Why Facility Residents Matter to Hospice Margins

Daily payment rewards enrolled days, while the hospice’s costs depend on the care it supplies. The Medicare Payment Advisory Commission explains that the hospice receives payment for each enrolled day even when no staff member visits that day.

The setting affects the business. In MedPAC’s 2024 data, average lifetime hospice stays among decedents were 120 days for patients whose main setting was a nursing facility, compared with 100 days at home.

The commission’s March 2026 report found that, in 2023, the half of hospices with the highest combined concentration of nursing-facility and assisted-living patients had an aggregate fee-for-service Medicare margin of 13.3%. The lower half had a margin of 0.2%.

Hospice Medicare Margins, a July 2019 Milliman report commissioned by the National Partnership for Hospice Innovation, a group of nonprofit care providers, explains the underlying incentive:

Milliman’s analysis found positive relationships between Medicare margins and the share of patients in nursing facilities or assisted living. It found negative relationships between margins and nursing and social-service days per patient. The facility contract and patient-level care records show how a particular hospice responded to them.

The Nursing-Facility Payment Debate Keeps Returning

The overlap in payment for personal care has been an oversight issue for decades. The government’s response has changed even while the underlying question has remained: why pay a hospice the full rate for work the nursing home is already required to provide?

In September 1997, the Inspector General recommended modifying Medicare or Medicaid payments for hospice patients in nursing homes. Its July 2011 report called for reducing Medicare hospice payments in nursing facilities, seeking authority from Congress if needed. The Centers for Medicare & Medicaid Services agreed.

In its July 2018 hospice oversight portfolio, the Inspector General again recommended changing those payments. This time the Centers for Medicare & Medicaid Services disagreed, saying nursing-facility residents received more visits than patients at home.

For an insider, the recurring policy question has an immediate counterpart on the floor: which organization supplied the care, and which organization collected the payment?

How Do You Identify Nursing Home Hospice Fraud?

Identifying nursing home hospice fraud means connecting the referral arrangement, the resident’s care and the government claim. A contract can show the promised benefit. Payment records show what the facility received. Staffing assignments and visit notes show who did the work.

Hospice and nursing-facility healthcare workers can know why those records differ: who promised the worker, who approved the extra payment or who directed staff to change an admission date. We work with you to connect that knowledge to the claims and the decisions behind them. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know What Bought the Referrals

If you know why a hospice supplied the staff, absorbed a facility’s expenses or billed for care someone else delivered, speak with our whistleblower experts about the arrangement. We build the case with you around the referrals, the care and the money, and bring in hospice fraud whistleblower lawyers who understand nursing-facility payment arrangements. We stay beside you as your knowledge becomes a case the government can pursue.