Hospice and Home Health Kickbacks at the SNF: Free Services and Paid Referral Access

SNF hospice and home health referral kickbacks buy patient referrals with money, free services or referral-driven contracts. A hospice can cover work the nursing facility would otherwise pay for. A home health company can pay the employees who send patients its way. For someone inside the facility, the arrangement may first appear as extra help on the floor, a medical-director appointment or a payment to a colleague. The business being purchased is access to residents, and the resulting care can become a Medicare claim.

Why Free Services Can Buy Referral Access

When a hospice supplies free nursing services to an SNF for referrals, the facility receives something valuable even if no check changes hands. Work the facility would otherwise fund comes off its own budget. The hospice gets a path to patients.

The Office of Inspector General explained that incentive in its 1998 alert on nursing-home arrangements with hospices. Nursing-home operators controlled which hospices could enter their facilities. An exclusive or semi-exclusive arrangement could give a hospice access to a substantial pool of residents. The operator’s decision had a price.

The alert described Medicare paying the hospice a daily rate for routine hospice care, with nursing-home room and board paid separately. For a resident also eligible for Medicaid, the hospice received the Medicaid room-and-board payment and paid the nursing home. The alert said Medicaid paid at least 95 percent of the state’s daily nursing-home rate. It distinguished core hospice services, supplied by hospice employees, from non-core services the hospice could contract with the facility to provide.

The alert also explained why nursing-home residents could be especially profitable: their hospice stays were longer on average than those of patients in their own homes. Overlapping services could reduce costs while the daily payments continued. The hospice’s care plan identifies the care it owes the patient. The facility has its own work to do. The Inspector General’s office specifically flagged hospice-paid staff performing duties the nursing home would otherwise perform. The useful question is whose expense the hospice is taking over, and what referrals it expects in return.

What the OIG Flagged in Nursing-Home Hospice Arrangements

The Inspector General’s alert identified suspected kickbacks hidden in service arrangements and payment terms. They included free or discounted goods, inflated room-and-board payments, and payments for additional services already covered by Medicaid’s daily payment. Paying above market value for separately contracted services could supply the same benefit through an invoice.

Cross-referrals were another form of the bargain: the hospice sent patients to the nursing home to induce the home to send patients back. The thing of value was business itself.

The alert also described a particularly revealing sequence. A hospice supplied free or below-market care while Medicare was paying the nursing home under the skilled nursing facility benefit. In return, the hospice expected to receive the patient after that benefit ran out. The free care today bought the expected hospice business tomorrow.

The Inspector General’s office connected these arrangements to distorted medical decisions, unnecessary services and poorer care. The referral source gets the benefit, while patients get care chosen for someone else’s financial gain and taxpayers pay for it.

Referral Payments Can Reach Different People

The benefit can go to the facility, a physician with nursing-home connections or an employee who influences referrals. HPH Hospice, Good Shepherd Hospice and Pro Healthcare Servicing illustrate those different routes.

HPH Hospice and Free SNF Services

HPH Hospice, also known as Hernando-Pasco Hospice, agreed to pay $1 million in July 2013 to resolve allegations involving Medicare and Medicaid hospice claims. The government alleged that HPH supplied free services to skilled nursing facilities in exchange for patient referrals. The hospice supplied the benefit, the facilities received it, and HPH submitted the hospice claims.

The same settlement addressed what allegedly happened after patients entered the hospice. The government said management targets drove ineligible admissions, procedures delayed or discouraged discharges, and staff received instructions to make patients appear eligible through false or misleading medical records. It also alleged billing at higher reimbursement rates than HPH was entitled to receive. In that account, a management target took the place of the patient’s need for hospice care.

Two former employees brought the whistleblower case behind the settlement.

Good Shepherd and Hospice Medical-Director Referrals

Hospice medical-director referrals involving nursing home residents put the physician’s connections at the center of the hiring question. In the Good Shepherd Hospice settlement announced in February 2015, the Justice Department alleged that the company hired medical directors based on their ability to refer patients, particularly through nursing-home connections.

The $4 million Medicare settlement also addressed alleged ineligible admissions, pressure to increase the patient census and enrollment bonuses. The alleged hiring strategy valued the physician’s access to residents.

We examine how the medical-director work, compensation and referral expectations fit together.

Pro Healthcare Servicing and Payments to Nursing-Home Staff

When a home health company pays nursing home staff for referrals, the alleged recipient can be an employee rather than the facility itself. The Justice Department’s March 2023 Pro Healthcare Servicing announcement makes that distinction explicit.

The government alleged that Pro Healthcare Servicing and its executives paid employees at assisted-living and skilled nursing facilities in northern Virginia from 2012 to 2021. The purpose was to induce referrals for home health care and hospice services. Pro Healthcare Servicing then billed Medicare for services to those patients.

A facility employee who knows about the payment and a billing employee who sees the resulting claims may know different parts of the same arrangement.

The Same Bargain in a Supplier Contract

A nursing home’s own bills can also become the bargaining chip. In the whistleblower complaint against Diagnostic Labs, the laboratory and radiology supplier allegedly offered low prices on business the SNF paid for itself in exchange for Medicare Part B and Medi-Cal referrals it could bill directly. The complaint put the economic point plainly:

A discount or free service can pay the referral source by removing an expense. The facility’s saving and the supplier’s separately billed business explain both sides of the alleged bargain.

When Referral Access Becomes a Medicare Claim

The referral arrangement leads to a provider’s claim for payment. Pro Healthcare Servicing’s alleged employee payments led to referrals it billed to Medicare. HPH’s settlement connected a free-service referral allegation with separate allegations about eligibility, continued enrollment, medical records and reimbursement levels.

The clinical decision matters because the Medicare hospice benefit serves patients with a life expectancy of six months or less if the illness runs its normal course. HPH allegedly pressured staff to admit patients who did not qualify and to make their records say otherwise. The government’s account gives an insider a concrete comparison: what staff understood about the patient against what management wanted the chart to say.

A nurse may know why discharge was discouraged. A medical director may know what referrals management expected from the appointment. The facility’s financial staff may know which services arrived without a bill. Bringing those observations together connects the commercial arrangement to the care and payment decisions that followed.

What Evidence Is Needed to Prove Fraud?

Useful evidence connects the benefit, its recipient, the referral and the resulting claim. We examine those connections with you.

A chart describing a patient’s condition and an instruction to change that description can tell very different stories.

For free services, we examine what the hospice supplied and whose costs it replaced. For a medical-director arrangement, we connect compensation and actual duties to referral expectations. For staff payments, we connect the recipient’s role to the patients referred and the provider that billed. The business agreement, the work and the claim belong in the same account.

What a Home Health Study Adds

Referral concentration can help explain where to look within a home-health business. The 2026 National Bureau of Economic Research working paper Medicare Home Health Fraud: How Much, Where, and Who? combined Medicare claims with federal enforcement records to estimate where other agencies would have faced enforcement. It estimated that fraudulent home health agencies billed 3.4% of Medicare home health spending in 2008. Its finding links the referral source to the pattern of care:

For someone inside a provider, its value is the connection between who sends patients and how alike their care records look. We connect that pattern to the specific payments, referral decisions and claims the insider knows.

What Is the Reward for a Medicare Fraud Whistleblower?

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

When You Know What Bought the Referral

If you know which free services, staff payments or medical-director arrangements bought access to residents, speak with our whistleblower experts about the referral business inside your facility. We work with you to build the case around who received the benefit, who sent the patients and who billed for their care. We bring in healthcare fraud whistleblower lawyers who understand hospice and home health referral cases, and stay beside you throughout the case.