Home Health & Hospice Week

Hospice chain shells out $13 million to settle fraud charges related to terminal illness.

If your employees don't feel like you're listening closely to their fraud concerns, you could wind up squarely in the feds' crosshairs--and that can be a very expensive place.

For-profit hospice chain Odyssey HealthCare Inc. has learned that lesson the hard way. The Dallas-based company has paid $13 million to the government to settle False Claims Act allegations, it says in a release. Odyssey also has entered into a corporate in-tegrity agreement (CIA) with the HHS Office of Inspector General.

The company admitted no wrongdoing in the settlement, which it first announced back in February (see Eli's HCW, Vol. XV, No. 8).

Federal prosecutors alleged that Odyssey billed Medicare for services provided to hospice patients who were not terminally ill and therefore were ineligible for the Medicare hospice benefit, the U.S. Department of Justice says in a release.

The settlement resolves charges originally brought against Odyssey by former regional vice president JoAnne Russell, the DOJ notes. Odyssey hired Russell in 2002 as director of patient care services for its Milwaukee program, Russell's attorney, Nola Hitch-cock Cross, told the Milwaukee Journal Sentinel. A year later, Odyssey promoted Russell to a position auditing Medicare compliance for a multistate region.

When Russell's audits turned up problems in certifications and recertifications, "she would recommend discharge of these patients who did not meet the criteria and was responded to unfavorably by Odyssey," according to her whistleblower lawsuit filed in 2003. Russell eventually was fired.

Russell will receive more than $2.3 million of the settlement, which covers Odyssey claims from 2001 to 2005, the DOJ notes.

"Now Odyssey has had a wake-up call, their CEO stepped down and they are under a corporate compliance agreement, so it was worth it," Russell told the Journal Sentinel. "I would do it again even if I had not received any money on the Odyssey claim."

6 Steps To Protect Against Whistleblowers

Heads up: The settlement shows the government is taking hospice fraud seriously, warns attorney Deborah Randall with Arent Fox in Washington, DC.

And terminal illness has always been a fraud risk area for hospices, notes Burtonsville, MD-based health care attorney Elizabeth Hogue. "This is one of the never-ending stories in the hospice industry," Hogue tells Eli. Hospices may be even more at risk because they "have generally let down their guard on this issue a little bit in the past year or so."

Consider these steps to keep in compliance and out of court for whistleblower lawsuits:

1. Scrutinize terminal illness. This settlement reinforces that determinations of terminal illness should "remain at the top of hospice managers' lists," Hogue urges. As part of its CIA with the OIG, Odyssey is implementing a "first-of-its kind clinical review protocol" for the six-month prognosis, the company says. Odyssey's clinical affairs and compliance personnel will administer the protocol and an Independent Verification Organization will verify the protocol's findings, the company explains.

Hospices should develop and implement their own clinical protocols to address the same issues, Hogue recommends.

Example: Providers can look at some details of Odyssey's review protocol in the company's 38-page CIA at www.oig.hhs.gov/fraud/cia/agreements/odyssey_healthcare_inc_07072006.pdf. The clinical review elements are on pp. 10-13.

2. Document thoroughly. Once the patient's terminal illness is determined, you should thoroughly back up the determination with "complete and accurate documentation supporting hospice certifications and claims," advises attorney Mary Michal with Reinhart Boerner Van Deuren in Madison, WI.

"Predicting life expectancy of six months or less is admittedly an inexact science," Michal notes. "Good supportive documentation is the foundation for good hospice care and solid compliance planning."

3. Adopt a compliance plan. Home care providers should develop and implement an overarching compliance plan to detect and address potential fraud and abuse issues, Michal counsels. Hospices can base their plans on the OIG's 1999 compliance guidance for hospices. The OIG issued similar guidance for home health agencies in 1998 and durable medical equipment suppliers in 1999.

The plan should include "a transparent process that they follow whenever an individual alleges that a fraudulent activity may have occurred," she adds.

Having the plan sit on a shelf isn't enough. It should "be a part of the overall culture of the hospice," Michal maintains. And providers should follow, evaluate and update the plan as necessary.

4. Assess risk areas. While terminal illness is a hospice hot spot, there are others that could put you at risk of whistleblower suits too. "Marketing and other areas which drive admissions--and may affect clinical decision-making--are always places where hospices must be careful," Randall stresses.

As part of your compliance plan, assess what areas may leave you the most vulnerable to risks, then take steps to achieve full compliance in those areas, experts advise. The OIG's compliance guidance points out specific risk areas, Michal notes.

5. Follow your complaint protocol. It may be tempting for management to shrug off at least some complaints of non-compliance, fraud or abuse. Those are the situations that can put you on the wrong end of a qui tam lawsuit.

The complaint process spelled out in your compliance plan should involve notification of your legal counsel to show you mean business, Michal recommends. "Every complaint from either inside or outside of the hospice alleging fraud or other misconduct should be taken seriously and addressed consistently," she urges.

Don't forget: Document the steps you take in every complaint investigation.

6. Choose compliance officers carefully. This case shows "internal compliance functionaries may themselves be the instigators of false claims cases if they feel they are disregarded," Randall warns. While they should go to the organization's Board of Directors if management is unresponsive, they may head to court--and an eventual multi-million-dollar settlement--instead.

Hidden pitfall: Some providers have written contracts with compliance officers that prohibit the disclosure of confidential company information to those outside the company. But that may be yet another compliance misstep. "One cannot contractually bind a person not to respond to governmental investigations, subpoenas, grand jury questions, etc., without risking obstruction of justice charges," Randall warns.

Instead, choose your compliance personnel carefully and then listen to them carefully when they have concerns, Randall advises. Make sure they feel management is taking their concerns seriously and acting on them, if necessary.

Note: The OIG's compliance guidance for providers is at http://oig.hhs.gov/fraud/complianceguidance.html  --scroll down to 1999 entries for hospice and DME guidance and 1998 for HHA guidance.