Aided by referral bonuses, hospice industry booms

Hospice Care of Kansas, or HCK, gave salespeople a budget of $500 a month to buy lunches and gifts for doctors and nursing-facility managers and staff, said Angelo, who now works for another hospice. Nursing homes have been offered diapers, wheelchairs, nutritional supplements and supplies in return for patient referrals, former hospice workers said.

Vitas paid salespeople bonuses based on patients’ length of stay, according to White, who worked for the company in Cathedral City, Calif., from 1998 to 2004. Medicare, which foots 90 percent of the national hospice bill, compensates providers on a per-diem basis, and lengthier stays increase profitability, data show.

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Vitas “compensates some marketing and management representatives based on overall growth,” according to spokeswoman Kal Mistry. She said Vitas does not link compensation to length of stay or pay bonuses to employees involved in admissions decisions.

Bonuses to doctors

VistaCare Hospice, a unit of Atlanta-based Gentiva, paid enrollment bonuses to doctors, admissions directors and branch managers, according to Misty Wall, a former social worker for the company and now an assistant professor at Boise State University in Idaho. VistaCare also gave pizza parties, gift cards and other extras to its registered nurses and social workers for meeting admission targets, Wall said.

Wall has filed a lawsuit against VistaCare in U.S. District Court in Dallas under the U.S. False Claims Act, seeking repayment to the government for admissions of ineligible hospice patients. The law lets plaintiffs share in any recoveries. The Justice Department, which has not joined Wall’s suit, is opposing VistaCare’s motion to dismiss the claim.

The allegations predated Gentiva’s ownership of VistaCare, according to spokesman Scott Cianciulli, who said the company is committed to complying with all Medicare rules.

The inspector general of the Health and Human Services Department is investigating hospice marketing practices and financial relationships with nursing facilities. The inquiry was prompted by a 2009 report by the Medpac commission, a congressional advisory body, that found hospices “aggressively marketed” to nursing-home patients, and paid incentives to medical directors for “inappropriate” referrals and enrollments.

Under various federal statutes, paying for patient referrals or compensating employees based on the number of Medicare patients recruited may be illegal. But the laws are “painfully complicated” and loaded with exceptions, said Ryan Stumphauzer, a former federal prosecutor in Miami who helped launch South Florida’s Medicare Fraud Strike Force.

He believes health-care laws bar all employees and contractors from earning bonuses based on Medicare enrollment goals, including salespeople and managers.

Nursing-home physicians referring patients to hospices that also pay the doctors, especially in cases when the compensation includes enrollment bonuses, may violate a federal statute known as the Stark Law, Stumphauzer said. The law is designed to ensure that doctors refer patients based on who provides the best care, not based on who is paying them.