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12.17.2011

On December 18, 2011, the Washington Post published an article that was critical of the hospice care industry, which has grown explosively in recent years, and which is 90% taxpayer funded via the Medicare program.  The Post article concluded that such growth was based in part on illegal kickbacks and tainted financial relationships.

The Post article reported that hospice care, once chiefly a charitable cause, has become a profitable growth industry, with $14 billion in revenue, 1,800 for-profit providers and a base of Medicare-covered patients that doubled to 1.1 million from 2000 to 2009.  To ascertain the reason for the growth, the Post studied court records and interviewed numerous hospice care employees, patients and family members.  The Post concluded that "compensation based on enrollment numbers, pay to nursing-home doctors who double as hospice medical directors, and gifts to the nursing facilities have helped fuel the [hospice care] boom."

Ryan Stumphauzer was asked to comment on the Stark Act, the Anti-Kickback Statute, and other federal laws that might be implicated by these questionable financial relationships that incentivize patient enrollment and referrals without regard to medical necessity:

"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 'painfuly 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."

The full text of the Washington Post article is available here: 

http://www.washingtonpost.com/business/aided-by-referral-bonuses-hospice-industry-booms/2011/12/12/gIQAIj930O_story.html

Mr. Stumphauzer is available to consult clients concerning alleged violations of the Health Care Fraud Statute, Anti-Kickback Statute, the Stark Law, and other healthcare related statutes.

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