Hospice and the FCA

While death is a certainty for us all, the timing of our deaths is typically indeterminate until the very end. For those who have been diagnosed as terminally ill, death is merely a matter of time. Hospice treatment is designed to allow terminally ill people to live out their final days with dignity and comfort. However, bad actors in the hospice industry often leave vulnerable populations to die uncared for and alone.

The Importance of Hospice

Dame Cicely Saunders is credited with founding modern-day hospice care. Her work with terminally ill patients led her to focus more on palliative care than curative treatments. Dr. Elisabeth Kubler-Ross helped bring the idea to the United States and the first hospice was opened in the US in 1972. In 1982, the Medicare Hospice Benefit was created.

To qualify as a hospice for Medicare purposes, the care must optimize the patient’s comfort and dignity and be consistent with the patient’s needs and goals.[1] In addition to physician and nursing services, hospices must provide counseling, social services, physical and occupational therapy, and other services that provide for the patient’s physical, psychosocial, emotional, and spiritual care.

A beneficiary who chooses to enter hospice elects to forgo any curative treatment. Instead, the goal of hospice is to manage symptoms to help patients improve their quality of life and be more comfortable in their waning days. Hospice treatment does not necessarily require admission into a special facility. Over 98% of hospice care is Routine Home Care performed at the patient’s home, an assisted living facility, nursing home, or similar facility.

The Rise in Hospice

In 2020, there were more than 5,000 Medicare certified hospices in the US.[2] This represents a 40.5% growth since 2008. Over the same period, there was a 63% increase in the number of Medicare beneficiaries enrolled in hospice care. More than 1.72 million people were in hospice care in 2020. By 2030, all of the Baby Boomers (nearly 70 million people currently) will be 65 or older. By 2040, the annual death rate in the US is expected to double to about 4.1 million deaths per year.[3]

The vast majority of industry growth is in for-profit hospices. More than 72% of all hospices are now for-profit businesses. In 2007, not-for-profit providers made up 48.6% of hospice providers, while only 47.1% were for-profit. What can explain this growth in an industry where the customer is always dying? Ava Kofman discussed this in her award-winning investigation of the hospice industry, “How Hospice Became a For-Profit Hustle”:

It might be counterintuitive to run an enterprise that is wholly dependent on clients who aren’t long for this world, but companies in the hospice business can expect some of the biggest returns for the least amount of effort of any sector in American health care. Medicare pays providers a set rate per patient per day, regardless of how much help they deliver. Since most hospice care takes place at home and nurses aren’t required to visit more than twice a month, it’s not difficult to keep overhead low and to outsource the bulk of the labor to unpaid family members—assuming that willing family members are at hand.

And there is big money in hospice care. In 2020, Medicare paid $22.4 billion to hospice providers. That number is going to continue to grow.

Medicare and Hospice

To qualify for hospice care under Medicare, one must be eligible for Part A of Medicare and be certified as terminally ill.[4] This certification must be based on a physician or medical director’s judgment that the individual's prognosis is for a life expectancy of 6 months or less if the terminal illness runs its normal course.[5]

If certified, the individual is then eligible to receive hospice care in stages: an initial 90-day period, a subsequent 90-day period, and an unlimited number of subsequent 60-day periods.[6]

This framework is designed to recognize that predicting life expectancy is not an exact science and that some patients may improve over time and possibly even exit hospice. For example, former President Jimmy Carter was seen in public recently, a little more than 7 months after he opted into hospice care in February. Still, 75% of patients are enrolled for 87 days or less.

During the first two 90-day periods, the certifying physician does not have to meet with the patient face-to-face. The doctor can certify the patient has less than six months to live merely by referring to their chart. Only if the patient’s care extends past 180 days must the doctor actually meet with the patient to recertify their eligibility for hospice care.

Once a patient is certified as terminal and enters hospice, the hospice organization receives a pre-determined fee from Medicare for each day that patient receives hospice care. There is also a statutory aggregate cap limiting the overall payments per patient made to a hospice annually. The current rates are as below, followed by the adjusted rates for 2024:

  • Routine Home Care (Days 1-60): $211.34 [$218.33]
  • Routine Home Care (Days 61+): $167.00 [$172.35]
  • Continuous Home Care: $1,522.04 ($63.42/hr.) [$1,565.46 ($65.23/hr.)]
  • Inpatient Respite Care: $492.10 [$507.71]
  • General Inpatient Care: $1,110.76 [$1,145.31][7]
  • Statutory Aggregate Cap: $32,486.92 [$33,494.01][8]

Hospice Fraud Schemes

Earlier this year, Deputy Assistant Attorney General Lisa Miller stated that the DOJ Health Care Fraud Unit was “prioritizing the investigation and prosecution of schemes that affect vulnerable populations, including, but by no means limited to . . . hospice fraud.”[9]

Due to the way hospice care is funded by Medicare, there are ample opportunities for fraud. The Office of the Inspector General noted several concerning issues in a 2019 report on hospice deficiencies. Their investigations unveiled numerous concerning issues, including false enrollments, enrolling beneficiaries without their consent, inappropriate billing, poor quality of care, a lack of transparency, a payment system that incentivizes minimizing services, and a rapid growth in the number of new hospices.[10]

Below are a few examples of hospice fraud schemes successfully pursued by the DOJ under the FCA:

Merida Group (Texas – 2021)

Merida Group Owner Rodney Mesquais and CEO Henry McInnis were convicted of six counts of health care fraud and one count each of conspiracy to commit health care fraud, conspiracy to launder money, and conspiracy to obstruct justice for their roles in a $152 million hospice fraud scheme.[11] Mesquais was sentenced to 20 years and McInnis was sentenced to 15 for their schemes to defraud Medicare.

Both were found civilly liable under the FCA as well. Both Mesquias & McInnis were held liable for treble FCA damages of $29,627,410 and civil penalties of $83,840,000 each.[12] Another member of the scheme, Operations Manager Jose Garza, was sentenced to 27 months and order to pay $4.7 million in restitution.[13]

Merida Group engaged in one of the most pervasive types of hospice fraud: certifying patients who were ineligible for hospice care. Merida had compliant in-house medical directors certify every patient as eligible for hospice. “The medical directors routinely lied about having seen patients face-to-face as Medicare requires, exaggerated how sick the patients were and made up diagnoses so that the patients would appear eligible for hospice, and fabricated medical records to cover their tracks. . . . [Merida] targeted poor and elderly non-English speakers in San Antonio housing projects and used the language barrier to trick them into signing up for hospice care.”[14]

San Diego Hospice and Palliative Care (California – 2017)

In 2017, a settlement of $3,678,735 was finalized with San Diego Hospice and Palliative Care for a case originally brought in 2012. A whistleblower alerted the government to SDH’s “Open Access to Patients” policy which required staff to admit virtually any patient. The settlement may have been larger, but SDH filed for bankruptcy in 2013, shortly after the allegations were made public.

Compassionate Care Hospice of New York (New York – 2015)

CCHNY and its parent company, Compassionate Care Hospice Group Ltd., agreed to settle hospice fraud claims with the United States for a total of $6.672 million. CCHNY “accepted responsibility for failing, at its Bronx location, to treat patients according to an individualized plan of care, failing to meet the needs of certain patients, failing to make nursing services available 24 hours a day and seven days a week as required, and failing to maintain adequate clinical records, while CCH Group accepted responsibility for failing to provide sufficient oversight of CCH-New York through its compliance audits.”[15]

Good Shepherd Hospice of Mid-America (Georgia – 2015)

Good Shepherd settled with the United States for $4 million after two former employees filed a qui tam suit. The suit alleged that Good Shepherd created an environment to submit claims for patients who were not terminal. They did so by pressuring staff to meet quotas, giving kickbacks for the number of patients enrolled, hiring medical directors based on their ability to refer patients (specifically medical directors who worked at nursing homes with vulnerable populations), and failing to properly train their staff on hospice eligibility criteria.

Serenity Hospice and Palliative Care (Arizona – 2015)

Serenity Hospice and Palliative Care agreed to reimburse the United States a total of $2.2 million to settle allegations that they provided kickbacks to a medical provider for referrals of patients who did not actually qualify for hospice care. The settlement also required Serenity to enter into a five-year corporate integrity agreement with the OIG and excluded the founder of Serenity from all federal health care programs for five years.

Home Hospice Care (Pennsylvania – 2013)

In 2013, Matthew Kolodesh, owner of Home Hospice Care (HCH), was found guilty on 35 counts related to hospice fraud and sentenced to 14-1/2 years in federal prison. In all 22, people employed by HCH were criminally convicted for participation in the scheme. Kolodesh and several of his co-conspirators settled their civil FCA claims for approximately $8.8 million.

HCH fraudulently billed Medicare approximately $12.8 million for patients who were not terminally ill. HCH also billed $1.5 million for patients who were dying, but HCH didn’t provide the services billed for. HCH created fake schedules to cover their tracks, pretending to visit dying patients who were, in reality, dying alone—one of the very things hospice care is intended to prevent.


When hospices bill for services they are not actually providing, unfortunately those patients who are terminal fail to receive the care they deserve and are entitled to. Patients who are given false diagnoses that they have only six months to live can be psychologically damaged or take their own lives to prevent having to go though or put their family through a battle with death they have been told they will soon lose.

Hospice workers who notice patterns and practices such as the ones described here are encouraged to inquire further about whether their organization is providing the care their patients need for the patients who need it. Helping uncover hospice fraud helps patients, helps protect government health programs, and can be quite profitable.

[1] 42 C.F.R.§ 418. (2020).

[2] National Hospice and Palliative Care Organization, NHPCO Facts and Figures 2022 edition, available at https://www.nhpco.org/wp-content/uploads/NHPCO-Facts-Figures-2022.pdf.

[3] Andrea Lambert South, Hospice and the False Claims Act: Paradoxes in End-of-Life Care, 29 Eler Law J. 127, 142 (2021).

[4] 42 C.F.R.§ 418.20 (2020).

[5] 42 C.F.R.§ 418.22 (2020).

[6] 42 C.F.R.§ 418.21 (2020).

[7] Dep’t of Health and Human Servs., Medicare Program; FY 2024 Hospice Wage Index and Payment Rate Update, Hospice Conditions of Participation Updates, Hospice Quality Reporting Program Requirements, and Hospice Certifying Physician Provider Enrollment Requirements, at 51174­–75, available at https://www.govinfo.gov/content/pkg/FR-2023-08-02/pdf/2023-16116.pdf

[8] CMS.gov, Fiscal Year 2024 Hospice Payment Rate Update Final Rule (CMS-1787-F) (July 28, 2023), https://www.cms.gov/newsroom/fact-sheets/fiscal-year-2024-hospice-payment-rate-update-final-rule-cms-1787-f

[9] Deputy Assistant Attorney General Lisa H. Miller Delivers Remarks at the American Bar Association’s 33rd Annual National Institute on Health Care Fraud, available at https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-lisa-h-miller-delivers-remarks-american-bar-association.

[10] U.S. Department pf Health and Human Services, Office of the Inspector General, Hospice Deficiencies Pose Risks to Medicare Beneficiaries (2019), available at https://oig.hhs.gov/oei/reports/oei-02-17-00020.pdf.

[11] United States v. Mesquias, 29 F.4th 276, 279 (5th Cir. 2022).

[12] United States ex rel. Plaintiffs v. McInnis, No. 2:15-CV-00208, 2023 U.S. Dist. LEXIS 94182, at *2 (S.D. Tex. March 24, 2023).

[13] Press Release, Manager of Hospice and Home Health Companies Sentenced To Prison For Role In $150 Million Health Care Fraud Scheme, https://www.justice.gov/opa/pr/manager-hospice-and-home-health-companies-sentenced-prison-role-150-million-health-care-fraud.

[14] Mesquais, 29 F.4th at 280–81.

[15] Press Release, Manhattan U.S. Attorney Settles Civil Fraud Claims Against Compassionate Care Hospice For Fraudulently Billing Medicare And Medicaid For Hospice Nursing Services Not Adequately Provided, Feb. 18, 2015, https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-settles-civil-fraud-claims-against-compassionate-care-hospice.