BY DANIEL GAITAN | daniel@lifemattersmedia.org

As Passages Hospice founder and owner Seth Gillman faces federal fraud charges, employees of the for-profit Illinois health care company are vowing to continue providing care to their terminally ill patients.

Gillman has been charged with both health care fraud and obstructing a federal audit. According to prosecutors, Gillman knowingly over-billed the government for hospice care provided to seniors across the state.

According to the charges, Gillman engaged in an elaborate scheme to obtain higher Medicare and Medicaid payments by fraudulently elevating the level of hospice care for patients, many of whom resided in nursing homes he controlled. Some patients were not terminally ill, and they wound up enrolled in hospice care far longer than the required estimated life expectancy of six months or less.

Kansas Swain, Passages public relations director, said Gillman has “stepped away” from the company.

“Mr. Gillman will have to answer for the allegations that have been placed against him, but Passages has been cleared,” Swain said.

Gillman also allegedly trained nurses to look for signs that would qualify a hospice patient for general inpatient care (GIP). For fiscal year 2012, Medicare’s daily reimbursement for GIP was $671.84; the daily payment for routine care was much lower, at $151.23.

From 2006 to late 2011, Passages submitted claims for about 4,700 patients to Medicare and Medicaid. The company received payments of approximately $95 million from Medicare and approximately $30 million from Medicaid.

Gillman, freed on $150,000 bond, faces 15 years in prison and $500,000 in fines. From March 2009 through April 2011, he allegedly authorized nearly $850,000 in bonuses for himself.

Swain, who described Gillman as a “hard-working” man with an “innovative vision,” said it was difficult for the hospice staff to learn of the allegations.

“The most important thing to him was the patients,” Swain said. “We want to move forward and restore public trust. Nothing has been interrupted.”

According to the FBI, federal agents have interviewed patients, family members and more than 30 former and current employees of Passages, including several who reported allegedly fraudulent billing and marketing practices to Medicare or law enforcement.

The allegations have created a chilling effect on other Illinois hospices.

Jeff Okazaki, communications director for Rainbow Hospice and Palliative Care, a non-profit, said he was not surprised by the allegations.

“Unfortunately, it is something that we’ve seen in the industry across the board now with a lot of the big, for-profit hospices facing lawsuits with these sorts of charges,” Okazaki said.

Rainbow Hospice advises that patients and families look for accreditation before enrolling, specifically from the Community Health Accreditation Program (CHAP). “Anybody can deliver quality hospice care, but it really comes down to the priorities,” Okazaki added.

Hospice is generally care provided in a patient’s home, but it can also be provided in a hospital, nursing home or other long-term care facility for those at the end of life. The number of hospice patients served nationally has risen more than 25 percent over the last five years from 1.25 million in 2008, according to figures published by the National Hospice and Palliative Care Organization.

Okazaki said patients enrolled in hospice should be reviewed about every 90 days by a physician or nurse practitioner to ensure that they are terminal and thus eligible for hospice benefits. Medicare may request documentation about patients enrolled in hospice.

Mary Runge, president of non-profit Horizon Hospice & Palliative Care, said that her biggest concern in the wake of these charges is public perception.

“When something like this happens, it hurts everybody,” Runge said. “I realize these are allegations, but this is not the way the majority of hospices operate. We follow the Medicare rules and regulations.”

She said the alleged conduct at Passages is not reflective of any practice in the industry. “There are so many wonderful hospices in the area,” Runge said. “Whether you are for-profit or not-for-profit, you have to follow the guidelines- and go beyond them, frankly.”

Dr. Balu Natarajan, chief medical officer with Seasons Healthcare Management Inc., said Medicare guidelines require its interdisciplinary team to meet every two weeks to determine an individualized care plan for every patient enrolled in the for-profit hospice program.

“At Seasons, we follow the Medicare guidelines when determining if a person qualifies for the Medicare hospice benefit,” Natarajan said. “The basic principle: two physicians must certify terminal illness, specifically noting that life expectancy is less than six months. Certain diseases have more specific admission and recertification guidelines, according to Medicare. We follow those admission and recertification guidelines diligently.”