Business Development Compliance Horror Stories

Kate Proctor (0:05 - 0:29)
The bonus based on length of stay in particular is a really easy one to tie to your submitting false claims because if I’m bonusing my marketers to say, I want long length of stay patients, and they’re getting me long length of stay patients, and maybe they’re not trained on eligibility, it creates this atmosphere where it doesn’t matter to me if they’re eligible as long as they’re on service for a really long time. That’s the government’s perspective.

Tony Kudner (0:33 - 1:56)
Welcome to the latest edition of the Transcending Home Care podcast. I am your host, Tony Kudner. I’m the Chief Strategy Officer here at Transcend Strategy Group.

And I’ve got a longtime colleague who knows more about this subject than I ever will joining me today. She’s officially reached friend of the podcast status now, probably one of the first people to have done that. I think since I’ve been hosting these, I think she’s the only person who’s been on more than once.

And so as you probably could tell from the title of the podcast, today is scary compliance stories day for Transcending Home Care. We are going to talk about some of the risk areas involved in marketing and ostensibly how to avoid them, how to think about compliance and risk mitigation as a healthy and necessary part of business development. And knowing is half the battle.

So really, it’s going to be a little more freeform than usual. Our guests and I … we’ve presented on this a bunch, and she does the very heavy lifting on this part. So, you’ll probably hear her talk more than I, but our guest is Kate Proctor, who is counsel and SVP of strategy for Omnia Healthcare Group.

Kate, welcome back to the pod.

Kate Proctor (1:57 - 1:58)
Happy to be here.

Tony Kudner (2:00 - 2:27)
Kate, let’s talk broadly. Let’s set the stage. I mean, we give a lot of advice on this podcast about how to provide good oversight to people who are in business development roles, reaching out to referral sources on a daily basis, what good management of them looks like.

And the compliance portion I think is a huge part of this. Maybe start by telling us why it’s such a huge part of it.

Kate Proctor (2:28 - 4:04)
Yeah, I think I always say that marketing is the biggest risk to any healthcare company. Doesn’t matter who you are, home, acute, does not matter. Mostly because the government does not love it. It struggles with the fact that ultimately even not-for-profits are in business. And if you can’t stay open, you can’t provide. But there are so many potential pitfalls in marketing, whether it’s anti-kickback, which hopefully everybody’s familiar with, and I’m sure we’ll get to it another podcast.

But even False Claims Act cases, really, a lot of them include a lot of allegations about what the marketing team did or how the company treated their marketing team, which is what we’ll get into today. But really, it plays a huge role in all kinds of nightmare. You know, home care companies, hospices, home health, whatever, can get themselves into if they’re not structured appropriately and then paying attention.

I think one of the cases that we’ll talk about, one of the primary allegations was they ultimately didn’t implement their common and well-compliant factors that would have prevented what they ended up being sued for and then settled for a whole millions of dollars for. So, I think it’s not just the structure, although I think that one’s the first step, super critical. But it’s also you then have to keep paying attention. You have to keep monitoring to make sure your marketing folks aren’t doing the things that will get you ultimately into trouble.

Tony Kudner (4:06 - 4:44)
Okay. Maybe we’ll close up by just a couple common features of what a compliance program should look like so folks can have some actionable takeaways. But I’m salivating for the stories. I hate to say this is the fun part, but I learn by touching the hot stove and having to pull my hand back quick. And maybe our listeners do too.

Can you talk us through some, I know you’ve got a couple of them planned. Talk us through a couple of these stories where, whether with intention or unintentionally, home-based care providers really got into some hot water and why, if that’s all right?

Kate Proctor (4:44 - 11:23)
Yeah, absolutely. And hopefully, you know, my goal has always been you can watch somebody else touch the hot stove and learn from it instead of having to touch it yourself. So really that’s the point.

Before we get into the stories, a little bit of background because the connection between these things isn’t always super clear. So the False Claims Act is the law that you can’t submit a false claim to the government for payment. And if you do, there’s a whole host of penalties, you know, several thousand dollars per claim, a bunch of penalties.

The way this ties in, though, is that your claim has to be false. So for whatever reason, like patient wasn’t eligible or documentation was incorrect, made up, that kind of thing. So your claim has to be false. Government wouldn’t have paid for it. But you have to knowingly submit it. And the knowingly part can be actual knowledge. Like I actually knew this patient was not eligible for hospice and submitted the claim anyway. Or I created, as a company, I created an environment where it is more likely than not that a false claim would have been submitted. And that’s where the marketing part comes in.

So these stories are about how the marketing place, the marketing structure, some of the things that the companies did play into, the company had to know that they were submitting false claims because of the way their marketers were behaving, because of the structure of bonus payments, because of some of the messaging that was being sent to the marketing team. So ultimately, they’re using that, those allegations to say, they had to know that these patients weren’t eligible for hospice because they were doing these things that created, we don’t care if they’re eligible in their marketing team. And so that’s the kind of thing where like, ideally, you’re going to learn from it before it actually happens to you. Because there are things that seem, can seem kind of innocuous. But ultimately, the government does not think that they are innocuous. And for, I mean, decades, not stuff for what it’s worth.

So first one, I’m not going to name case names because folks have not admitted to any of these allegations, but some of them, the details might sound familiar. One of the largest hospice settlements in history, their allegations related to the marketing team were a lot about bonuses and pressure put on the marketing team to admit patients or to market to patients and to facilities where patients may not have been eligible. So the biggest thing, and the thing that plays through a lot of these cases is, what does your bonus structure look like?

Are you bonusing marketers based on the number of admissions, which people do and in and of itself may not be a problem, sort of in conjunction with other things. But the other thing that they were bonusing on was days on service goals. So length of stay ultimately, right? They were giving you extra money if you’re a marketer, if your admission resulted in longer length of stay patients. And again, this is not a new thing that the OIG in particular and DOJ had been focusing on. There’s a 2018 report by OIG that essentially says, look, if hospices are focusing, are targeting long-stay patients, there’s a question about whether they’re providing the services needed.

They’re serving the full sort of range of potential hospice patients. And if they’re trying to get these patients because they have less need and ultimately are financially important to a hospice. And so, the bonus based on length of stay in particular is a really easy one to tie to your submitting false claims. Because if I’m bonusing my marketers to say, I want long length of stay patients, and they’re getting me long length of stay patients, and maybe they’re not trained on eligibility or I don’t, it creates this atmosphere where it doesn’t matter to me if they’re eligible as long as they’re on service for a really long time. That’s the government’s perspective. Now, whether that really happens, we could probably debate, but like ultimately, the length of stay, the acuity as well.

So one of the other things that they focus on is whether you’re bonusing on does this patient need continuous care GIP or something like that. Because that again, I actually heard the OIG say one time that focusing on long length of stay patients is bad because they might not be eligible and because they are higher revenue, but also focusing on short-stay patient is bad because they probably need GIP and that’s higher revenue. And so then at some point you’re like, okay, what do I focus on?

And I do think the takeaway there is a little bit like try and serve the whole sort of continuum of potential hospice patients. But so anyway, in that high settlement case, they were bonusing marketers. They bonus without regard for eligibility. And the way that the government ultimately proved it is they found patients who were ineligible, who were marketers that had bonuses. So it’s not a hard thing to ultimately prove either, especially when you have long length of stay patients where eligibility is very subjective and the government will find a doctor who says these guys are ineligible. The other thing they did though, is in addition to the bonus programs, they also had folks who were employees, had been employees who were willing to say, look, this company did not care about eligibility. Their philosophy, their company philosophy was sign everybody up. They have staff that testified that they felt pressured to admit patients and not discharge patients who may not have been eligible. So it’s really this whole culture of eligibility doesn’t matter. Get them on, keep them on regardless. And that’s where once the government finds that a handful of patients who, or a lot of patients who are not eligible and the hospice billed for them, they get into trouble because the culture piece of it, the bonus piece of it is what creates the, this company had to know that they were going to have ineligible patients. And so when they submit those claims, they were knowingly false. And that’s ultimately what they settled for. They settled for a handful of other things too. It was a really, really high dollar settlement.

So I think that’s the thing that ends up happening in these false claims cases is the company is accused of creating this culture of, we don’t care about eligibility. We are focused on our marketers who are, we’re telling to focus on potentially ineligible patients. Again, that’s the government’s perspective. I have no doubt that this company has a different perspective on that, but I also happen to know that they have changed their bonus program since then. So it is a thing that you got to get the structure around the bonus plan and then be paying attention to your ultimate culture too.

Tony Kudner (11:24 - 12:26)
Okay. Real quick, without deviating too much, what are some firewalls in those cases to both protect the company and also the marketers? I mean, having a consistent case mix, you know, that everybody knows that hospices, unless it’s GIP or continuous level of care, you lose your shirt.

You’re underwater generally for those patients who need your care but are on service for less than seven days. I’ve heard them called an acuity bomb, right? That it’s hard to get the right care to those patients. And so the longer lengths of stay help with that. Knowing that that is a reality, the government may not care about that reality. They may be like, that’s not our problem. But how do you firewall that? How do you insulate yourself knowing that a balanced case mix is a needed part and it’s usually the longer length of stay that the agency needs to be sustainable?

Kate Proctor (12:27 - 16:45)
Yeah. I think the struggle with even an agency acknowledging that to sort of your frontline staff is that your frontline staff are going to say they want longer length of stay. And so if they are disgruntled for any reason, it’s not hard for them to go to the government and say, they told us to focus on long length of stay.

So I think as a company at the high level, the executive level, you can say, look, we need a healthy case mix. How are we going to structure maybe where we put our marketers as opposed to a bonus plan that focuses on it? Because really, you do want to make sure that you’re training your marketers in particular, but everybody on eligibility requirements, your marketing staff should also know what eligibility for hospice looks like. And it is because then they can also say, hey, you know, we don’t know if this patient’s eligible now, but they will be soon. Call us when the next hospitalization happens or whatever. Right. Whatever. And then train them on AKS risk, too. But I think when you’re an executive team and you’re saying we’re focusing too much on short patients, I think reorganizing where you’re having your folks spend their time is one way. But I also think ultimately, the more you say to levels throughout the organization, we need long length of stay patients, they will feel pressure to get those long length of stay patients. And the more likely they are to say you didn’t actually want to serve the whole thing. So I think you might have a company strategy that is a healthy case mix of individuals.

That is not something that you necessarily want to push down to say we need to focus on long length of stay or even we need to focus on short length of stay. You might just structure where your people are spending their time and to whom, you know, they’re focused on physicians offices, for example, but even like home care. The caveat there is when I say where they’re spending your time, hospices also get into trouble and OIG has done a ton of reports on hospices that focus on nursing homes and ALFs.

And the second case we have, that was one of the things is they were targeting ALFs. And again, the OIG says or the DOJ, excuse me, says because those have longer length of stay and they say that they have less. And so that can also create, it creates the same problem of if you say we’re just going to send everybody to ALFs, then they just use that instead of the bonus program to say this is what you were focused on.

So I really do think it’s about structuring people’s time, people’s actual presence in places, but not getting too bogged down on the individual details of sort of the single focused, I think, is the critical thing. If you’re singly focused on we need a longer length of stay, OIG can come in, DOJ can come in and say, you’re not serving the whole community. We think you’re focused too much on money and here’s the 14 patients that we have of yours.

If you’re only focused on nursing homes, same thing. Now, as a hospice and frankly, as somebody who’s worked in both hospice and nursing homes, we know that nursing home patients often have higher needs actually than home patients. But the government does not believe that. They believe that people in nursing homes and ALFs have fewer needs and therefore cost less than folks in other care settings. And so because the government believes that, that is one of the things that they say is you’re focused on money and you’re not focused on. And so the less pressure you can put on staff to focus on single sort of trait of a patient, the better.

They should really be thinking, everybody needs hospice. Everybody needs hospice as early as they are eligible to receive hospice, not earlier. And so if they can have the frame of mind that everybody’s life is better, end of life is better, when they are on hospice at the right time, then they can even say, look, we want to get people the care that they need when they need it, at the time they need it and not at the very end of the time.

Those are just some of my thoughts. I’m sure you have probably more strategies because you’re more on the strategy part of this.

Tony Kudner (16:47 - 18:08)
Yeah, I think focusing their time and giving them a balanced portfolio of accounts to call on that achieve the growth needs of the organization but also lead to some of that balance is something that we’ve seen done. And I’m sure you’ll talk about this a little bit, but also teaching them the eligibility and the nomenclature, especially that gets put down in emails or company text records about what that looks like. It’s an important part of it.

I think this patient’s eligible based on what you’ve taught me. Is there a nurse who can come out and lay eyes on them? It seemed like that goes a long way from what you and others have taught me.

I think building a firewall between who gets to determine eligibility and the person who is going out to secure the referrals helps as well. Again, something that you taught to me that the person who’s getting bonused on whether that patient ultimately is cared for by your program does not ever get to make the determination of eligibility. That’s another big one. I think that we think is the hallmark of a program that is inflating themselves from risk but still trying to grow and serve the eligible need.

Kate Proctor (18:09 - 19:45)
Yeah, that’s a really good point is not bonusing your clinicians on clinical decision-making. So, it can be if you have an admissions nurse or even if you have clinical liaisons who are behaving as nurses using their nursing knowledge to be sort of liaisons, making sure that you’re not bonusing them on clinical decision-making related to eligibility. Because once you start doing that, once you say I’m going to pay my admissions nurses for every admission, they are then incentivized to make a decision that is financially beneficial even if that patient is not eligible. And you really want to prevent that so that you don’t run into this. Well, they’re admitting patients who are ineligible and my bonus program incentivized that. And so, the government thinks that I knew that they were going to admit ineligible people.

Physicians too. One of the things that comes up sometimes with physicians is you want to pay them per certification. And I know this isn’t really what we’re talking about, but the struggle when you pay a physician per certification is they are incentivized to certify patients. They need to be incentivized to make a decision about eligibility, whether yes or no, whether eligible or not, not in order to certify, recertify or certify patients as eligible. And so it’s similar with your admissions nurses is you don’t want them making decisions based on how much money they’re going to get. You want them making decision based on what they’re actually seeing in the event. So that type of bonus program is generally frowned upon by OIG and DOJ as well. Great point.

Tony Kudner (19:46 - 20:05)
All right. Kate, give us another compliance horror story or I don’t know, maybe I don’t want to be too rough on anyone. Like you said, a lot of these folks haven’t, no one’s admitted guilt, but give us a story of where the government definitely interpreted something in a way that would make a lot of people who work at hospices thoughtful.

Kate Proctor (20:07 - 25:06)
And I think it’s interesting because when we get into AKS, there’s a lot of obvious bad behavior, giving money, putting money in a gift card and saying, thanks so much for referral. You know, that’s pretty far out there on the risk continuum of this is problematic. Right.

And then they’re doing absolutely nothing for referrals, which is pretty conservative on the risk continuum. One of the things that I think is the most helpful is those sort of gray areas. This case isn’t an AKS case. It’s a false claims again. But in this one, they ended up settling two cases for four million dollars around four million dollars. The management, marketing managers, so it was like directors of business development and managers of business development, directed their marketers to go to nursing homes and ALS and look through records, not of their own patients, but of all patients to see if they could find anybody who was eligible for hospice. There’s so many problems. There’s so many problems with that. One is these marketers were not clinicians, so they couldn’t actually determine eligibility anyway. Two is they didn’t have permission from the families to exchange this patient information. And because it’s not exactly for treatment purposes, that’s problematic. Now, if the nursing home had identified three patients that were probably eligible for hospice and shared that information either with the patient’s permission or at least with their permission to seek hospice, then clinicians from hospice could have reviewed that for eligibility. But because it’s non-clinicians, there was no indication at that point that some of these patients were eligible for hospice or would be in any time soon. That becomes also a HIPAA violation.

So, you have this company who’s instructing their marketers to what they called it, calling it, which is problematic, right? And then they found an ineligible patient at this hospice and then used obviously that to their allegations that this hospice knowingly admitted these ineligible patients. The other thing they did, and this is sort of back to the bonus or the marketing structure piece, is they set quotas for admission on their marketers.

The interesting thing about quotas is in any other business, anything other than healthcare, right? You can have quotas. You can have sales quotas. And in healthcare, again, I actually think this is kind of a gray area because ultimately, if you’re not doing your job and patients aren’t choosing your hospice because you’re a terrible marketer, like that suggests to me that you should either be coached or find a new job. But in this case, they had former marketers who were saying that they would be fired if they didn’t hit, I think it was 11 or 12 admissions per month. And the interesting thing about that is those marketers aren’t making the admissions decision. You could use it to coach them and say, hey, you’re not marketing to eligible patients. And that is a problem because marketing to ineligible patients in and of itself is a sort of red flag. But I think that this business, again, there were definitely ineligible or there were allegedly ineligible patients that were admitted that the government said were admitted knowingly so knowing that this is a little bit gray, you know, a quota is not great. And when you put pressure on people to admit patients or to market to patients, regardless of eligibility, that becomes the problem. This too, again, they were not training on eligibility requirements. And one of the things that happens when you have this pressure on marketers plus lack of training is the other allegation here was that they weren’t telling patients that hospice was palliative and not curative. And so, there’s allegations that they had patients who were being admitted to signing up for hospice and did not know they couldn’t receive curative care, which again, huge red flag, problematic in terms of compliance. So that was the other thing is when you put these programs in place, especially without training, but even with training, if you get a trainer who’s like wink, wink, nod, nod, be careful compliance, you know, you can’t do it tongue in cheek. You have to do real compliance training. You put these marketers in a position to do the wrong thing knowingly or unknowingly, right, to do the wrong thing in order to keep their job or get a bonus or whatever. So when you’re thinking about structure and you’re thinking about company culture, the focus really needs to be look, we know you have a hard job, especially because unlike every other industry on the planet, you cannot pay for, I shouldn’t say every other one, but a lot of them, they cannot pay for referrals. Let’s structure your job and your compensation and your training in a way that helps you be successful as opposed to puts pressure on you to do the wrong thing. That’s really what you want to avoid.

Tony Kudner (25:07 - 25:39)
Got it. Kate, we either might turn this into a two-parter or like you said, you know, we really haven’t touched on AKS, which stands for Anti-Kickback Statute. I’m not sure we’ve actually said that once.

If you’re listening to this podcast and you didn’t know that, you should give me a call or give Kate a call really more realistically. But I don’t know if we have time for like one more quick case study before we wrap up with some takeaways and things that folks should do to run a healthy and compliant growth function. What do you got in the can?

Kate Proctor (25:39 - 26:51)
Yeah, I think there’s only one more thing. I think the extra stuff for marketers who are super successful, even if it’s not technically in your bonus plan, can be problematic. So there’s a case where they were giving gift cards to the marketer who had the most admissions in a month. And the thing is, if you are extra incentivizing your marketers outside your normal bonus program, it’s still problematic, right? The other thing that they were doing is they were giving extra PTO days to marketers for each admit over a certain amount. And again, that is worth money to that marketer. And so it does still incentivize problematic things. So when you’re talking about being like, oh, I’m going to be creative with this, just keep in mind that the goal has to be that these folks are doing the right thing for the right reason. And you’re not paying them more to put pressure on them to do the right thing.

I really think the take home is just be careful. Talk to a lawyer when you’re structuring your formal bonus program. And every time somebody new says, I did this great thing at my old company where I gave such and such clinicians a gift card every time they admitted a patient, really chat through it with your compliance officer or your legal team.

Tony Kudner (26:53 - 28:12)
Got it. And not just once.

Right. I think that’s one of the takeaways I’ve gotten is it’s not once at orientation and then that plus the compliance training that everybody at the organization gets yearly is enough. Because this is a risk area, a needed risk area, I kind of want to add, right?

Like what you said, not many hospices have the field of dreams mentality, right? Like you have to have people in some way, shape or form who are letting the community know about your services. But because that presents extra risk along the continuum, one of the ways that you can move it back to the more safe side, if I’m hearing you right, is education, ongoing review of structure, checking in with the compliance team regularly so that things get updated as new information about how the OIG is looking at this comes to light.

Of course, maybe if you worry that you’re at risk for a TPE in general, with counsel’s help, that’s something that you might adjust your marketing plans to reflect that reality, that there’s an audit coming or an ALJ hearing that you’re going to have to defend. This could all be part of that. So that’s my takeaway is compliance is not a one-time thing, especially for marketers.

Kate Proctor (28:13 - 28:38)
Yeah, agree. The other thing is, do encourage your marketing team if they have questions or issues to talk to compliance. You want them to talk to you before they feel like they have to go to the government. Obviously, if they want to report to the government, they can, but you want them to feel safe going to your own compliance team and safe in the knowledge that they won’t be retaliated against and that they will be taken seriously if they have concerns.

Tony Kudner (28:40 - 30:22)
Great callout, Kate. Okay, we’re definitely going to have you back, Kate. Thank you so much for being a friend of the pod. I’m going to close as I have been for a couple of these recently with a lighthearted complaint. I mean, I told Kate what it was going to be before this. Others of these, Kate, have included the coffee stations at conferences being set up in the wrong order, so we’re not talking earth-shaking stuff here.

But today’s is malapropisms. I was on a call earlier today with somebody, not a client, just another sort of normal course of business call, and they said something was going to be a mute point, and it was very, very hard for me to keep a straight face through that. If you don’t know what a malapropism is, that’s kind of funny. I think that’s karmic justice for me. But if you don’t know what it is, listeners, go do yourself a favor, because once you know it’s out there, you’ll hear them everywhere, and you’ll be a little bit more frustrated in going bald like your host here. 

So Kate, thank you again. We’re going to have to have you back on the pod. And just a shameless plug, Kate and I, this is being recorded in mid-December. Kate and I did a presentation on this topic at the Alliance conference, and thankfully, folks really seemed to glean a lot of value from it. And so we’re going to be doing a webinar for the Alliance, basically recapping that coming up in the new year. And you can follow Transcend socials for a lot of that as well to see when it’ll be publishing or if you’re an Alliance member, I’m sure they will be sending you emails too.

So, Kate, I can’t wait for that with you. And yeah, have a happy holiday season if we don’t chat.

Kate Proctor (30:22 - 30:23)
Thanks! You, too, Tony. Appreciate you having me.