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Central Oregon hospice sues feds over challenged Medicare claims

One of a declining number of nonprofit hospice providers, Partners In Care leaders have successfully defended the vast majority of disputed claims. Now they've sued to erase the rest while challenging government methods, in a case that could have 'huge ramifications.'
Partners In Care, Inc is a nonprofit hospice provider that runs the only inpatient facility of its kind in Oregon east of the Cascades.
April 11, 2024

After more than three years of wrestling with audits done on behalf of the federal government, a prominent central Oregon hospice provider is fighting back.

Partners In Care, Inc., the only inpatient hospice provider east of the Cascades, has filed a lawsuit in U.S District Court in Eugene against the United States Department of Health & Human Services, calling the agency’s methods of challenging payments unfair and unconstitutional.

While federal audits are a routine part of business for Medicare providers, filing a lawsuit is not. Though earlier challenges to audit findings by Partners In Care were endorsed by an administrative law judge and have caused the federal government to drop the vast majority of its claims of overpayment, the hospice provider is still fighting, according to Greg Hagfors, its chief executive officer.

“This is not about the money; it is about the principle of the matter. We are confident in our providers at Partners In Care and the procedures we have in place to ensure we are doing the right thing for our patients and their families,” he said.

The fight is significant because audits of hospice providers can make them go under, and Partners In Care is a major Oregon provider — serving about 1,000 people at any one time across Jefferson County, Deschutes County, Crook County, upper Klamath County and Lake County.

The lawsuit is even more significant because it challenges the primary method used by the federal government to calculate and demand repayment of funds after disbursing for care in response to claims filed by providers.

It’s also noteworthy because of the stature of Partners in Care in Oregon hospice care, and its status as one of a declining number of nonprofits in the industry. The shift to for-profit by most hospice providers, including purchases by private equity firms, has sparked high-profile concerns over fraud and declining care.

“They are seen as leaders around the state because of their experience, their wisdom,” said Barb Hansen, executive director of the Oregon Hospice and Palliative Care Association. “I've known several of their managers. They have an excellent reputation.”

She said she can’t comment on the claims in the suit, but “If they feel the (auditing) method is flawed then I applaud them for having the courage to challenge the method. This could have huge ramifications for the industry if they are successful with this lawsuit.”

In the past, investigators have expressed concern that nursing homes have received kickbacks for referring patients to hospice care unnecessarily, and in recent years the federal government has increased its auditing of hospice services.

However, audits of hospices raise complicated issues due to the nature of their patients, which under Medicare rules are supposed to be within six months of death. The audits often focus on whether the documentation of the patients’ condition is sufficient to justify costly end-of-life care. And yet with successful care, patients’ prognosis can improve. 

Predicting the timing of a patient's death is "an inexact science and every physician may have a slightly different interpretation or judgement about a patient's prognosis," Hansen said. She's heard of a case where auditors have challenged whether a patient was eligible for hospice, only to have that patient die two weeks later. But to auditors, even a patient's actual death does not constitute proof of hospice eligibility, she added.

Letter arrived in late 2020

Partners In Care just celebrated its 45th anniversary. Since its founding it has expanded to employ more than 200 people about three-quarters of whom are involved in providing direct care, according to spokesperson Maureen Dooley. It also deploys 175 volunteers to help patients.

It has received the top rating of five stars under the federal consumer assessment system for three years in a row, and the agency says it is one of only three hospice providers in Oregon to do so.

In November 2020, the provider received an alarming notice from the federal government saying that based on a random sampling of claims for patient care, auditors felt the provider owed the federal government $11.2 million —about half the Medicare revenue received by Partners In Care, and equal about nearly half of its overall assets.

Hagfors didn’t join the agency until well after it received the notice, but said of the initial notice, “That would be considered a bad day.”

Significantly, the overall figure disputed was an extrapolation based on a random sample of patient information, rather than an actual finding of $11.2 million of insufficiently documented claims.

Moreover, it was conducted by a private firm hired to conduct such reviews, firms often referred to as “bounty hunters” because their income depends on how much in repayments they help collect.

Thus began a series of challenges and appeals by Partners In Care, which hired lawyers and expert witnesses who looked at the same information cited by the federal government and reached opposite conclusions.

When the nonprofit took its case to an administrative law judge, two thirds of the federal government’s claims were tossed as wrongful— only to have the federal agency dispute that finding, and have Partners In Care file its own appeal.

At this point, the amount in dispute is less than $500,000, a small fraction of the original amount claimed by the federal government.

But the nonprofit is suing because it believes the extrapolation method used for federal recovery violates due process rights guaranteed by the U.S. Constitution.

“We would not be a five-star hospice organization if we cut corners or didn't have the people that we have,” Hagfors said. “I feel really good about what we're doing.”

You can reach Nick Budnick at [email protected] or at @NickBudnick on