Healthcare Fraud and Abuse and Freedom of Choice

Medical care is a highly competitive field; from group homes to hospitals (and everywhere in-between), commission-based marketers with no medical background are charged with the mission of finding as many patients as possible. These professionals might be nurses or social workers, but often they have no medical licensure or code of ethics to follow. Their job is to get the patient to sign onto their service, and they’ll often promise anything (private rooms, specialty care, rides for family members, etc) only to refuse to provide the extra services later. This can lead to all sorts of abuses at the expense of the patient.

It’s important to understand that, according to Section 1802 of the Social Security Act, you have the right to choose which provider will serve your family member. There are many choices among the private agencies who participate in the Medicare program; you can choose to use one you’ve used in the past or another one altogether. You don’t have to use an agency of the doctor’s or facility’s choosing.

Some hospice or home health providers will rent a booth at a health fair and offer giveaway items or free massages. At that time they’ll have future patients complete and sign an Inquiry Form, and then advise the patient and his family that they’ve committed to using that agency when the patient needs the assistance. Patients & their families don’t realize they may have signed a release of information that allows the agency to contact the physician and ask questions about the senior’s medical condition. At this point it’s possible that the home health or hospice will also obtain a doctor’s order and begin to commit the patient to a hospice program without the patient’s knowledge. If the patient isn’t ready, or refuses hospice care, the provider will call on a regular basis reminding the patient that they’ve already signed permission and the agency is waiting for the doctor’s order. While not illegal, this practice is highly unethical.  

Another common method of finding patients is to ask current patients if their neighbors are doing okay – and then knock on the neighbor’s doors saying that their neighbor is concerned about them. During an informal chat, the marketer will obtain the name of the doctor – and then contact the doctor for an order to start hospice or home health services. There are many marketing tactics like these, which continue without any regulation whatsoever. 


When a nursing home patient is sent to the hospital, he has the right to choose which hospital will treat him. However, the doctor assigned to him as the primary care physician at the nursing home will dictate which hospital to send the patient. Doctors are often affiliated with certain hospitals, and it doesn’t matter whether the care in that facility is considered to be good or even how far away the facility is located, that’s where nearly every patient will be sent because of the doctor’s affiliation. If your family member is being sent to the hospital, you have the right to dictate which hospital you prefer (unless it’s an emergency).

Once the patient has been admitted into the hospital, he’s either going to be treated by his primary care physician, if he has privileges at the hospital, or a hospitalist, which is an MD whose job it is to coordinate the hospital-based care. If the hospital is part of a larger healthcare corporation (most are), it’s likely that the patient who lives at home will be referred to a home healthcare agency affiliated with the healthcare corporation when he’s ready for discharge. Even though federal statutes mandate that patients have the right to choose which agency will provide aftercare, the hospital staff is encouraged to refer to their own agency if at all possible. The way they get around the law is to have the patient sign a form stating that he chose to use the agency affiliated with the hospital. In most cases, patients sign whatever is placed in front of them and the form means next to nothing to them – but it’s used as proof of patient choice anyway.

Not every hospitalist works for the hospital; some work for physician groups. These groups often have a preferred provider for home health or hospice – this might be due to one of the doctors being the medical director or otherwise affiliated with the agency, or they might prefer that particular agency for any number of reasons. The hospitalist might promise to provide follow-up care for the patient if he uses the services of the referred agency – however, if this is the case, it might be better to find a physician who is more concerned about the patient’s physical well-being than he is about the physician’s financial well-being.

Hospitals often provide an on-site office for their own home health & hospice agency, which gives them a higher profile as they walk the halls. They approach patients and offer their services, prominently display their brochures and do whatever they possibly can to get the patient to commit to using that agency. Patients and their families are under the mistaken impression that this agency will better serve their needs because of the connection with the hospital – but the agency affiliated with the hospital will provide the exact same care as any other provider. They just receive the majority of the referrals because the healthcare corporation prefers it that way.

If the patient prefers to use a different agency, he’ll often have to ask his doctor for permission to have the agency visit him in the hospital. While the agency affiliated with the hospital is free to walk the halls looking for potential patients, other agencies must sign in and can see only those patients whose doctor has specifically ordered their care. It’s common for the doctor or other staff members to attempt to talk the patient out of using any agency other than the one affiliated with the hospital – this is because the hospital monitors which agencies are receiving the most referrals. Staff members are known to be fired for not referring enough patients to agencies affiliated with the hospital.

If the patient is going to be discharged to a nursing home, a nursing home marketer will place their business card on the patient’s chart and “lay claim” to the patient – and it’s possible that the patient has never even heard of the place. For those patients who were admitted from a nursing home, that facility’s marketer will contact the hospital immediately and inform them that the patient will return there. It doesn’t matter whether or not the patient wants to return, because no one asks him. If he wants to go to another facility, the hospital may do everything possible to discourage the change. I’ve heard of nursing homes that imply that the patient has inappropriate or unmanageable behaviors so that no other facility will want to accept him. The competition is brutal and providers will do anything to get the patients in the door.

Skilled Nursing Facilities

Some nursing homes limit their home health referrals to a handful of agencies they believe will refer the patients back in the future. The nursing home is required to allow the patient to choose a provider as they set up necessary services during the discharge process. I know of several nursing homes that will tell patients they must use a specific agency and imply that the agency the patient requested has “problems” (that, of course, they’re not willing to discuss for fear of being accused of libel or slander). Some homes even tell the patient that the doctor has referred a particular agency because of the patient’s specific needs – but this practice is unethical and illegal.  Part of the problem is that nursing home staff members don’t want to report the behavior to the state licensing bureau because they’ll lose their jobs, and may possibly be blacklisted from other jobs. Patients often don’t realize that they have the right to choose a provider, so they don’t complain. They’ll accept that the nursing home is looking out for their best interests, or figure that it’s not worth fighting the nursing home over the issue. If patients were to be willing to complain, the offending behavior would stop.

Hospice care is different – if a nursing home patient chooses to use the services of a hospice, he will have to use the services of an agency that is contracted with that nursing home. If he prefers another hospice provider, the nursing home must obtain a one-time contract to provide care for the patient. This is because hospices and nursing homes are required to have a contract that clearly defines each provider’s role in caring for the patient. However, if the patient is returning to the community with assistance from a hospice agency, the nursing home must refer to the agency the patient prefers regardless of which ones are contracted with the nursing home. The nursing home can’t dictate which agency will provide aftercare to the patients.

The same rule applies to referrals to ALF’s (assisted living facilities) or group homes; as long as the patient’s needs will be addressed, the nursing home discharging the patient can’t dictate which facility will care for the patient. Many group homes pay kickbacks to nursing home workers in order to get referrals – this is illegal. However, proving that this is happening is nearly impossible, unless someone sneaks around with a camera. Even if the group home/ALF doesn’t pay the nursing home worker, promising to return the patient to the nursing home in the future is a violation of the anti-kickback statutes. If you find a facility that is able to meet a family member’s needs, yet the nursing home refuses to allow this discharge, call the nursing home ombudsman to complain. You have the right to choose which provider will serve your family member.

Physician Referrals

Every patient has the right to choose his provider (as long as his insurance will pay), but it’s common for doctors to refer to agencies with which they’re affiliated. A hospice medical director might refer to his agency, or a doctor whose wife is part owner of a home health agency might refer to that home health provider. These referrals are illegal and a clear violation of the law, but they happen all of the time because no one reports it. Doctors often tell patients that in order for them to continue acting as the primary care provider, they must use the services of the hospice the doctor prefers – but this isn’t true. Patients who are receiving hospice care usually can continue to use the services of their primary doctor regardless of which agency they choose, so they have the freedom of choice. If the doctor refuses to work with a particular hospice, it might be best to find another doctor.