Chemed Declines Most in Five Years on Medicare Lawsuit

Chemed Corp., the provider of hospice care and Roto-Rooter plumbing services, fell the most in five years after its health unit was accused by the U.S. government of false billing for Medicare services.

Chemed, owner of the largest for-profit hospice chain in the U.S., plunged 17 percent to $68 at the close in New York, its biggest one-day drop since April 2008. The shares of the Cincinnati-based company have increased 12 percent in the past 12 months.

The U.S. filed a lawsuit claiming Chemed’s Vitas Hospice units knowingly billed the government’s Medicare program for crisis-care services that weren’t necessary or provided, and enrolled patients who weren’t eligible, the Justice Department said in a statement yesterday. The department has settled civil fraud complaints against at least eight hospice companies in the past four years as federal inspectors probe providers of end-of-life care for possible Medicare overbilling.

Too often “we hear reports of companies that abuse this critical service by using aggressive marketing tactics to push patients into services they don’t need in order to get higher reimbursements,” said Stuart Delery, acting assistant attorney general for the department’s civil division, in the statement.

Defend Vigorously

Chemed and its Vitas business “intend to defend this lawsuit vigorously,” according to a statement from the company today. The businesses have made significant investments in their systems and procedures to be sure they meet regulatory requirements and the highest industry standards, Chemed said. The changes were designed to ensure services are provided only to eligible patients, the company said.

Medicare is the U.S.-backed health insurance program for the elderly. The suit claims the units set goals for the number of crisis days they billed to Medicare, pressured staff to boost claims and used aggressive marketing tactics to increase improper billing. Crises-care services are billed at the highest daily rate for Medicare patients and are intended for brief periods to treat urgent symptoms of worsening health.

Hospices are supposed to enroll only people who they believe will be dead within 180 days. About 21 percent of patients stay longer, the U.S. inspector general responsible for Medicare reported in July 2011, and more than 200,000 are discharged alive each year.

Chemed acquired Vitas in 2004 and now provides hospice care in 18 states and Washington, D.C. The health-care business generated revenue of about $271 million in the first three months of 2013, or about three-quarters of the company’s total, Chemed said on April 18.

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