San Diego Hospice Front

By Joanne Faryon, inewsource and KPBS Investigations Desk

As many as half of the patients in San Diego Hospice last year were not eligible for care, according to testimony filed in bankruptcy court earlier this week.

It’s the first time company officials have disclosed just how many of its patients were not eligible for the Medicare benefit and gets to the heart of why the organization has been under investigation for the past two years.

San Diego Hospice filed for bankruptcy last month, in the wake of a two-year Medicare audit and federal investigation. The results of the audit have yet to be released, but San Diego Hospice President and CEO Kathleen Pacurar has maintained the scrutiny was a result of improper documentation and eligibility requirements.

San Diego Hospice consistently cared for about 1,000 patients a day, but in the past several months, before filing for bankruptcy, discharged more than half.

William Parker, San Diego Hospice Chief Operating Officer, testified in a deposition earlier this week that while some of the discharged patients went to other hospices, most  “were ineligible for service.”

The government, which pays for most hospice care, is looking into whether all San Diego hospice patients met the Medicare definition of terminal – having six months or less to live.

Patients can remain in hospice longer than six months, but only if they’re recertified by a doctor – that means their condition is worsening.

Parker’s testimony about ineligible patients, given under oath as part of the bankruptcy proceedings, give insight into how much money Medicare could demand in repayment.  Most of San Diego’s $83 million budget comes from Medicare dollars. Depending on the number of years the audit examined, the amount could easily be in the tens of millions – more if the federal government seeks “treble damages,” allowing it to collect triple the amount owed.

Dr. Doris Howell, San Diego Hospice Founder and Director Emerita of the Hospice’s Board of Directors, told KPBS the organization’s executive team estimated the repayment amount could be about $50 million.

Internal documents obtained by the KPBS and inewsource Investigations Desk reveal San Diego Hospice had a strategic plan in place last fall to deal with unexpected disclosures from the Medicare audit.

A binder labeled “The ZPIC Audit Response Strategic Plan and Materials” provided detailed instructions to management about how to respond “in the event our current issues with Medicare are made known to the public.”

The binder contains detailed instruction on how to handle “tough questions” and present the information about the audit to the board of directors, donors, employees, elected officials, and patients.

The public relations firm which prepared the binder wrote:

“The materials include phone scripts, letters, emails and fact sheets that contain key messages specific to each audience.

“When news of the audit becomes public, San Diego Hospice should review the response plan and begin taking action steps as directed.  For instance, when the ZPIC findings letter arrives at San Diego Hospice, phone calls should be made to key stakeholders to inform them of the situation using the phone call scripts in the tabbed sections.”

For example, one script for  the Board of Directors read:

“We have taken the findings of the ZPIC audit very seriously and we are implementing an aggressive five-point plan to improve our patient documentation and ensure we are in full compliance with Medicare’s reimbursement requirement.”

Last November, Pacurar told UT San Diego about the Medicare audit before the results were known  – pre-empting the strategic plan.

Medicare has yet to release its findings. The bankruptcy hearing continues. A judge will decide how San Diego Hospice’s assets, including its eight-acre location in Hillcrest, will be liquidated to pay creditors. Scripps Health has offered to buy the property for $10.7 million. Its assessed at more than $18 million according to county records.

Joanne Faryon is a freelance reporter and former inewsource and KPBS reporter.