The United States has filed suit against Chemed Corporation and various wholly owned hospice subsidiaries, including Vitas Hospice Services LLC and Vitas Healthcare Corporation, alleging false Medicare billings for hospice services. The government's complaint alleges that Chemed and Vitas Hospice knowingly submitted or caused the submission of false claims to Medicare for crisis care services that were not necessary, not actually provided, or not performed in accordance with Medicare requirements. According to the complaint, the companies set goals for the number of crisis care days that were to be billed to Medicare. The companies also allegedly used aggressive marketing tactics and pressured staff to increase the numbers of crisis care claims submitted to Medicare, without regard to whether the services were appropriate or were actually being provided. In addition, the government's complaint alleges that Chemed and Vitas knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill. The companies allegedly paid bonuses to staff based on the number of patients enrolled in the program and based on patients who were admitted for longer lengths of stay, and took adverse employment actions against marketing representatives who did not meet monthly hospice admissions goals. According to the Complaint, these business practices resulted in the admission of patients who were not eligible for hospice care. The Complaint alleges that Vitas admitted a patient to hospice who showed no signs of a terminal condition and was described in Vitas' own records as, 'very healthy given her age.' As a result of the conduct alleged in the complaint, the government contends that Chemed and Vitas violated the False Claims Act and misspent tens of millions of taxpayer dollars from the Medicare program.

VITAS Healthcare Corporation announced unaudited earnings results for the first quarter ended March 31, 2013. For the quarter, the company reported service revenues and sales of $271,326,000 against $260,847,000 a year ago. Income from operations were $31,557,000 against $30,964,000 a year ago. Income before income taxes were $32,575,000 against $31,626,000 a year ago. Net income was $20,142,000 against $19,627,000 a year ago. Adjusted EBITDA was $37,577,000 against $35,489,000 a year ago. This revenue growth was the result of increased ADC of 5.3%, driven by an increase in admissions of 5.0%, increased discharges of 4.0% and Medicare price increases of approximately 0.9%. Revenue growth aggregated 5.9% excluding the impact of 2012 leap year and the impact of revenue recognition related from the reversal of prior years Medicare Cap accruals. VITAS estimates its full-year 2013 revenue growth, prior to Medicare Cap, will be in the range of 4.5% to 5.5%. Admissions in 2013 are estimated to increase approximately 5.0% to 6.0% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 13.8% to 14.2%. Effective October 1, 2012, Medicare increased the average hospice reimbursement rates by approximately 0.9%. As a result of sequestration, effective April 1, 2013, this 0.9% increase was reduced to a 1.1% decline in Medicare rates when compared to the prior year.

VITAS Healthcare Corporation and Hospice Pharmacia announced they have entered into a three-year agreement to provide services to patients under VITAS' care, in their places of residence. As part of the agreement, VITAS physicians and nurses will have access to pharmacists from Hospice Pharmacia 24 hours a day, seven days a week, to effectively manage patient symptoms and ensure that clinicians have timely access to information about pharmaceutical best practices. VITAS and Hospice Pharmacia have worked together for almost a decade to achieve positive patient-specific outcomes.