RehabCare, Therapy Fraud and Lessons Not Quite Learned
This last week the Department of Justice and CMS announced a $125 million settlement with RehabCare, a subsidiary of Kindred Healthcare, regarding improper Medicare billing. As in virtually all cases of a similar nature involving false or improper billing to the Medicare program, this matter began with a whistleblower suit (insiders establishing False Claims Act violations perpetrated by the organization). What is different in this case or unique by comparison, is that RehabCare is not a “provider”. It did not actually conduct the billing but as alleged, caused the false or improper claims to occur through a certain set of business practices.
RehabCare has been party to a number of improper Medicare billing settlements and enforcement actions. For example, the Arch Care case in New York (I wrote a post on this case in 2015 at http://wp.me/ptUlY-im). In prior cases, RehabCare was tangentially involved as the contract therapy provider. The enforcement action was taken against the SNF as the “provider” as opposed to the therapy contractor. Recall that the Government/Provider relationship is between CMS and the SNF as it is the SNF that holds the provider agreement and ultimately submits the claim for the “improper” services to Medicare. In this most recent settlement, the Government used the insider information provided RehabCare therapists to direct a “conspiracy” action against the company. Simultaneous to the larger settlement, the Department of Justice announced four other settlements with nursing homes (SNFs) for improper therapy billing, each involving RehabCare as the therapy contractor. The settlements ranged from $3.9 million to Wingate Healthcare (Massachusetts and New York) to $750,000 for a SNF operated/owned by Frederick County Maryland.
To my knowledge, this is the first time that the Department of Justice has brought a conspiracy type suit against an organization, alleging an intent to defraud the government via the billings of the actual “provider”. This is a unique twist in the False Claims Act application (as applied to health care fraud) as it does not involve a party that actually “billed” Medicare – the SNF that contracted with RehabCare filed the claim. The whistleblowers alleged and the government pursued, a case where the allegations ranged from RehabCare setting unrealistic financial goals for its therapists to not allowing discontinuation of therapy services after the therapist recommended discharge to over-treating and upcoding. And while all these allegations may be true, the fascinating element is that the government took the “brunt” action against RehabCare even though the SNFs involved were technically and legally responsible for making sure that the claims submitted to Medicare were proper, legitimate, etc. Ultimately, it is the SNF (the actual provider) that is responsible for assuring that the Government is not billed for inappropriate, improper, fraudulent, etc. services. The False Claims Act nuts and bolts language is below:
(1)In general.—Subject to paragraph (2), any person who—
- With RehabCare fallen, do not be surprised that organizations like Genesis are next or already in process. Any provider (SNF) that uses a national therapy provider for contracting purposes should immediately do all of the following.
- Review the contract between the SNF and the therapy contractor, especially the liquidated damages clauses. Meet with the contractor’s representatives and openly discuss concerns. Undoubtedly, assurances that all is “well” will be offered. Ask for the same in writing and a revisit to the liquidated damages section to re-craft a shared risk provision.
- Engage a qualified firm to conduct a full audit of the therapy contractor’s practices, a reasonable sample of Medicare claims, and supporting documentation. Again, for readers, I have resources here for referrals to the best firms.
- Use a triple-check. Anyone who needs resources, contact me.
- Integrate your billing and Medicare RUGs data into your QAPI. You want to review monthly, your RUGs distribution, EOTs, COTs, lengths of stay, average daily rate, etc. Benchmark your date and trends.
- If you haven’t bid your therapy contract within the last two or so years, plan on it. Again, best practice is to use an outside consultant who knows the therapy side and contracting to assist with the bidding process.
- Consider, strongly, going in-h iouse or developing a hybrid partnership for your therapy services. Again I can provide some resources and direction here. Partnerships can be as beneficial (SNF with hospital, etc.), done right, as in-house programs and again, can go a long way to minimizing the expansive fraud risk and complications that come (historically) via RehabCare, Genesis, etc.
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