Risk Management

Kindred Healthcare to Pay $125M Over Medicare Fraud

Patients "are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers," said the...
Matthew HellerJanuary 12, 2016

Kindred Healthcare, the largest U.S. nursing home therapy provider, has agreed to pay $125 million to settle federal charges that it provided unreasonable and unnecessary services to patients to inflate Medicare billings.

In announcing the settlement, the Department of Justice said Tuesday that Kindred’s RehabCare unit had a policy of setting unrealistic financial goals and scheduling therapy to achieve the highest reimbursement level regardless of the clinical needs of its patients.

“Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the DoJ’s civil division, said in a news release. “All providers, whether contractors or direct billers of taxpayer-funded federal healthcare programs, will be held accountable when their actions cause false claims for unnecessary services.”

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RehabCare, which Kindred acquired in 2011, contracted with more than 1,000 nursing homes in 44 states to provide rehabilitation therapy to their patients. Four nursing homes that hired RehabCare agreed to pay the federal government about $8 million for their role in the alleged overbilling scheme.

The case was initially filed under the whistleblower provisions of the False Claims Act by Janet Halpin, a physical therapist and former rehabilitation manager for RehabCare, and Shawn Fahey, an occupational therapist who worked for RehabCare.

Among other allegations, the Justice Department said Kindred presumptively placed patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs.

The company also allegedly scheduled therapy even after the patients’ treating therapists had recommended that they be discharged from therapy and reported that skilled therapy had been provided when in fact the patients were asleep at the time.

RehabCare “engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on the clinical needs of patients,” said Carmen Ortiz, U.S. Attorney for Massachusetts.

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