Health Law Daily Rehab therapy providers settle for $125M; SNFs pay millions more
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Wednesday, January 13, 2016

Rehab therapy providers settle for $125M; SNFs pay millions more

By Sarah E. Baumann, J.D.

Kindred Healthcare, Inc., and its subsidiaries, RehabCare Group, Inc. and RehabCare Group East, Inc., settled False Claims Act (FCA) (31 U.S.C. §3729 et seq.) allegations with the United States for $125 million. The government alleged that RehabCare Group and RehabCare Group East, which operate under the name RehabCare and comprise the largest provider of therapy services in the nation, knowingly caused skilled nursing facilities (SNFs) to submit false claims to Medicare for unreasonable and unnecessary rehabilitative services. At least nine SNFs have entered into individual settlement agreements. As part of its agreement, RehabCare entered into a five-year corporate integrity agreement with the government (Settlement Agreement, January 12, 2016; Corporate Integrity Agreement, January 11, 2016).

Allegations. RehabCare contracts with more than 1,000 SNFs in 44 states to provide rehabilitation therapy. Kindred acquired RehabCare in 2011. According to the Department of Justice (DOJ), RehabCare engaged in “ramping,” a process in which it reported a higher amount of care during assessment reference periods than outside of those periods, causing SNFs to bill at the at the highest therapy reimbursement level. It also placed patients in the highest therapy reimbursement level without evaluating their individual needs, scheduled and reported therapy even after treating therapists recommended ending services, shifted the number of minutes of planned therapy among physical, occupational and speech disciplines to reach targeted therapy reimbursement levels, and increased therapy at the end of measurement periods to achieve desired reimbursement levels.

Agreements. In addition to paying the settlement amount, with interest, RehabCare will also need to return payments for unallowable costs after the government has adjusted payments. The corporate integrity agreement specifically requires the entity to engage an independent review organization that will review its provision of contract rehabilitation therapy services to SNFs to verify compliance with federal requirements and generally accepted medical practices.

SNFs. The DOJ announced that it was settling FCA allegations with four nursing homes that contracted with RehabCare for amounts ranging from $750,000 to $3.9 million. The agency already executed agreements with five other entities ranging from $3.75 million to $35 million (see SNFs accused of billing for unnecessary services slapped with $3.75 million settlement, September 12, 2014).

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