Kindred Healthcare pays $125M to settle claims against subsidiary

The nation's largest rehab provider, which specializes in caring for skilled nursing facility (SNF) residents, will pay $125 million to settle claims the company provided medically unnecessary therapy services, according to the Department of Justice.

RehabCare Group, which was purchased by Kindred Healthcare Inc. in 2011, has settled claims that it provided unreasonably high levels of therapy to SNF residents to maximize reimbursement dating back to 2009. Prosecutors allege that Rehab Care preemptively placed residents at the highest therapy level; scheduled therapy sessions even after therapists recommended halting services; shifted the number of minutes between physical therapy, occupational therapy and speech therapy in order to maximize reimbursement; and provided therapy to patients who were asleep.

Prior to October 2011, RehabCare also engaged in a practice known as "ramping," boosting the amount of therapy during "assessment reference periods" to make it appear as though residents were receiving consistently high levels of therapy. Outside of those reference periods, when SNFs weren't required to report therapy minutes, RehabCare provided significantly fewer services.

Additionally, four SNF providers entered into a settlement totaling $8.225 million for their role in the FCA violations. Claims submitted by the SNF providers were deemed false as a result of the unnecessary therapy provided by RehabCare. The entire lawsuit stemmed from a whistleblower claim filed in 2011 by two therapists.

The Office of Inspector General (OIG) previously identified weaknesses in change-of-therapy assessments that led to $143 million in overbilling in fiscal years 2012 and 2013. Others have said that payment rules established by the Centers for Medicare & Medicaid Services have incentivized facilities to unnecessarily provide ultra-high levels of therapy. An OIG report released in October indicates that those flawed incentives led to $1.1 billion SNF overpayments.

To learn more:
- read the DOJ announcement

Related Articles:
OIG report calls for changes in skilled nursing facility billing
Medicare rules may encourage nursing homes to over-treat patients
Report: Medicare overpays skilled nursing facilities by more than $1B
Legal report highlights key takeaways for SNFs regarding False Claims Act liability

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