Maryland Skilled Nursing Facility Agrees To Pay $1.3 Million To Resolve Allegtions That It Submitted False Claims For Rehabilitation Therapy

Boston, MA – Episcopal Ministries to the Aging, Inc. (EMA), an Eldersburg, Md. based company that operates William Hill Manor, a skilled nursing facility in Easton, Md., has entered into an agreement to pay $1.3 million to resolve allegations that it submitted false claims for rehabilitation therapy purportedly provided by RehabCare Group East, Inc. (RehabCare), a subsidiary of Kindred Healthcare, Inc.

“Patients in nursing homes should not be left to wonder whether the therapy they receive is based on their own clinical needs, or is instead tied to the financial targets of the companies providing their care,” said Carmen M. Ortiz, United States Attorney for the District of Massachusetts. “This settlement, like others recently announced by this office, makes it clear that when a skilled nursing facility contracts with an outside rehabilitation therapy provider, the facility remains responsible for ensuring that its patients are receiving, and Medicare is paying for, reasonable and necessary care.”

This settlement resolves allegations that EMA submitted false claims to Medicare that sought inflated amounts of reimbursement based on the provision of unreasonable or unnecessary rehabilitation therapy that was dictated by financial considerations rather than patient needs.

In January 2010, William Hill Manor hired RehabCare to provide rehabilitation therapy at its facility. As with the prior settlements involving facilities that hired RehabCare, the United States alleges that EMA and William Hill Manor failed to prevent RehabCare from engaging in a pattern and practice of providing high levels of therapy that were not reasonable or necessary during so-called “assessment reference periods.” EMA billed Medicare patients at the highest therapy reimbursement level, and then provided less therapy to those same patients outside the assessment reference periods, when the facility was not required to report to Medicare the amount of therapy RehabCare was providing to its patients. In that way, RehabCare, EMA, and William Hill Manor “ramped up” Medicare patients’ therapy minutes when it served to maximize the reimbursement rate and correspondingly reduced the patients’ therapy minutes, regardless of patient need, when the time spent on that therapy would not affect the Medicare reimbursement rate. The government alleges that, as a result of RehabCare’s practice of “ramping,” EMA frequently billed Medicare for its patients’ care at the highest therapy-based levels, even though the patients frequently were not receiving therapy at those levels.

This settlement further resolves allegations that EMA and William Hill Manor failed to prevent other RehabCare practices designed to inflate Medicare reimbursement, including: (1) presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy, rather than using individualized evaluations to determine the level of care most suitable for each patient’s clinical needs; (2) providing the minimum number of minutes of therapy required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients’ clinical needs; (3) arbitrarily shifting the number of minutes of planned therapy between different therapy disciplines to ensure targeted reimbursement levels were achieved; (4) providing significantly higher amounts of therapy on the final day of an assessment reference period in order to achieve the minimum level of therapy necessary to achieve the highest RUG level; and (5) reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

“Patient need must dictate the provision of Medicare benefits rather than the fiscal interests of providers,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “Today’s settlement demonstrates the department’s continued commitment to safeguarding both Medicare beneficiaries and taxpayer dollars by holding accountable all entities involved in billing for unnecessary services, including those that did not directly provide the unnecessary services.”

This announcement follows a $3.75 million settlement announced by this office and the Department of Justice on Sept. 5, 2014, which arose out of a related investigation involving two other skilled nursing facilities that allegedly retained RehabCare to provide rehabilitation therapy and then failed to prevent RehabCare from engaging in the practices described above in an effort to inflate amounts of Medicare reimbursement.

This matter was investigated by the Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation. The case was handled by District of Massachusetts Assistant United States Attorneys Gregg Shapiro and Patrick Callahan and Department of Justice Trial Attorneys Christelle Klovers and Rohith Srinivas.