$48 Million Settlement in Nursing Home Medicare Bill Inflation Case

Earlier this week we shared information about programs which train seniors to identify questionable items on medical bills in the hopes of rooting out errors and fraud. As mentioned, even individual mistakes on simple items–like accidentally billing for double medication–can add up over the long-term. It is important to constantly improve billing efficiency to ensure all public money is well spent.

But even more invidious are those cases where there are systematic problems in billing. Nursing homes are frequently the site of these Medicare and Medicaid fraud schemes. When left unchecked, hundreds of millions of dollars or more can be filtered to service providers for services that were not performed adequately or at all. It is vital that those with information about these schemes–including seniors, nursing home care workers, and others–to come forward, speak with an attorney, and ensure the fraud is stopped.

Nursing Home Bill Inflation Case
A recent example of one of those systematic cases resulted in a large settlement announced this month. According to reports in the Mercury News, a company which owns nursing homes across the country–ten different states–will pay $48 million to settle claims that it inflated bills to Medicare.

The specific allegations are that the company submitted fraudulent bills to Medicare for at least ten years. The bills were supposed to correspond with services provided at various homes, but according to whistleblower lawsuits which spurred the matter, those services were often not performed or completely unnecessary. Federal officials claim that tens of millions of dollars paid by federal coffers for occupational, physical, and speech therapies for nursing homes residents were unnecessary or not performed. In addition, the suits claim that some residents were kept in the nursing home longer than necessary, specifically to boost the billing power of the company. Remember that Medicare only pays for shorter, “rehabilitation” stays at long-term care facilities. These usually do not last any more than 90 days, unlike Medicaid support which can pay for nursing home care indefinitely.

According to the story, the nursing home company tried to boost revenue by offering incentives to therapists who billed at certain high levels. However, the only feasible way to reach those incentives was to bill at higher than legal rates and/or keep patients in therapy longer than necessary.

Federal False Claims Act
As this case demonstrates, millions can be saved by cracking down on these illegal practices. However, one obvious problem is that lack of resources of federal regulatory bodies to identify these problems. If no one is looking out for fraud, who will spot it?

To fill this void, a federal law known as the False Claims Act was passed. This law applies to many different situations, allowing individual citizens to bring civil lawsuits alleging that a person or entity is defrauding the federal government. As a practical matter, the vast majority of cases involve fraud against the Medicare and Medicaid programs.

As an incentive to spur accountability, those who file the lawsuit are usually entitled to a portion of the money ultimately recovered. For example, in the above case, the whistleblowers were former employees of the nursing home chain. As a result of this settlement they will receive sizeable portions of the funds
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