Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Provider Org Pays $3M for Violating Medicare Fraud Resolution

OIG imposed the highest penalty in its history on Kindred Healthcare for breaching a Medicare fraud resolution agreement resolving an improper medical billing case in 2012.

By Jacqueline Belliveau

- Kindred Healthcare, Inc., the country’s largest provider of post-acute care, recently paid more than $3 million for failing to comply with a Medicare fraud resolution agreement. It represents the largest penalty ever doled out by the Office of Inspector General for a violation of a corporate integrity agreement (CIA), the federal agency announced earlier this week.

Kindred Healthcare paid over $3M after breaching its Medicare fraud resolution agreement with OIG

According to OIG, Kindred Healthcare neglected to fix billing practices in the fourth year of the five-year agreement. The federal department also conducted several unannounced sites visits to Kindred facilities and found ongoing violations of the corporate integrity agreement.

“This penalty should send a signal to providers that failure to implement these requirements will have serious consequences,” said Inspector General Daniel R. Levinson. “We will continue to closely monitor Kindred's compliance with the CIA.”

The agreement was part of a 2012 False Claims Act settlement involving Odyssey Healthcare, Inc., which was owned by Gentiva Healthcare at the time. Kindred Healthcare acquired Gentiva Healthcare in a $1.8 billion deal back in February 2015.

Odyssey Healthcare was accused of improperly billing Medicare for home health services that were either medically unnecessary or were never provided between 2006 and 2009. The home health agency agreed to pay $25 million to the government to settle the Medicare fraud case.

To avoid being excluded from federal healthcare programs, Odyssey Healthcare also agreed to sign a corporate integrity agreement. The corrective action plan included establishing a compliance committee, developing an audit team, training on Medicare billing requirements, and resolving issues with improper billing practices.

However, required audits from 2013 to 2015 that were performed by Kindred Healthcare’s internal auditors showed that the healthcare company and its predecessors neglected to implement policies and procedures outlined in the agreement.

As a result, Kindred Healthcare demonstrated “poor claims submission practices” that “led to significant error rates and overpayments by Medicare,” reported OIG. The healthcare company continued to bill Medicare for hospice services for patients who were either ineligible for hospice care or who were ineligible for the highest level and highest paid hospice services.

While OIG discovered several agreement violations, the federal watchdog noted that Kindred Healthcare did take several “significant corrective actions” in 2015, such as upgrading internal audits and monitoring resolutions of identified problems.

In response, Kindred Healthcare announced that it plans to shut down 18 of its sites that have been “underperforming” since March 2015.

The healthcare company faced another False Claims Act allegations earlier this year. Kindred Healthcare, along with RehabCare Group Inc., one of the company’s contract therapy providers, agreed to pay $125 million to resolve a Medicare fraud case, reported the Department of Justice (DoJ).

RehabCare Group allegedly improperly billed Medicare for rehabilitation therapy services that were “not reasonable, necessary and skilled, or that never occurred.” The lawsuit stated that the provider group had scheduled treatments to achieve the highest-paid Medicare reimbursement rates regardless of a patient’s clinical needs.

OIG also offered Kindred Healthcare and its rehabilitation provider group a corporate integrity agreement. The agreement included provisions for an outside review organization to annually audit random samples of medical records to evaluate the medical necessity of treatments provided at RehabCare Group.

The federal government recently demonstrated its commitment to stamping out Medicare fraud. In July, HHS partnered with several other federal agencies to carry out the largest healthcare fraud takedown in the department’s history. Over 300 individuals, including 61 physicians and licensed medical professionals, were charged with partaking in Medicare fraud schemes that amounted to a total of $900 million in false medical billing.

“Millions of seniors depend on Medicare for essential health coverage, and our action shows that this administration remains committed to cracking down on individuals who try to defraud the program,” said Sylvia Mathews Burwell, HHS Secretary.  “We are continuing to put new tools and additional resources to work, including $350 million from the Affordable Care Act, for healthcare fraud prevention and enforcement efforts.”

“Thanks to the hard work of the Medicare Fraud Strike Force, we are making progress in addressing and deterring fraud and delivering results to help ensure Medicare remains strong for years to come,” Burwell added.

Dig Deeper:

Key Ways to Improve Claims Management and Reimbursement in the Healthcare Revenue Cycle

Strong Compliance Programs Key to Avoiding Healthcare Fraud


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