Medicare Fraud At Skilled Nursing Facilities

Often times after older citizens suffer an incapacitating illness or stroke, they require some time to recover in a rehabilitation center.  However, there are some cases in which these skilled nursing facilities (SNFs) partake in fraudulent behavior.  The way this scam works is often through a type of billing fraud called “upcoding”.  Upcoding is when a provider, such as an SNF, bills a health insurance payer, in this case Medicare, using a false current procedural terminology (CPT) code for a more costly service than was performed.  Upcoding is understandably illegal because it forces individual patients and taxpayers to pay more so that the providers get paid more money.  In addition to stealing money from patients, it also puts false information on their medical records.  This is not only dangerous, but it may affect the patient’s future ability to get insurance.  SNFs also may place patients into the highest Resource Utilization Group (RUG) category.  This is another scam used by SNFs because by doing this, the center receives the most Medicare money paid by the government.  In this group, patients receive excessive physical and occupational therapy, which is often unnecessary and can even be unsafe for the patient.

According to a New York Times article published in September 2015, Inspector General Levinson reported SNFs have been classifying patients in the highest level of therapy group at an increasing rate.  The article states that increases in SNF billing for placing patients in RUG accounted for $1.1 billion in Medicare payments in 2012 and 2013.  Additionally, fraudulent SNF billings in 2009 resulted in $1.5 billion of inappropriate Medicare payments.

Fraud in skilled nursing facilities is relatively prevalent.  This year, the country’s largest nursing home therapy provider, Kindred/Rehabcare, paid $125 million to resolve False Claims Act allegations.  The providers RehabCare Group Inc., RehabCare Group East Inc. and their parent, Kindred Healthcare Inc. were involved in a government lawsuit in which they were accused of allowing their SNFs to submit false claims to Medicare.  Nationally, RehabCare provides rehabilitation therapy to patients through more than 1,000 SNFs in 44 states.  The government filed a complaint, which claimed that RehabCare’s policies were directed at receiving the highest reimbursement level regardless of the clinical needs of its patients.  U.S. Attorney Carmen M. Ortiz for the District of Massachusetts claimed RehabCare was involved in several schemes in which they “engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on clinical needs of patients.”  Along with the initial $125 million paid by Kindred/RehabCare, there were also settlements with four SNFs for their role in submitting fraudulent claims. 

These settlements demonstrate the government’s focus on preventing health care fraud and mark another success for the Health Care Fraud Prevention and Enforcement Action Team.  The False Claims Act has been influential in discovering such fraudulent actions.  Since 2009, the Justice Department has recovered over $27.1 billion through False Claims Act cases, $17.1 billion of which have involved federal health care program fraud. If you have information regarding inappropriate or fraudulent Medicare payments and would like to see if you have a potential claim give us a call to speak to a experienced Medicare fraud lawyer. Our attorneys are available for consultation during office hours, evenings and weekends.


“Nation’s Largest Nursing Home Therapy Provider, Kindred/Rehabcare, to Pay $125 Million to Resolve False Claims Act Allegations.” The United States Department of Justice. N.p., 12 Jan. 2016. Web. 13 June 2016.

“Red Flags in the Realm of Skilled Nursing Facilities–The Future of the Payment System.” The American Occupational Therapy Association, INC. N.p., 13 Nov. 2015. Web. 13 June 2016.

“Skilled Nursing Facility Fraud.” Senior Medicare Patrol. N.p., n.d. Web. 13 June 2016.

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