The Grand Health Care System and 12 affiliated skilled nursing facilities will pay more than $21.3 million to settle allegations of therapy upcoding. The government alleged the operator used a quota system to keep billing minutes higher and discharge rates lower than warranted.
The New York state-based chain in filings attributed missteps to supervisory officials no longer with the company.
The Department of Justice announced the False Claims Act settlement on Wednesday, about a week after involved parties completed their sign-offs on the deal.
Whistleblowers Stacey Rosenberger and Kelley Retig, former rehab providers for The Grand system, will collect more than $4 million for their part in drawing attention to questionable practices that initiated the widespread federal investigation.
The Medicare, Medicaid and Department of Department of Defense’s TRICARE programs all were defrauded, officials said. The Grand fostered a system of overbilling for Medicare therapy services that was unreasonable, unnecessary, unskilled or that “simply did not occur as billed” from as early as the start of 2014 to Sept. 20, 2019.
Grand Health Care officials admitted that quotas were used to inflate lengths of stay and keep a certain percentage of beneficiaries billed at the highest reimbursement levels, a DOJ statement said.
A call to company headquarters seeking comment Wednesday afternoon was not returned.
Weekly discharges limited
As part of its schemes, “ the Grand directed that no more than three patients be discharged from any facility per week and instructed that no Medicare Part A patients should be discharged from rehabilitation therapy unless it had been discussed with corporate officials,” Department of Justice officials said.
In some instances, managers who did not personally evaluate or treat patients dictated how many therapy minutes a patient would receive. The company also agreed that at times supervisors falsified the amount of therapy delivered and instructed employees to do so “well after the therapy was allegedly rendered.”
The billings occurred under the Resource Utilization Groups billing system, which was swapped out in October 2019 in favor of the current Patient Driven Payment Model. Under the RUGs system, reimbursements were predicated almost entirely upon the levels of therapy a patient received, which led to numerous cases of massive upcoding and suspicious clustering of patients near upper pay thresholds of various groupers.
Included in Wednesday’s settlement announcement was resolution of federal allegations that the company submitted inflated Medicaid claims for services delivered from 2016 to 2021 at a single Grand location.
The company will undergo independent review of its therapy billing processes for five years under a corporate integrity agreement.
“As a part of this settlement, the defendants acknowledged that they obtained funds from the Medicare program to which they were not entitled,” noted Special Agent in Charge Naomi Gruchacz of the Health and Human Services Office of Inspector General.
The case is formally referred to as United States ex rel. Rosenberger and Retig v. Strauss Ventures, LLC, et al., No. 1:19-cv-1311 (N.D.N.Y.).The full settlement notes that company has five years to pay the settlement, which with interest will total more than $23 million if it runs its full course. CEO and majority owner Jeremy Strauss signed an unconditional guarantee to cover all payments.
The US Attorney’s Office, the Justice Department, HHS-OIG; and the Department of Defense Office of Inspector General all took part in the investigation.
