Medicare Compliance & Reimbursement

Why one company will end up doling out hundreds of millions to the feds

Attention, hospitals: The Department of Justice is keeping close watch of billing compliance for physical therapy services and inpatient rehab admissions.

Case in point: The nation's largest provider of rehabilitative medicine will pay $325 million to resolve allegations that it defrauded Medicare, the DOJ announced Dec. 30. Four whistleblowers who filed lawsuits against HealthSouth Corporation will share a reward of more than $12 million.

According to investigations, the agreement settles allegations that HealthSouth submitted the following to Medicare and TRICARE:

 claims for outpatient physical therapy services that lacked a properly certified plan of care and were rendered by persons other than licensed physical therapists;
 claims for one-on-one services when no such services were provided;
 unallowable costs on hospital cost reports and home office cost statements, such as lavish entertainment and travel costs for HealthSouth's annual administrators' meeting at Disney World;
 a range of improper claims for inpatient discharges involving Medicare outlier payments for inpatient facilities;
 medically unnecessary claims for arthritis unit admissions; and
 costs of skilled labor for infusion therapy services as "ancillary services" to avoid routine limits on Medicare payments for skilled labor at skilled-nursing facilities. A five-year corporate integrity agreement requires the company to undergo an independent review of its inpatient and outpatient rehabilitation therapy claims.

"HealthSouth's new management team is dedicated to developing a corporate culture characterized by integrity, quality and compliance," says Jay Grinney, HealthSouth president and chief executive officer.

Lesson Learned: Facilities need to ensure that outpatient rehab programs are in compliance with Medicare requirements.