Medicare Compliance & Reimbursement

Imploding rehab giant HealthSouth Corp.'s woes deepened April 22, with a Congressional panel joining the Department of Justice and the Securities and Exchange Commission in investigating the company for dubious accounting practices and possible Medicare and Medicaid fraud.

House Energy and Commerce Committee leaders demanded a host of documents from Birmingham, AL-based HealthSouth and its auditor, Ernst & Young. Citing SEC allegations that the company fraudulently overstated its earnings by some $2.5 billion since 1997, the letter suggests HealthSouth has joined the hall of shame already peopled by Enron Corp., Global Crossing, Qwest and Worldcom.

Penned by Billy Tauzin (R-LA), John Din-gell (D-MI) and James Greenwood (R-PA), the missive says the company's board of directors and Ernst & Young appear to have fallen down on the job. Among other things, they point out that the board's audit committee met only once in 2001, a year in which HealthSouth settled a Medicare fraud lawsuit with the DOJ.

Additionally, the congressmen write that "it appears that HealthSouth may have submitted hundreds of thousands of claims for reimbursement to Medicare and Medicaid based on improper billing of certain rehabilitative therapy claims." The missive cites in particular contentions that the company: billed for services not rendered, billed for therapy provided by supportive personnel as if it had been furnished by licensed therapists, failed to include physicians' plans of care when appropriate and billed improperly for group therapy. The panel ordered HealthSouth and Ernst & Young to produce the documents it requested by May 6.

In related news, yet another HealthSouth exec has been implicated in the company's accounting schedule. According to prosecutors, company Treasurer and former Chief Financial Officer Malcolm McVay was charged in a three-count criminal information and is expected to plead guilty.

"HealthSouth has had five chief financial officers since its incorporation," notes U.S. Attorney Alice Martin. The McVay filing "brings to four the number of former CFOs for HealthSouth that have been charged with conspiracy to commit wire fraud and securities fraud, and all four have agreed to cooperate with investigators."

Lesson Learned: The congressional probe of HealthSouth, combined with the HHS Office of Inspector General's recent call for boards of directors to get involved with Medicare compliance issues, makes it more important than ever to ensure that your compliance officer has ready access to your organization's board of directors and other top officials.