Kindred Health Care, one of the country’s largest providers of home health, hospice and skilled nursing facilities (SNFs) has been hit very hard with a large penalty. The $3 million penalty comes from the Office of Inspector General (OIG). The OIG, known for actively being the law enforcement arm of Medicare, takes directives very seriously.
The penalty arose from Kindred not following the agreed upon Corporate Integrity Agreement (CIA) that was put in place between the provider and the OIG for improper billing practices. Under the agreement, Kindred was required to implement and follow very strong internal processes to ensure no additional fraudulent or incorrect billing was occurring. In addition to the billing component, the OIG reserved the right to conduct yearly audits on Kindred.
During the internal annual audit, the OIG identified many areas in which Kindred did not follow the CIA. Kindred did not implement the necessary billing processes and procedures to ensure proper billing. Overpayments and high error rates continued to be a part of Kindred’s operating model according to the internal audits for 2013-2015.
Internal audits discovered that Kindred was billing for hospice patients that were ineligible. Also, in order to maximize reimbursement, Kindred was up coding to benefit from higher reimbursement. Kindred has, however, cleaned up its billing department. As of this year, the OIG has acknowledged Kindred’s corrections and implementation of the CIA. Still, the OIG was not pleased with past violations and levied the $3 million penalty – the largest ever levied against a healthcare provider.
Kindred Healthcare (KND) is a publicly traded company who consistently receives positive ratings and outlooks from Wall Street analysts. Kindred’s response to the OIG’s penalty was to close 18 “underperforming sites” over the past 18 months.
Massachusetts has its own squad going after agencies as well. Since the beginning of 2016, MassHealth (Medicaid) and the Attorney General’s Office have been very aggressive at targeting home health agencies across the state. Spending on Medicaid based services grew significantly over a short period of time, which promoted the aggressive targeting.
The most recent agency to close due to fraud is Worcester based, Compassionate Homecare. The owner, chief operating officer, and administrator were all indicted by a grand jury for multiple counts of Medicaid false claims and larceny by false pretense. The agency was first flagged back in 2011 and remained under investigation until this year, when the offices were raided. The Attorney General alleges that the owners and management were well aware of overbilling, and false billing for services that were not ordered, authorized or in some cases even provided to patients. The total dollar amount allegedly defrauded and caught by the investigation totals more than $800,000.