Home-Health Firms Blasted: Senate Panel Alleges Big Providers Abused Medicare by Tailoring Patient Care to Maximize Profits

Published in The Wall Street Journal by John Carreyrou

An inquiry by the Senate Finance Committee has found that the nation’s three largest home-health companies tailored the care they provided to Medicare patients to maximize their reimbursements from the federal program.

The committee launched its investigation following an article last year in The Wall Street Journal that used Medicare-claims data to analyze the companies’ patterns of dispensing care. The article described how the companies’ Medicare patients received a high number of the most profitable home-therapy visits but few of the least profitable ones.

The three companies, Amedisys Inc., LHC Group Inc. and Gentiva Health Services Inc., get most of their revenues from Medicare. Home-health care, which involves sending nurses to patients’ homes in an effort to cut down on costly hospitalizations, is one of the fastest-growing areas of spending for the $524 billion-a-year health plan for the elderly and disabled.

The Senate committee, citing emails and other internal documents obtained from the companies, alleges that they encouraged employees to make enough home-therapy visits to reach thresholds that triggered bonus payments, whether or not the visits were medically necessary.

The panel’s report said those alleged practices, at best, “represent abuses” of the Medicare program. “At worst,” it said, “they may be examples of for-profit companies defrauding” the program at taxpayers’ expense. The report concludes that the Centers for Medicare and Medicaid Services should stop using the number of therapy visits as a payment gauge and instead rely on measures of “patient well-being and health characteristics.”

“We are disappointed with the committee’s conclusions, and we stand by our company’s integrity, ethics, and patient-care practices,” Amedisys said in an emailed statement.

A spokesperson for Gentiva said it “cooperated fully with the committee’s inquiry, providing all materials requested.” The company declined to elaborate because it hadn’t seen the committee’s full findings.

Pete November, LHC Group’s general counsel, said his company provided the committee with an independent analysis showing that LHC Group’s “therapy utilization and reimbursement per episode” were “both 13% below the national average.” He added, “Our business operations focus on providing cost-effective care based upon the individualized needs of the patients we serve.”

In a case unrelated to the Senate inquiry, LHC Group reached a $65 million settlement with the Justice Department last week to settle civil allegations that between 2006 and 2008 it improperly billed for services that weren’t medically necessary and for care provided to patients who weren’t homebound. The department said Judy Master, whose lawsuit prompted the government investigation of the matter, will receive $12 million of the settlement. Ms. Master worked for a consulting firm that LHC Group had hired.

As part of the settlement, in which it didn’t admit any wrongdoing, LHC Group entered into a corporate integrity agreement with the inspector general of the Department of Health and Human Services.

In a report summarizing the findings of its inquiry, which it plans to release Monday, the Senate committee said LHC Group, Amedisys and Gentiva “encouraged therapists to target the most-profitable number of therapy visits, even when patient need alone may not have justified such patterns.”

Medicare reimbursements for home-health care are determined in part by the number of therapy visits each patient receives, with an extra fee kicking in as soon as a patient hits a certain number of visits. The bonus was designed to ensure providers didn’t stint on therapy visits.

In 2008 Medicare altered the number of visits required to trigger bonus payments. Instead of offering companies a bonus of a few thousand dollars after they reached a 10-visit threshold, it instead offered smaller bonuses at thresholds of six, 14 and 20 visits. After it did so, Amedisys, the largest of the three home-health companies, altered its clinical protocols to match the change, the committee alleges.

“We need to work immediately to adjust our ’10 therapy threshold’ mind-set,” one Amedisys executive in Florida wrote to subordinates in a Feb. 27, 2008, email cited by the committee’s report, referring to the number of home visits that used to, but now no longer, triggered a Medicare bonus. By increasing the number of visits its nurses made to patients’ homes to 14 to match Medicare’s new reimbursement system, Amedisys stood to earn $880 more per patient, the executive wrote in the email.

After the 2008 reimbursement change, the number of Medicare patients treated by Amedisys who received 10 home visits dropped by 46%, while the number of patients who received 14 visits rose 22.5%. Meanwhile, the committee’s report said, the number of Amedisys patients who received either six or 20 visits, the two other new bonus thresholds, rose 16% and 32%, respectively, according to the report.

During a conference call Amedisys held on June 13, 2007, the report said, a document was passed around to participants that proposed substituting more lucrative physical-therapy visits for less-lucrative skilled-nursing visits in a company program to treat patients with wounds. The switch would bring “added revenue” of $1.4 million, the document stated.

At Gentiva, the report said, a spreadsheet analyzing Medicare’s 2008 reimbursement changes showed that the company would earn $11 million more from the federal program if “therapy visits provided increased 2 to 4 visits to reach 6- and 14-visit plateaus.”

Another internal analysis of the coming reimbursement changes emailed to Gentiva Chief Executive Tony Strange on Sept. 7, 2007 stated that “increasing therapy visits by an average of 2 visits” per patient “will increase revenue by approximately $350 to $550 per episode” of care.

After the 2008 reimbursement change, the number of Gentiva patients who received 10 visits declined by 24%, while the number of patients who received either 14 or 20 visits rose by 21% and 29%, respectively, according to the report.

At LHC Group, a company physical therapist said in a July 8, 2007, email to another LHC employee that he had coached a colleague on how to meet the 10-visit threshold under Medicare’s old reimbursement system. “There are several old tricks up my sleeve that I told him about from a clinical standpoint that he should feel better about using to get to 10 visits,” he wrote.

Sen. Max Baucus (D., Mont.), the Senate Finance Committee’s chairman, said “the gaming of Medicare by these companies represents serious abuse of the home-health program.” Elderly patients “should not be used as pawns to increase a company’s profits,” and “in these tough economic times, taxpayers simply cannot afford for their dollars to be wasted on unnecessary care,” he added.

“The reimbursement policy encourages gaming, and gaming is what’s occurred,” said Sen. Charles Grassley, the committee’s senior Republican member. “The federal government needs to fix the policy that lets Medicare money flow down the drain.”

Read the Report

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