Therapy billing fraud: When will LTC learn?

There’s a commonly quoted phrase that defines insanity as “doing the same thing over and over again and expecting different results.” Long-term care providers are doing the same thing again, billing Medicare for therapy services that are not “reasonable and necessary,” or that never took place. Someone in the organization will get disgusted and a qui tam whistleblower lawsuit won’t be far behind. The federal government, via the Office of Inspector General and the Department of Justice, often joins in the litigation and uses the heavy hammer of government to bring about a very expensive settlement.

Large multi-facility groups have settled litigation and others are in deep the (expensive) mire of the litigation process. Fortunately, the feds have not often used the ultimate hammer—the hammer of criminal prosecution. This could change.

These days, the heat is on—meaning the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a program begun in 2009 to bring a major force against healthcare fraud and abuse. The Office of Inspector General, Federal Bureau of Investigation and Department of Justice are on the prowl.

This over-utilization is a rerun of events from two decades ago. In the 1990s groups of facilities expanded rapidly, largely funded by the hyper-utilization of therapy services. New Mexico’s Sun Health grew from a small regional company to an international mega-company, and then disintegrated into bankruptcy when their over-billing practices became clear.

There does seem to be one major difference these days, company employees often document the misconduct in the email system, making life easier for the litigation lawyers!)

Congress became incensed and reacted by passing massive Medicare reforms in the Balanced Budget Act of 1997. This led to a long political soap opera over therapy billing rules and rates.

But since then the rules and regulations have been clear. “Reasonable and necessary” has been a key concept in Medicare services since very early on in the program. While it is not an easily quantifiable standard, there are enough experts (including the facility staff) to recognize what is allowable and what is fraud, waste and/or abuse.

Therapy stacking (physical, occupational, speech) and “minute stuffing” are not acceptable behaviors.

During the 1990s misconduct campaign I remember auditing a chart that really shocked me. According to this chart a very frail elderly man who was failing fast had received hour upon hour of physical and occupational therapy. Either the resident had been dragged up and down the hall, an act of abuse or the therapy had never happened, an act of fraud. Reasonable? No. Necessary? No. Therapeutic value? No!

Therapy services are very valuable to both rehabilitation and long-term residents. Necessary therapy, within a proper plan of care, adds tremendous value to residents’ well being. Unnecessary therapy is at least fraud and possibly abuse—and always unacceptable.

Tom Ealey is a professor of business administration at Alma College in Alma, Michigan. His research interests include healthcare regulatory issues and compliance, healthcare quality failures and financial fraud. He can be reached at

Topics: Articles , Executive Leadership , Facility management , Medicare/Medicaid , Regulatory Compliance , Risk Management