HCR ManorCare accused in Medicare suit

Feds say firm collected millions in false claims

HCR ManorCare denies providing unnecessary medical services and says the lawsuit is the result of a billing dispute. between the company and the federal government

The U.S. Department of Justice has accused Toledo-based HCR ManorCare of engaging in a lengthy, nationwide scheme to collect millions of dollars worth of Medicare payments for treatment that wasn’t medically justified.

The department announced the lawsuit — initially brought on by three whistle-blowers — on Tuesday. Officials said the government has identified more than 1,200 false claims submitted by HCR ManorCare from Oct. 1, 2006, to May 31, 2012.

Federal investigators say HCR ManorCare routinely subjected patients to unnecessary and potentially harmful treatments to increase reimbursement rates, based treatment decisions on reimbursement metrics rather than patient needs, and kept patients in skilled nursing facilities longer than was medically necessary.

HCR ManorCare, which operates 281 skilled nursing and rehabilitation centers across the United States, denies those charges.

In a letter distributed to employees, patients, and others Tuesday, the company said it had cooperated with the government’s investigation, providing information that should have refuted the government’s claims.

“We believe this lawsuit is unjust, and we will vigorously defend ourselves in court,” the letter said.

RELATED CONTENT: Read HCR ManorCare letter to employees, patients

A company spokesman provided the letter to The Blade, but declined to comment further. Since 2007, HCR ManorCare has been owned by The Carlyle Group, a Washington-based asset management group.

Medicare reimbursement rates for skilled nursing facilities are generally based on how intensive a patient’s treatment is.

In its lawsuit, the government alleges that ManorCare executives pressured facility administrators and therapists to meet corporate targets for billing more and more patients at top Medicare reimbursement rates to increase revenues.

The lawsuit notes that HCR ManorCare billed Medicare at the ultra high level for 39 percent of all rehab days in October, 2006. But by November 2009, HCR ManorCare was billing 80 percent of its rehab days at the ultra high level.

“This change was not the result of a change in the characteristics of HCR ManorCare’s patient population,” the lawsuit states.

In one example included in the lawsuit, an 85-year-old man identified as Patient D was admitted to a Florida facility for hospice care only. Though he wasn’t to receive rehab, HCR ManorCare provided physical therapy, occupational therapy, and speech-language pathology services at the ultra high level, including 75 minutes of physical therapy for each day during the first week of his stay.

“We want to ensure that taxpayer dollars are used to pay for health care for Americans that need it, not to unjustly enrich health-care companies,” said Barbara McQuade, U.S. Attorney of the Eastern District of Michigan, and one of those involved in the case. “Medical providers will be held accountable when they exploit patients for profit by subjecting them to therapies they don’t need and then billing Medicare for reimbursement.”

HCR ManorCare denies providing unnecessary medical services and says it views the lawsuit as the result of a billing dispute between the company and the federal government, with the government objecting to the level of care Medicare rehabilitation patients receive.

“In fulfilling our duty to our patients, we provide the care they are entitled to receive as Medicare beneficiaries based on their individual clinical needs, as determined by their own caregivers,” the letter states. “Conversely, the government bases its allegations on retrospective analyses performed by a few alleged experts who have never cared for, spoken with, or even seen the patients in question. ... In some cases these alleged experts ignore the tangible benefits of the rehabilitative therapy actually provided to patients. We believe it is important that we speak up for our patients and for these tens of thousands of dedicated, licensed caregivers.”

The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia, Alexandria Division.

Contact Tyrel Linkhorn at tlinkhorn@theblade.com or 419-724-6134 or on Twitter @BladeAutoWriter.