Making a List. Checking It Twice. Gonna find out who’s…. c’mon…you know the words!red checklist

Well, these days it’s the Department of Justice making “the list” – and that’s a list that no one in long-term care wants to be on! Yes, the Department of Justice has a naughty and nice list.

It’s a list of skilled nursing facilities involved in lawsuits with the government alleging unreasonable and unnecessary therapy services billed to Medicare. Lawsuits throughout the country have been filed at an alarming rate over the past few years alleging therapy services billed were not reasonable and necessary, thus defrauding Medicare, and in most cases, alleging that the amounts of therapy were intentionally manipulated for higher RUGS and financial gain. We all know that Medicare ONLY pays for skilled, reasonable and necessary care. Nothing more and surely nothing less. So why is Medicare saying the therapy was unreasonable and unnecessary? Read on…

During our training and education seminars with Rehab Managers, it is always shocking to discover that most of them are totally unaware that these {or any!} therapy-related lawsuits are occurring in long-term care facilities across the country. So let’s take this opportunity to discuss and review some of these cases with you, so you can see where the problems stem from, and so that you can be sure when the “list” is made, YOU are NOT on it!

If you search the Department of Justice website ( for Medicare False Claims Act cases, you will find no shortage of settlements in every shape, size and practice setting. New fraud cases are released almost daily. Hospitals, homecare agencies, mental health facilities, durable medical equipment companies, physician practices, chiropractors, pharmacies and the like. Circumstances in some of these cases are downright despicable…billing for patients that were never seen, lying about services provided, getting kickbacks for referrals, and so on. Reading the details of these cases makes one cringe and wonder how these licensed professionals went astray – and those of us who make an honest living may even be {secretly} glad the “bad guys” were caught. However, when we start to read about cases in our world, the long term care world, we may get a bit defensive. The circumstances in these cases, on the surface, may seem a bit more subtle and harmless… accusations that the therapy provided was “unreasonable and unnecessary.” A difference of opinion between what Medicare and the therapist thought was necessary. So…was the therapy really…unnecessary? When you dig into the details of these therapy cases, you will see that there is more to it all.

The cases we will look at here are specific to long-term care and involve allegations under the False Claims Act for unreasonable and unnecessary therapy services. More specifically- Medicare Part A services and resulting RUG scores. A majority of the cases reported on are brought about by therapists – therapists or therapy managers who “saw something and said something,” sometimes after attempting to address company and facility issues on their own without success, ultimately resulting in “whistleblowing” to bring light to the situations of concern and hopefully bring about change. In this type of qui tam case, the government {not the whistleblower} is considered the real plaintiff because we are dealing with Medicare, a government program. If the government succeeds in a lawsuit against a SNF, the whistleblower may receive up to 30% of the government’s award. An incentive offered by Medicare in an attempt to keep everyone honest!


Recent Case Settlements

These prominent lawsuits have settled in the last 2 years. Click on the links for details about each case.

  1. Released 4/30/15: $300,000 settlement for 1 Maine SNF for therapy services deemed unreasonable and unnecessary as provided by a therapy contractor {Rehab Care}easy come go pointing
  2. Released 3/2/15: $3.5 million settlement for 3 NY SNF’s for therapy services deemed unreasonable and unnecessary as provided by a therapy contractor {Rehab Care}
  3. Released 9/15/14: $3.75 million settlement for 1 Maryland SNF for therapy services deemed unreasonable and unnecessary as provided by a therapy contractor {Rehab Care}
  4. Released 9/5/14: $3.75 million settlement for 1 Iowa SNF and 1 CA SNF same owner, for therapy deemed unreasonable and unnecessary as provider by a therapy contractor {Rehab Care}
  5. Released 11/19/13: $48 million settlement with same owner for therapy services provided by in-house therapy staff

Another settlement released in October 2014 involving provider, ProStep, was noted to be the largest “failure of care” settlement with a chain-wide SNF in the Justice Department’s history. Extendicare owns 146 SNFs in 11 states. This settlement was a bit different than the 5 above in that it involved Medicare AND Medicaid, as well as, therapy AND nursing services. In other words, Medicare Part A therapy AND therapy captured under Medicare Part B for Medicaid Case Mix reimbursement in 33 of the SNFs in 8 states. Ouch!

It is also important to mention here that the claims resolved by the settlements above are allegations only; there has been no determination of liability. The SNFs settled for the amounts listed to close the case.

Cases Still Out There

There are currently a few LARGE cases “in progress” alleging unreasonable and unnecessary therapy services. These cases are SNF chains owning over 200+ facilities each. These cases have not yet settled, though the circumstances listed in the lawsuits filed mirror the cases above and will be discussed below.

  • SavaSenior Care: This suit was filed 10/29/15 and involves a SNF operator of 200+ facilities nationwide with in-house rehab
  • HCR ManorCare: This suit was filed 4/21/15 and involves a SNF operator of 281 facilities nationwide with in-house rehab
  • Life Care: This suit was filed 11/28/12 and involves a SNF operator of 200+ facilities nationwide with in-house rehab

This statement from the Department of Justice regarding the above cases reflects their mindset involving the circumstances around each case:

“ When seeking payment for federal healthcare programs, it is the providers obligation {the SNF} to assure that services provided to beneficiaries are supported by evidence {documentation} that the services are reasonable and necessary. The DOJ is committed to ensuring that healthcare providers who pressure their employees to provide medically unnecessary services to Medicare beneficiaries solely to increase their own profits will be held accountable.”

The lawsuits are with the “provider” – the SNF, as the SNF is responsible for billing Medicare for the services that the Rehab Company provides. The Rehab Company does not bill Medicare directly, therefore, does not submit the “false claim” to violate the False Claims Act. The False Claims Act provides that any person who “presents a false claim for payment, knowingly makes a false record material to a false claim, is then liable to the US Government for statutory damages and penalties.”

So What’s the False Claim?

The False Claim was the “bill” for the therapy services- the bill from the SNF to Medicare. The therapy services were deemed not reasonable and not necessary and because the facility billed gavel and moneyMedicare for these services, a “false claim” was submitted. Also, part of the false claim/false record was the Minimum Data Set (MDS). Contained in Section O are the therapy days and minutes for a particular time period. The Medicare RAI manual stipulates that only skilled therapy services meeting all Medicare criteria, including reasonable and necessary, can be included on the MDS. The therapy information on the MDS determines in part the RUG level, which then is converted into a daily per diem payment rate that the facility receives. The RUG score is placed on the billing claim form that is submitted to Medicare for payment. Hence, if therapy info does not meet reasonable and necessary criteria, it should not be on the MDS or on the claim. If it is there, it could be a “false claim.” So why was there a question with the RUG scores on the claims? What made some of the therapy minutes making up a RUG score unnecessary? It was the way the minutes were obtained. Read on…

Negative Practice Patterns in Common with All Cases

In all of these cases, there were certain negative practice patterns in the SNF that raised eyebrows. Whether these negative practice patterns stemmed from corporate policy or were Rehab Department specific, they were enough to get these facilities on “the list.”

These are the Top 10 Negative Practice Patterns that all these cases had in common. These patterns are cited as specific examples in the detail of the cases:

  1. High levels of therapy provided during assessment or look back periods, with decreased levels when not in assessment periods
  2. All residents were placed in a Rehab Ultra category for treatment minutes unless it was shown that the patient could not tolerate this level, rather than using an individualized evaluation or plan to determine the level of care for each resident
  3. Minutes for each Assessment Reference Date (ARD) period were exact to the RUG and not over, manipulated to prevent over delivery (i.e.: 500 minutes for RV, 720 for RU)
  4. Therapy minutes were increased on the last day of the ARD to hit the next RUG if minutes were short (if only 540 minutes on day 6, then 180 minutes were provided on the last day between disciplines)
  5. Minutes were shifted between disciplines arbitrarily (i.e.: if PT minutes were low, OT minutes would be doubled)
  6. Minutes were rounded
  7. Initial evaluation minutes were included on the MDS at times to hit the RUG
  8. RUG level targets, length of stay and discharges were determined by Corporate
  9. Pressure from Corporate on administrators and therapists for revenue targets, with threats to those that complained or did not hit targets
  10. Rehab Manager set the schedule of minutes for daily treatments for all therapists and disciplines based on RUG targets, not based on clinical need

Do any of these sound familiar?

The DOJ stated these as the reasons why the therapy was deemed unreasonable and unnecessary:

  • Therapy was not provided according to patient need, rather to the financial plan of the provider
  • Therapy services were driven with the goal of achieving RUG scores by manipulating minutes arbitrarily, separate from patient clinical need
  • The SNF failed to take sufficient steps to prevent the contracted therapy provider from engaging in a pattern and practice of providing high levels of therapy

What is very important to understand is THIS….Medicare did NOT say the therapy itself was unreasonable and unnecessary. The therapy was NOT denied in its entirety. ONLY the days and minutes provided that were not supported by documentation or thought to be “manipulative to achieve a RUG” were deemed unnecessary and then removed. This removal of minutes reclassified the RUG, causing a “take-back” of the $ difference. Medicare is NOT saying the “therapy” itself was unreasonable and unnecessary, rather that the “level of therapy” was unreasonable and unnecessary based on the negative practice patterns of the companies. The RUG levels attained were not supported by the documentation and fluctuations in minutes demonstrated that the need was not there

Successful long-term care therapy programs can exist without manipulation! A high % of Rehab Ultra does not equate to fraud! Recognize that there is a BIG difference between prudent, organized therapy department management and fraud! The difference here is  — 1 is based on resident need and maximized from there, the other is based on RUG targets without regard to resident need and maximized from there. As long as therapy documentation can answer WHY and HOW RUG scores were achieved – and a reviewer can tell from this documentation that the level of therapy was “reasonable,” it’s all good!

Tips to Stay Off “The List”

Obviously, these case examples are {hopefully} the exception to long-term care therapy practice, and NOT the rule! It is these types of cases that now shed doubt on all successful long-term care therapy programs. And because of this, facilities and therapy providers need to put extra effort and attention into all that they do to support the successful programs in place. RUG scores need to be justified and defended to prevent future accusations.

Implementing positive practice patterns and documentation standards to support therapy services can help prevent false claim accusations down the road and keep your facility off “the list.”

Policies, procedures and documentation should reflect that therapy services provided are based on resident need. Period. What does this mean? This means that the evaluating therapist and subsequent therapists involved in the direct care of the resident are the ones that should be involved with determining the amount of therapy needed and documenting as such. The initial evaluation should distinguish what amount of therapy would be reasonable and necessary and why. There should be information in the assessment or plan of care that drives the level of care that the patient will receive. A reviewer needs to be able determine if the therapy amount is reasonable based on the condition described in the assessment.

Drive home that therapists should not be providing “minutes” – they should be providing “treatments” based on resident need. Minutes scheduled should stem from an assessment and schedules should be set up by clinician’s involved with the resident care. Rehab Managers who set the schedule for all disciplines should be doing so based on documentation provided by the evaluating clinician. This is the only way to show that the delivery of therapy was based on need – otherwise- a reviewer can assume that delivery was based on achieving RUG targets. Don’t be afraid to talk about the RUG in your documentation! Document to support the Part A RUG the resident is in from evaluation through discharge. Talk about why a particular RUG is appropriate, and if RUG fluctuations occur, document the reason, especially with COT’s or RUG score increases. This type of documentation can be achieved through a simple interdisciplinary team note with each PPS MDS.

If you feel your facility may be providing questionable practice patterns, discuss this with someone. It’s always best to start with your Rehab Manager and work from there. There may be practice patterns in place for a reason that you are not aware of and a simple explanation could ease your mind. If not, the following resources are available:The words Compliance, Rules, Regulations and Guidelines on color

In many of the cases, more supporting documentation may have justified the services provided and proved they were in fact reasonable and necessary. There are those cases, however, that just plain reflect unethical practice. Therapists have the opportunity to make a positive impact on this overall situation by taking individual responsibility for the patients they evaluate, outlining what each resident needs in terms of level of therapy, and documenting to support this level throughout the course of care.

So… if today you got a chance to peek at “the list,” which one would YOUR facility be on?


Any questions, visit our Just Ask! Q&A Forum.

In Your Corner,


Dolores Montero, PT, DPT, GCS, RAC-CT, RAC-CTA

SNF Therapy & MDS Compliance Team

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