A Senate Finance Committee report says two publicly traded home health companies in Baton Rouge and Lafayette encouraged therapists to make the most profitable number of patient visits, even when the patients’ needs may not have justified the treatments.
The committee report named Amedisys Inc., of Baton Rouge, LHC Group Inc., of Lafayette, as well as Gentiva, of Atlanta. Each company showed concentrated numbers of therapy visits at or just above the point at which a “bonus” payment was triggered in the Medicare payment system, according to the report.
The bonus payments, which were implemented to ensure adequate care was provided, were worth hundreds of dollars per patient.
“The home health therapy practices identified at Amedisys, LHC Group and Gentiva at best represent abuses of the Medicare home health program,” the report says. “At worst, they may be examples of the for-profit companies defrauding the Medicare home health program at the expense of taxpayers.”
The report cited emails from Amedisys Chief Executive Officer Bill Borne and LHC CEO Keith Myers discussing these strategies. The Senate committee recommended changes in the Medicare payment system to curb these practices.
Each firm’s stock took a hit Monday during a general market decline. Amedisys closed at $13.40, down $1.42, or 9.6 percent. LHC closed at $15.64, down $1.42, or 8.3 percent. Gentiva closed at $3.68, down $1.84, or 33.3 percent.
Amedisys issued a statement Monday saying the company was pleased that the committee’s investigation is over but was disappointed with the conclusions.
The company said it stands by its integrity, ethics and patient care practices.
LHC general counsel Pete November said independent CMS data for 2008 and 2009 show the company’s therapy patterns mirrored industry averages.
And the company’s payment per visit was 13 percent below the national average for 2006 to 2009, he said. LHC, like the Senate committee, supports a payment approach that focuses on patient well-being and health characteristics rather than therapy visits.
The Senate committee report said Amedisys’ records showed that prior to 2008, managers were encouraged to meet the 10-visit threshold, which triggered a bonus for the company. After the Centers for Medicare & Medicaid Services began providing bonuses at the six-, 14- and 20-visit marks, Amedisys adjusted its treatment programs to target the most profitable number of visits, the report says.
In addition, Amedisys pressured therapists and regional managers to follow new clinical guidelines developed to maximize Medicare reimbursements, according to the report.
At LHC, top group managers, including Myers, instructed employees to increase the number of therapy visits, which allowed the company to increase revenue, the report says. In general, Medicare payments are higher for sicker patients, who require more treatment.
On Friday, LHC agreed to pay $65 million to the federal government to settle an unrelated whistleblower case. In that case, the U.S. Justice Department alleged that LHC charged Medicare for services that weren’t medically necessary and that the company treated patients at home who could have gone to doctors’ offices.
LHC disputed the allegations and didn’t admit any wrongdoing in the settlement. The company chose to settle with the federal government, which is the regulator and primary payer for health-care services for the elderly and disabled.
Sheryl Skolnick, managing director of CRT Capital Group LLC, said she was not surprised at the report’s unflattering picture of Amedisys and LHC Group.
She has been publishing similar graphs since 2007 that show how adept the companies were at “seeing patients with precisely the profit-maximizing number of therapy visits,” Skolnick said.
The most surprising thing about the Senate committee’s report is that it looked only at therapy visits and not other practices, such as patient recertifications, Skolnick said.
In order for a home health company to extend treatment, a provider must confirm that the patient needs the additional visits. Amedisys’ recertifications have been declining.
“I think to that extent the companies actually got off easy because I believe there are significantly more problems here than just the therapy visits,” Skolnick said.
As to what happens next, Amedisys is also under a Justice Department investigation, Skolnick said. She said additional fines or settlements for the home health firms are a near certainty, and the cost could be significantly larger for Amedisys.
LHC paid the federal government roughly 9 percent of its Medicare home health revenue for 2006 to 2008, Skolnick said. A similar percentage settlement would cost Amedisys around $200 million.
Add in 9 percent of the company’s Medicare home health therapy revenue for 2009, and Amedisys could be looking at more than $270 million in costs, she said.
Skolnick also said she is concerned that that investigation could widen from civil to criminal penalties.
The report says the chief executives of Amedisys, LHC and Gentiva were aware, if not a part, of demanding or requiring the profit-maximizing number of therapy visits, Skolnick said. It makes one wonder whether there was a methodical, systemic and systematic approach to achieving that number.