Encompass Health will pay $48M to settle false claims allegations

Birmingham, Ala.-based Encompass Health, the largest operator of inpatient rehabilitation facilities in the U.S., has agreed to pay $48 million to resolve false claims allegations, according to the Department of Justice.

Medicare and Medicaid use information about patients' diagnoses to determine whether a facility is properly classified as an IRF and to determine the facility's reimbursement level for specific patients. The government alleged some of Encompass Health's IRFs provided inaccurate information to Medicare to maintain their IRF status and earn higher reimbursement.

The government specifically alleged that beginning in 2007, some Encompass IRFs falsely diagnosed patients with "disuse myopathy" when there was no clinical evidence for this diagnosis. Some of the Encompass facilities also allegedly admitted patients who were not eligible for admission to an IRF, according to the Justice Department.

The allegations were originally brought in three whistleblower lawsuits filed under the False Claims Act.

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