Nursing home chain settles false billing allegations for $9.5M

Diversicare Health Services agreed to pay a $9.5 million settlement to resolve improper billing allegations for Medicare rehabilitation therapy services, according to the Department of Justice.

The Brentwood, Tenn.-based nursing home chain submitted false claims to Medicare for services that weren't reasonable, necessary or skilled, according to investigators. Specifically, the federal government alleged that from 2010-15, the 74-facility chain followed corporate policies and practices that were designed to bill for the highest level of Medicare reimbursement — Ultra High — regardless of clinical needs.

The policies led Diversicare to provide improper care to reach minute thresholds and extend patient lengths of stay, the investigators said. Diversicare also threatened employees who didn't meet budgets, goals and quotas, according to the DOJ.

Additionally, the government alleged Diversicare submitted false information to Tennessee's Medicaid program, TennCare. 

Under the settlement, Diversicare agreed to a five-year agreement with the HHS and the Office of Inspector General to conduct internal reviews and risk assessments.

As the settlement was based on lawsuits filed under the qui tam provision of the False Claims Act, two plaintiffs will receive $1.4 million and $145,350 of the settlement.

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