What is Physical Therapy Medicare Fraud?

Physical therapy Medicare fraud is when a provider fraudulently bills Medicare for physical therapy services. This fraud can also extend to other types of therapy services for Medicare beneficiaries, such as occupational or speech therapy.

This particular fraud has been the subject of several successful qui tam lawsuits: in 2016, the United States reached a $145 million settlement with Life Care Centers of America, which owns or operates more than 200 skilled nursing and other facilities, for overbilling Medicare and Tricare for rehabilitation therapy services provided at their facilities. That same year, the government settled with RehabCare Group, a contract therapy provider, to resolve similar allegations of Medicare fraud for $125 million.

Medicare Part A Coverage of Physical Therapy

The Medicare program is divided into four parts that cover different services. Medicare Part A generally covers inpatient hospital services, home health and hospice care, and skilled nursing and rehabilitation care on an inpatient basis. (Medicare Part B covers therapy services provided on an outpatient basis).

In general, Medicare Part A covers up to 100 days of skilled nursing and rehabilitation care following a qualifying hospital stay.  42 U.S.C. §1395d(a)(2)(A); 42 C.F.R. §409.61(b), (c). However, Medicare Part A will only cover those therapy rehabilitation services that are reasonable and medically necessary for the treatment of the patient.  See U.S.C. § 1395y(a)(1)(A).

Medicare Reimbursement Amounts for Skilled Nursing Facility Physical Therapy

After a qualifying hospital stay for an illness, injury or surgery, a Medicare patient may need to receive rehabilitation therapy services at a skilled nursing facility. Medicare Part A pays a pre-determined daily rate for each day of skilled nursing facility rehabilitation therapy such as physical, occupational or speech therapy. The daily rate is based on the Resource Utilization Group (“RUG”) to which a resident is assigned. The assigned RUG levels depend on the number of skilled therapy minutes and the types of therapy the residents require to meet their therapy goals.

The highest daily rate is reserved for those residents assigned to the “Ultra High” RUG category, requiring ultra high levels of therapy, or a minimum of 720 minutes per week from at least two therapy disciplines (e.g., physical, occupational and speech). The other RUG categories for less intense therapy needs and corresponding lower Medicare reimbursement are: Very High, High, Medium and Low. The difference in the Medicare daily rate varies considerably, from as much as $755 for Ultra High to as little as $235 for Low.

Physical Therapy Medicare Fraud

As mentioned above, there have been several large settlements for physical therapy fraud. In those cases, the government alleged that the Companies violated the False Claims Act by knowingly causing skilled nursing facilities to fraudulently bill Medicare for rehabilitation therapy services that were not reasonable or necessary for the treatment of the patient. Allegations in those cases have involved the following fraudulent practices:

1. Automatically providing and billing Medicare for Ultra High therapy to patients without assessing their rehabilitation needs in order to receive a higher Medicare reimbursement;
2. Reporting and billing Medicare for rehabilitation therapy that a patient did not receive; and
3. Continuing to provide rehabilitation therapy services to patients even after the therapists had recommended discharge.

Individuals Knowledgeable About Physical Therapy Fraud

The qui tam whistleblowers in the successful case against RehabCare were a former physical therapist and a former occupational therapist who had previously worked for the company. In addition to physical therapists, occupational therapists, or speech pathologists, individuals who may have knowledge about rehabilitation therapy fraud include:

1. Directors of Rehabilitation;
2. MDS Coordinators; and
3. Corporate Executives.

If you know of a person or company who is committing physical therapy fraud, please contact Berger Montague’s qui tam attorneys for a free evaluation of your claims.

Contact Us To Learn More

Do you need a Whistleblower Lawyer or want to know more information about Qui Tam Law and your rights under the False Claims Act?

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