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Senate Finance Committee accuses home health companies of 'gaming' Medicare

Three of the nation’s largest for-profit home health companies are “gaming” Medicare, concluded a report released Monday by the Senate Finance Committee. The report accuses Amedisys, LHC Group and Gentiva of intentionally increasing the number of their home health visits in order to plump their profits.

In May 2010, Max Baucus (D-Mont.), Senate Finance Committee chairman, and Chuck Grassley (R-Iowa), senior finance committee member, spearheaded an investigation into home health therapy practices at Amedisys, LHC, Gentiva and Almost Family after the Wall Street Journal published a story examining how these companies were taking advantage of the Medicare therapy payment system by providing medically unnecessary therapy visits.

The finance committee’s staff report, based on a review of internal documents provided by the companies, found that Amedisys, LHC and Gentiva actually had strategies in place to increase therapy visits for the purpose of boosting their own revenue. The report notes that while patient visit patterns at Almost Family resembled those of the other investigated home health companies, none of the documentation provided by Almost Family indicated the company’s executives had strategies in place to increase visits.

“The home health therapy practices identified at Amedisys, LHC Group, and Gentiva at best represent abuses of the Medicare home health program,” the report said. “At worst, they may be examples of for-profit companies defrauding the Medicare home health program at the expense of taxpayers.”

“The gaming of Medicare represents serious abuse of the home health program,” said Baucus in a statement accompanying the report. “Elderly patients in the Medicare system should not be used as pawns to increase a company’s profits. Especially in these tough economic times, taxpayers simply cannot afford for their dollars to be wasted on unnecessary care. We are going to continue to crack down on these companies to ensure taxpayer dollars are used efficiently and Medicare patients are protected.”

LHC, Gentiva, Almost Home and Amedisys did not respond to requests for comment for this story, but Amedisys and Gentiva did release statements responding the finance committee's report. “We are disappointed with the Committee's conclusions, and we stand by our company's integrity, ethics and patient care practices,” the Amedisys statement reads in part. “We are proud of our mission, which is to provide the highest quality care for our nation's chronically ill, elderly population, while managing a compliant, efficient and financially sound business.”

In its statement, Gentiva said it agreed with the finance committee that changes to the Medicare payment system would be beneficial but the company took exception to the finance committee's conclusions about its use of financial analyses, saying, "Each year, CMS's proposed rate change rule is released and the Company analyzes every change to reimbursement to understand its potential financial impact. This is no different than analyzing the financial impact that a 5 percent fuel cost increase would have on performance. Analyzing the impact of reimbursement changes demonstrates fiscal responsibility, and is not indicative of a drive to direct care, as all services that Gentiva delivers in the home are ordered specifically by the patient's physician."

At the close of the financial markets Monday, Amedisys stock was down 9.58 percent, LHC was down 8.32 percent and Gentiva was down by 33.33 percent.

The Senate Finance Committee report comes just months after the Centers for Medicare & Medicaid Services’ released a proposed rule for CY 2012 that would redistribute payments from high payment therapy groups to other groups with little or no therapy. The finance committee report supports CMS’ efforts, saying CMS’ proposed changes are “moving in the right direction."

“The reimbursement policy encourages gaming, and gaming is what’s occurred,” said Grassley in a statement. “Companies are doing everything they can to make as much money as possible, whether the patients need the care or not. The federal government needs to fix the policy that lets Medicare money flow down the drain.”

Some members of the home health community have decried CMS' proposed changes. The National Association for Home Care and Hospice (NAHC) released an analysis last month saying CMS' proposed payment changes will gut profits.

[See also: Cuts to home health will be detrimental to the industry.]

In a statement given to Healthcare Finance News, NAHC president Val J. Halamandaris said the home health industry trade group commends the finance committee for calling for changes to the Medicare payment model, but noted that CMS' proposed changes were not ideal.

"Medicare's proposed reforms may be viewed as a step in the right direction, but we believe that there are better ways to go than continued reliance on the number of therapy visits for determining the payment amount," Halamandaris said. "We are somewhat concerned with the Medicare proposal that increases payments if the patient receives no therapy, while decreasing payments if they do. Patients should get what they medically need, not what a payment model directs. Therapy is an essential service that helps patients return to independence, saving Medicare from higher costs while improving patients' lives. There should not be incentives to deny patients' care any more that than we should encourage unnecessary care utilization through a payment model."

Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.

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