Senior Care Industry: Expect More Medicare Fraud Scrutiny

The senior care industry can expect increased Medicare fraud scrutiny in the next couple years as the Obama administration seeks to recoup program dollars to help fund health insurance coverage expansion, according to a senior member of a law firm’s Healthcare Practice Group. 

“[Because of] healthcare reform, President Obama will try to find any Medicare fraud or abuse they can to reclaim money,”  said John Durso, JD, partner at Ungaretti and Harris, at Life Services Network’s annual meeting and expo in May. “[The administration] is focusing on that in our Medicare programs, in nursing homes and hospitals, to try to fund the expansion of healthcare reform to those who are currently uninsured.”

Under healthcare reform, more than 21 million people will become eligible for Medicaid-funded insurance coverage if all states participate in the program expansion, according to the Kaiser Family Foundation. While state spending is only expected to increase by about 3%, federal spending on the Medicaid program would rise 26% to nearly $1 trillion. 


The federal government has promised to cover 90-100% of care costs for the expected millions of new Medicaid beneficiaries at a time when state and federal Medicaid budgets are already strained. It’s led the Obama administration to look for ways to redistribute or recoup dollars from its other programs, such as through cracking down on fraud, said Durso. 

“It’s real money if they find people doing something wrong. They can hit them up for [re]payments out of their next Medicare payment,” he said. “It could be a huge money source.”

In fiscal year 2012, the Department of Health and Human Services and Department of Justice reported recovering $4.2 billion in taxpayer dollars from individuals and companies that had been fraudulently billing Medicare for reimbursements. Durso expects that amount to rise in fiscal year 2013 as the government redoubles efforts to prevent and halt Medicare fraud and crack down on fraudsters. 


Already in 2013, The Ensign Group (NASDAQ:ENSG) has reached an agreement with the Department of Justice to resolve Medicare overpayment allegations in a settlement that could reach $48 million. 

Life Care Centers, the nation’s third-largest nursing home chain, is currently under federal investigation, accused of overbilling Medicare millions of dollars for unnecessary or excessive therapy. 

Grace Healthcare LLC, a Chattanooga, Tenn.-based nursing home manager, has also been a False Claims Act target accused of billing for medically unnecessary rehabilitation therapy. The company and its affiliate have agreed to pay $2.7 million to resolve the allegations.

Another False Claims Act recouped $700,000 from Fairfax Nursing Center, a Virginia-based skilled nursing facility accused of billing Medicare for providing “excessive and medically unnecessary” therapy services to Medicare beneficiaries. 

Skilled nursing providers aren’t the only care providers facing scrutiny. 

“Opportunity for fraud is more prevalent in hospital settings than in nursing home settings,” Durso said. But skilled nursing facilities, like hospitals, chase referrals allowing them to bill for certain revenue-producing services, such as rehab. 

To avoid Medicare’s hammer of justice, he cautions, know the rules—and follow them.  

Written by Alyssa Gerace

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