For-Profit Nursing Homes More Likely to Overbill Medicare, U.S. Study Says

For-profit nursing home companies led by Kindred Healthcare Inc. and Sun Healthcare Group Inc. are likelier than non-profit counterparts to overbill Medicare for the costliest services, according to a U.S. government report.

Medicare should investigate instances in which companies keep patients longer, charge more for care and classify clients for more extensive and costly services than needed, the study released today by the inspector general found.

The findings, based on audits of nursing-home billings from 2006 to 2008, “raise concerns about the potentially inappropriate use of higher-paying” billing codes, said the report by the Health and Human Services Department’s Office of Inspector General. It recommends that Medicare, the U.S. health insurance program for the elderly and disabled, consider changing its payment method for nursing home services.

The program covers as much as 100 days of nursing-home services for beneficiaries who require skilled care or rehabilitation following a hospitalization of at least three consecutive days. Care can be provided in a hospital or free- standing facility.

Medicare plans to target an undisclosed list of nursing homes with “questionable” billing practices, according to the report. The program specifically is examining “special-nursing facilities” for patients recovering from an injury or who are disabled.

Photographer: Chris Ratcliffe/Bloomberg

Medicare plans to target an undisclosed list of for-profit nursing homes with “questionable billing” practices, according to an inspector general's report. Close

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Photographer: Chris Ratcliffe/Bloomberg

Medicare plans to target an undisclosed list of for-profit nursing homes with “questionable billing” practices, according to an inspector general's report.

Congressional Criticism

California Representative Pete Stark, the ranking Democrat on the House Ways and Means Health Subcommittee, has been critical of the reimbursements that special nursing facilities get from Medicare. Medicare pays too much for the therapy services that the companies were billing more for, and too little for other services, his Stark’s spokesman, Brian Cook, said in an e-mail.

Stark unsuccessfully attempted to change the payments to nursing facilities in the health-care law signed by President Barack Obama in March.

Kindred fell 36 cents, or 1.9 percent, to $18.99 at 4:04 p.m. in New York Stock Exchange composite trading. Sun Healthcare rose 18 cents, or 1.4 percent, to $12.75.

The report didn’t mention any specific companies. Susan Moss, vice president of communications with Louisville, Kentucky-based Kindred, the largest publicly traded U.S. company by number of beds, didn’t respond to a telephone message requesting comment. Bernadette Bell, a spokeswoman for Irvine, California-based Sun Healthcare, the second-largest by beds, also didn’t respond to a telephone message.

To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net;

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

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