Extendicare to pay $38M to settle care, billing allegations

In what the U.S. Department of Justice is calling “the largest failure-of-care settlement with a chain-wide skilled nursing facility [SNF] in the department’s history,” long-term care provider Extendicare Health Services and subsidiary Progressive Step Corp. have agreed to pay $38 million to resolve False Claims Act allegations that it provided substandard care and inappropriately billed Medicare for rehab services.

The justice department and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) jointly announced the settlement Oct. 10. Extendicare says it refutes the allegations [PDF], and the justice department says it has made “no determination of liability” in resolving the cases.

“It is critically important that we confront nursing home operators who put their own economic gain ahead of the needs of their residents,” said Acting Associate Attorney General Stuart F. Delery. “Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.”

Through its subsidiaries, Extendicare operates 146 skilled nursing facilities in 11 states, according to the justice department. Extendicare’s website says the company has 156 senior care facilities in the United States with approximately 15,000 beds. ProStep provides physical, speech and occupational rehabilitation services.

The allegations cover the period of 2007 to 2013 and relate to 33 SNFs in eight states. Extendicare, according to the government, did not have a sufficient number of skilled nurses to adequately care for residents, failed to provide adequate catheter care to some of residents and failed to follow the appropriate protocols to prevent pressure ulcers or falls. Also, the government maintains, Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries, particularly during residents’ assessment reference periods, so that it could bill Medicare for those residents at the highest per-diem rate possible.

The settlement calls for the federal government to receive $32.3 million and for Medicaid programs in eight states—Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin—to receive $5.7 million. Extendicare says [PDF] it will make a lump-sum payment this month.

“These unproven accusations are an affront to the hardworking and dedicated individuals who work tirelessly to meet the complex health care needs of our nation’s most vulnerable adults,” Extendicare President and CEO Tim Lukenda, said in a press release. Eighty percent of Extendicare centers have received a National Quality Award from the American Health Care Association/National Center for Assisted Living, including eight Silver Quality Awards and 12 Bronze Quality Awards received this year, Lukenda pointed out. “In addition, the number of centers with overall four or five-star ratings, as measured by the Centers for Medicare & Medicaid Services, has improved almost 300 percent since the program’s inception,” he added. Nonetheless, Lukenda said, the settlement will allow the company to avoid protracted litigation, which “would have likely cost the company more than it paid in settlement and worse, it would have diverted the company’s attention from our quality efforts.”

Also as part of the settlement, Extendicare will enter into a five-year, chain-wide corporate integrity agreement (CIA) with HHS-OIG. The compliance program must include, among other things, corporate-level committees to address compliance and quality, including a committee to assess staffing, and an internal audit program to assess the quality of care provided to its residents. Extendicare must retain an independent monitor, selected by the OIG, who will regularly visit Extendicare’s facilities and report to the OIG. In addition, an independent review organization will perform annual reviews of Extendicare’s claims to Medicare.

“The implementation of the CIA will only serve to further strengthen our comprehensive compliance program as well as enhance our quality assurance performance improvement processes,” Lukenda said.

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