DOJ Reaches Settlement with Nursing Home Provider Based on Alleged Abuse of COVID-19 Waiver
Last week, DOJ and the State of California reached a $7,084,000 settlement with a California-based nursing home chain and two executives for allegedly misusing a pandemic-era waiver program by routinely submitting claims to Medicare for nursing home residents that did not have a qualifying prior hospital stay. This settlement is noteworthy because it is one of the first FCA settlements involving alleged abuse of this particular Centers for Medicare & Medicaid Services (“CMS”) COVID-19 waiver. See United States and State of California ex rel. Bay Area Whistleblower Partners v. Renew Health Group, LLC, No. 2:20-cv-09472-CBM-AS (C.D. Cal. Oct. 14, 2020).
Medicare Part A covers skilled nursing and rehabilitation services furnished in a skilled nursing facility (“SNF”) under certain conditions, including that a beneficiary complete a qualifying hospital stay of at least three days prior to SNF admission. If a patient who has Medicare Part A stays in a hospital for three days or longer and still needs a high level of care, known as “skilled care,” the patient can move into a nursing home that qualifies as a SNF to receive that care, and the nursing home can submit Medicare Part A claims for furnishing that care, for up to 100 days. Nursing homes receive higher reimbursement rates for their residents who receive skilled nursing care as compared to those who do not. In response to the COVID-19 pandemic, CMS issued waivers of certain Medicare requirements, including the requirement that a person stay in a hospital first, in order to advance programmatic goals including ensuring patient continuity of care.
The settlement arose from a qui tam complaint alleging that a chain of SNFs (“ReNew”) and two corporate executives violated the FCA by fraudulently billing Medicare under the Part A SNF benefit for nearly every Medicare-eligible resident across 27 California SNFs. In addition, the relators further alleged that these Medicare Part A claims resulted in false and fraudulent Medicaid claims, to the extent that Medicaid covered patient cost-sharing amounts for some of the Medicare Part A claims. The qui tam complaint—filed in October 2020 by an entity comprised of an anonymous set of relators—alleged that within one week of the issuance of the waiver, ReNew began to fraudulently bill Medicare for skilled nursing services for residents that had no need for such services and thus were ineligible.
Specifically, ReNew allegedly put all Medicare-eligible residents through an observation period whenever they were exposed to COVID-19 and billed Medicare for skilled nursing services for these residents even though the waiver did not expand the Medicare Part A benefit to cover “observation” of residents who might have been exposed to COVID-19. For example, the qui tam complaint alleged that ReNew placed nine residents on the Medicare Part A census after one staff member tested positive for COVID despite the fact that none of the residents tested positive or, according to relators, exhibited any clinical conditions that would warrant a skilled level of care. The qui tam complaint further alleged that ReNew maintained a “COVID Log” of 900 residents who did not meet the medical necessity requirement for skilled care but whose stays ReNew billed to Medicare and Medi-Cal on account of the waiver. The COVID Log justified such treatment with explanations such as “picked up under waiver,” “monitoring in house due to positive CNA test,” and “covid exposure – pending test results.” And ReNew’s Medicare billing consultant supposedly expressed concern about ReNew’s interpretation of the waiver, stating, “I am not sure that being potentially ‘exposed’ to covid is a condition that requires a skilled level of care.” However, ReNew persisted with its billing practice.
The settlement’s Covered Conduct chastises ReNew for experiencing increased Medicare reimbursement during the pandemic when the CMS waivers were supposedly intended to be revenue neutral. The Covered Conduct further critiqued ReNew for “fail[ing] to preserve key communications about its reasoning for production to the government in this matter.”
This settlement reinforces that abuse of regulatory flexibilities during the pandemic remains an enforcement priority for DOJ.
A copy of the settlement agreement can be found here and a copy of the qui tam complaint can be found here.
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