HHS's Office of Inspector General Levies Largest Penalty Under a Corporate Integrity Agreement Against Nation's Biggest Provider of Post-Acute Care

Kindred Health Care, Inc., the nation's largest provider of post-acute care, including hospice and home health services, has paid a penalty of more than $3 million for failing to comply with a corporate integrity agreement (CIA) with the Federal Government, Department of Health and Human Services' Inspector General Daniel R. Levinson announced today.

It is the largest penalty for violations of a CIA to date, the Office of Inspector General (OIG) said.

The record penalty resulted from Kindred's failure to correct improper billing practices in the fourth year of the five-year agreement. OIG made several unannounced site visits to Kindred facilities and found ongoing violations.

"This penalty should send a signal to providers that failure to implement these requirements will have serious consequences," Mr. Levinson said. "We will continue to closely monitor Kindred's compliance with the CIA."

OIG negotiates CIAs with Medicare providers who have settled allegations of violating the False Claims Act. Providers agree to a number of corrective actions, including outside scrutiny of billing practices. In exchange, OIG agrees not to seek to exclude providers from participating in Medicare, Medicaid, or other Federal health care programs. CIAs typically last five years.

In this case, CIA-required audits performed by Kindred's internal auditors in 2013, 2014, and 2015 found that the company and its predecessors had failed to implement policies and procedures required by the CIA and that poor claims submission practices had led to significant error rates and overpayments by Medicare.

Kindred was billing Medicare for hospice care for patients who were ineligible for hospice services or who were not eligible for the highest level and most highly paid category of service, OIG said.

The Medicare hospice benefit covers services for beneficiaries with terminal illnesses who have life expectancies of six months or less. When patients elect hospice, they agree to stop receiving curative treatment and in its place receive palliative care. Benefits are largely for pain relief, respite care and grief and loss counseling for the patient and the family. Benefits can be provided in a person's home or an inpatient hospice facility.

As a result of the findings of CIA-required audits of its claims, Kindred decided to close 18 sites that it characterized as "underperforming" since March 2015. The company has paid a penalty of $3,073,961.98.

OIG also found that in 2016 the company took significant corrective actions, including upgrading internal audits and investigations and tracking resolutions of identified issues.