The Temptation to Defraud the Government in the Growing Nursing Home Industry

09/29/2013 // Justice News Flash: Featured Column (Press Release) // Kathleen Scanlan // (press release)

Advertisers would have us believe that American seniors are fiercely independent people who live in their homes where they entertain other equally healthy seniors and get talking Hallmark greeting cards from devoted grandchildren. Not even the most fatalistic curmudgeon pictures spending his – or her, senior years in a nursing home, surrounded by wheelchairs and bedpans and diapers. But a recent Kaiser Family Foundation survey found that 18 percent of seniors spend at least one year in such a facility.

Setting aside all the stereotypes, nursing homes play a critically important role in caring for seniors, especially when they suffer severe dementia or are unable to eat or bathe or walk on their own. Nationally, about $143 billion is spent on care in 16,000 nursing homes nationwide. And with legions of Baby Boomers every day getting their invitations in the mail to become AARP members, the number of aging Americans in “custodial care” is primed to grow. By 2040, one in five Americans will be 65 or older, and the population of those 85 and older is expected to expand from 5.8 million in 2010 to 19 million in 2050.

The tab for this important custodial care is already picked up in large part by government funded health care programs. Medicaid covers about 63 percent of nursing home residents, while Medicare covers about 14 percent, according to the Centers for Medicare & Medicaid Services. With so much money paid out in government health benefits to care for seniors in nursing homes each year, it should come as no surprise that fraud on these programs follows. Fraud in the nursing home industry includes: billing for unnecessary rehabilitation services; billing for expensive supplies and equipment that was not used or necessary; improperly classifying patients in order to inflate reimbursements; ordering unnecessary medical tests. In addition, nursing home fraud increasingly involves kickback arrangements for patient referrals and sweetheart arrangements with hospitals or pharmacies. While the schemes vary from other kinds of healthcare frauds, they still run afoul of the False Claims Act and subject the nursing homes, and their corporate owners, to liability.

Our modern healthcare system has made significant improvements since baby boomers were born, including benefits like nursing home care paid for by Medicare and Medicaid. There is little doubt, however, that caring for these aging boomers presents a host of challenges too. If the United States is going to maximize benefits for the boomers, and have anything left for anyone who comes after them, then there needs to be a systematic effort to curb the temptation that the hundred billion dollar a year nursing home industry represents for fraudsters looking for the next easy mark. Whistleblowers and the False Claims Act could be just the anecdote.

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