Ensign Group: Alleged Therapy Targets Without Regard to Patient Need

In the Ensign Group therapy fraud case, The Ensign Group Inc. agreed to pay $48 million to resolve allegations that six California facilities billed Medicare for unnecessary rehabilitation therapy and therapy they never delivered. The government’s account connected revenue targets to treatment decisions and stays that allegedly continued beyond medical need. A therapist who knew what happened during treatment could see something a Medicare claim would never reveal on its own.

Two former therapists brought the qui tam cases, and the government joined them. The Department of Justice announced the settlement on November 19, 2013. The allegations concerned the old RUG payment system, when recorded therapy could move a resident into a higher-paying category.

Who Was Named in the Ensign Therapy Case?

The Ensign Group Inc. was the named corporate settling party. The covered facilities were Atlantic Memorial Healthcare Center, Panorama Gardens, The Orchard Post-Acute Care, also known as Royal Court, Sea Cliff Healthcare Center, Southland and Victoria Care Center.

The company’s annual report for 2014 described a holding company over separately managed operating subsidiaries, with service companies supplying centralized support such as payroll and accounting. That structure matters to someone who knows a facility by the name on the building. The employer, the company providing payroll support and the provider submitting the Medicare claim can occupy different parts of the business.

What Did the Government Allege About Ensign Therapy?

The government alleged that Ensign submitted claims for unnecessary therapy from January 1, 1999 through August 31, 2011. Its account connected revenue targets divorced from individual patient needs with inflated therapy that was not delivered and stays extended past medical necessity.

In the government’s account, the patient supplied the occasion for treatment, while the target supplied the reason to keep billing. Medicare and the people it serves bore the consequences of that alleged reversal.

Why Therapy Minutes Mattered Under RUG Payment

Under the historical RUG system, therapy helped determine the resident’s payment category, and that category affected the facility’s daily Medicare payment. Ensign’s annual report described a predetermined payment per patient, per day, based on the resident’s resource utilization group and acuity.

That is why the therapy record mattered beyond the rehabilitation department. Treatment minutes, the disciplines involved and the timing of an assessment could affect classification. A longer covered stay also meant more paid days. The alleged financial pressure could therefore operate both through the daily category and through how long the facility continued to bill.

The historical Ultra High therapy category required at least 720 minutes a week, with additional requirements for therapy disciplines and days. In its rule adopting a different payment model, the Centers for Medicare & Medicaid Services reported that assessments in the narrow 720-to-739-minute band increased from 5% in fiscal 2005 to 33% in fiscal 2013. That national pattern shows how strongly a payment threshold could shape the recorded amount of therapy.

The California Research Bureau’s 1997 report, Fraud and Abuse in the Health Care Market of California, identifies an incentive in fee-for-service health care: income tied to the frequency and type of services can encourage treatment beyond medical need. It also distinguishes billing for a more expensive procedure from billing for a service never performed. In a nursing facility, the daily payment category gives the treatment record another job. It describes care and helps determine revenue.

Medicare replaced RUG-IV with the Patient Driven Payment Model for covered skilled nursing stays on October 1, 2019. That model bases classification on patient characteristics and clinical needs instead of therapy-minute groups. Under PDPM, an unsupported patient characteristic on the Minimum Data Set resident assessment can change the payment category. A therapist who sees a mismatch between a resident’s condition and the assessment still has something worth discussing with our whistleblower experts.

A Preset Target in the Life Care Case

In a separate case against Life Care Centers of America, the government alleged that corporate targets drove therapy classifications and prolonged stays after treating therapists believed therapy should end. Its complaint quoted a rehabilitation manager’s instruction about keeping planned minutes in place:

The instruction allegedly tied treatment to a payment category and a deadline. That is the practical connection an insider may recognize: a clinical decision made to fit a number already chosen elsewhere in the business.

What Evidence Is Needed to Prove Fraud?

Evidence in a therapy billing case connects the care a resident needed and received to the assessment, the Medicare claim and the people who directed the disputed entries. A therapist may know why a session should have ended. An assessment coordinator may know who changed the recorded minutes. Our whistleblower experts work with the insider to connect that knowledge to the billing decisions and the people behind them.

Treatment notes, assessments and paid claims can tell different stories about the same resident. Revenue instructions and discharge recommendations can explain why the facility kept billing after treating staff thought care should end. We examine those differences with you, including how responsibility ran between the local facility, the therapy provider and the companies supporting the business. The clinical account gives us a starting point that a payment record alone cannot supply.

What the Ensign Settlement Required

Ensign reported that it completed the settlement and remitted the full amount to the government in a single lump sum in October 2013.

The company also entered a five-year corporate integrity agreement with the HHS Office of Inspector General, effective October 1, 2013. The national agreement required Ensign to maintain a compliance program covering federal health care programs.

The clinical requirement was especially relevant to the therapy allegations: Ensign had to retain an independent review organization to examine certain clinical documentation annually throughout the agreement. The settlement therefore reached back into the records supporting care and payment.

How Much Does Medicare Fraud Whistleblower Pay?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The two former therapists brought the cases from inside the treatment business. Their roles are a reminder of why the clinical account matters: the people who see a resident’s needs can explain a discrepancy that the payment records alone leave hidden.

You Know What Happened in Therapy

If a revenue target overruled what you saw in treatment, speak with our whistleblower experts about how the therapy was billed. We build your strongest Medicare therapy whistleblower case with you around the clinical facts, the claims and the people directing them, and bring in Medicare fraud whistleblower lawyers who understand skilled nursing therapy. You have a partner from the first account of the treatment through the pursuit of a recovery.