Vanguard Healthcare: Free Equipment Became a Medicare Charge

In the Vanguard Healthcare enteral billing fraud case, the company agreed to pay $2 million to resolve allegations of duplicate Medicare and Medicaid charges, billing for free feeding supplies and claims for patients ineligible for the skilled nursing inpatient benefit.

Vanguard operated nursing homes, and the settlement covered its wholly owned ancillary subsidiary too. The Justice Department announced the settlement on November 8, 2011. At the center of the free-supplies allegation was a simple absurdity: the equipment cost Vanguard nothing, but the company allegedly sent Medicare a bill. Taxpayers were asked to pay for the supplier’s giveaway.

Duplicate Enteral Billing Across Medicare and Medicaid

Vanguard allegedly billed Medicare for enteral feeding services and supplies that it also billed to Tennessee Medicaid. The federal Health Care Fraud and Abuse Control Program report for fiscal year 2012 says Vanguard submitted the allegedly duplicate claims to Medicare and to Tennessee and Mississippi Medicaid between March 1998 and September 2008.

The question is what each program was asked to pay for in the same episode of care. Billing data from outside the facility can matter here. The same federal report describes the Medicare-Medicaid Data Match program as a way for contractors and government agencies to analyze billing trends across both programs to identify potential fraud. The underlying idea fits this allegation: separate payment systems can hold different parts of the same transaction.

Free Pumps and Poles With a Referral Purpose

Vanguard allegedly billed Medicare for pumps used to deliver nutritional products and intravenous poles used in enteral therapy, even though a supplier had provided them at no cost. The supplier allegedly gave the equipment away to win referrals. That connects the free items to the business Vanguard could send back.

Who supplied the equipment, what the facility agreed to pay, and what business the supplier expected in return are distinct questions. The agreement and referral records can explain why that price was free. The Medicare claim shows what the government was then asked to cover.

The same commercial incentive appears in supplier swapping allegations. In Regent Management Services‘ separate ambulance case, the government alleged that the company obtained free or discounted transports for costs its nursing homes otherwise would have borne, in exchange for referrals of other residents whose transports were billed to Medicare or Medicaid. The goods differ, but the bargain is recognizable: absorb a facility expense to win other reimbursable business.

Benefit Eligibility Comes Before the Supply Claim

The Justice Department also alleged that Vanguard billed Medicare for patients who were not eligible for the skilled nursing inpatient benefit. That allegation concerns the resident’s entitlement to the benefit, separately from duplicate charges or the price paid for equipment.

Skilled nursing benefit eligibility depends on the qualifying stay and the care the resident needs. The coverage framework in Medicare’s skilled nursing benefit manual connects hospitalization, skilled need, physician orders, certifications and available benefit days. For an eligibility concern, we examine the hospital and transfer dates, the clinical account of skilled care and the certification behind the billed stay.

A feeding record answers what care staff documented. The eligibility records answer why Medicare was asked to cover that inpatient stay. The employee who knows the admission history may hold a different part of the case from the person who knows the supplier’s invoice.

The Facility’s Bill and the Supplier’s Deal

The relationship between the nursing home and its supplier helps explain why the claim trail extends beyond the bedside. Under skilled nursing facility consolidated billing, the Part A payment bundles nursing, therapy, drugs, laboratory services and supplies. Medicare pays the facility, and the facility’s contract determines its payment to an outside supplier.

That payment arrangement is described in Medicare’s claims processing manual. An outside supplier generally cannot bill Medicare separately for a service included in the facility’s bundled payment. Moving the resident offsite does not remove the service from that bundle. The payment responsibility follows the covered service beyond the nursing home’s walls.

The California Research Bureau’s 1997 report, Fraud and Abuse in the Health Care Market of California, describes referral kickbacks as channeling business to another party in return for a fee. Vanguard’s alleged arrangement puts that incentive in a form a purchasing employee would recognize: equipment supplied at no cost to win referrals.

The clinical chart can describe use of the feeding equipment. It does not explain the alleged referral inducement or show both programs’ bills. Those connections run through purchasing, contracts and reimbursement records.

What Evidence Is Needed to Prove Fraud?

For these enteral billing allegations, the useful evidence connects the service, the supplier arrangement and the resident’s benefit eligibility to the claims submitted. Our work on nursing home fraud evidence brings those records together with the insider’s account of who directed the billing and what they knew.

Each allegation runs through different records and different people inside the business. We connect them to build the case.

A purchasing employee may know who negotiated the equipment arrangement. A billing employee may know how charges reached both payers. A clinician may know whether the account supporting the skilled stay matches the care actually provided. We use that knowledge to identify the decisions behind the claims.

The Settlement and the Integrity Agreement

The settlement payment was split between the United States and Tennessee. Vanguard also agreed to enter a comprehensive Corporate Integrity Agreement with the Department of Health and Human Services. The department’s Office of Inspector General investigated the case.

The enteral settlement preceded Vanguard’s separate 2019 resolution concerning allegedly worthless nursing care and forged TennCare forms.

You Know How the Supplies Became Claims

A False Claims Act case over nursing home billing can pay the whistleblower 15% to 30% of what the government recovers. If you saw free feeding equipment become a Medicare charge, or the same service billed across programs, speak to our whistleblower experts about what happened inside the business. We bring in healthcare fraud whistleblower lawyers who understand nursing home and supplier billing, and stay with you through every step to build your strongest nursing home whistleblower case.