Carenow Services: Accused of Billing More for the Therapy Residents Needed

In the Carenow Services fraud case, the company and its CEO agreed to pay $2 million to resolve allegations of billing Medicare and Medicaid for nursing-facility psychotherapy without documented medical necessity and upcoding services that were needed. That second allegation matters to anyone who knows the care behind the claim: a resident’s need for therapy and the amount billed for it are different questions.

The Justice Department announced the civil settlement on August 25, 2021. Carenow was a Roswell-based psychotherapy provider serving nursing homes and skilled nursing facilities. A former employee brought the False Claims Act case that led to the resolution.

Medical Necessity and Upcoding Are Different Allegations

The government alleged that, between 2012 and 2018, Carenow billed for psychotherapy sessions with no documented medical necessity. It separately alleged that, when sessions were medically necessary, Carenow billed Medicare and Medicaid using higher-reimbursing procedure codes than the services justified.

Those allegations concern different parts of a treatment record. Medical-necessity documentation explains why a resident needed the service. The level billed represents the treatment provided. In the government’s account, the problem extended from the reason for a session to the intensity claimed for it.

We see a particularly ugly feature in the upcoding allegation: a resident could need the treatment and still become the basis for an inflated bill. Needed care, padded claim. Taxpayers would pay for the difference.

For an insider, the useful comparison is between the clinical account and the claim made from it. A therapist may understand why a session was needed and what happened during it. Someone working with the billing may see the procedure code submitted to the payer. The resident needs treatment. The taxpayer funds it. Neither benefits when the claim inflates what the provider delivered.

What the Psychotherapy Code Represents

Psychotherapy billing ties the code to the service and its documented time. Later Medicare contractor guidance makes that relationship concrete. First Coast’s coding article, revised effective January 1, 2025, sets out these time bands for standalone psychotherapy:

• 90832: 16 through 37 minutes.
• 90834: 38 through 52 minutes.
• 90837: at least 53 minutes.

The article calls for start and stop times or total psychotherapy time, excluding time spent on a separate evaluation and management service. Those are Medicare contractor instructions from after the Carenow conduct period, useful for understanding what a time-based claim represents.

When psychotherapy accompanies a medical visit, the corresponding add-on codes are 90833, 90836 and 90838. In WPS’s guidance revised effective January 1, 2026, the evaluation and management level is selected by medical decision-making when those add-ons are used.

The medical visit and the therapy each need their own support. Counting the whole encounter as psychotherapy would erase the separation the coding guidance requires.

What Evidence Is Needed to Prove Fraud?

Treatment records, documented psychotherapy time and the procedure codes on the claims show how care became a charge. We examine them with the insider who knows the work, including the reason for treatment and who provided it.

The Carenow allegations point to two comparisons. For medical necessity, we look at the reason documented for treatment alongside the billed session. For upcoding, we look at the work and time documented alongside the procedure code and intensity represented to Medicare or Medicaid. The useful evidence makes the difference visible at the level of a particular service.

An individual psychotherapy session, a group session and a medical evaluation represent different work. A clinician may know whether the resident received individual or group treatment. A biller may see which service went onto the claim.

The treating professional and the billing organization can be different. We want to understand both sides: who delivered the treatment, and who decided how to bill it?

The question for someone inside the operation is often very specific: did the claim describe the care you knew was delivered? You may understand the treatment, the documentation or the billing better than anyone reading a claim from outside.

The Investigation and Cooperation Credit

The Justice Department identified the investigators as the U.S. Attorney’s Office for the Northern District of Georgia, the Georgia Medicaid Fraud Control Unit, the Department of Health and Human Services Office of Inspector General, and the FBI.

The settlement credited Carenow for immediately cooperating with the investigation and promptly taking steps to remediate the conduct described by the government.

Vericare’s Nursing-Home Case Shows the Same Split

Vericare Management’s nursing-home psychiatric-services settlement, announced in October 2015, also concerned medical necessity and claims unsupported by treatment records. The government alleged that standing orders covered evaluations of all new admissions at 128 facilities without individualized medical-necessity orders.

The same resolution included separately self-disclosed evaluation and management claims that lacked medical-record support. The clinical reason for an evaluation and the support for the service billed were again separate issues.

The parallel helps explain why a nursing-facility setting deserves a close reading of the actual care. In Vericare’s alleged standing-order practice, admission triggered an evaluation without an individualized necessity order. In Carenow’s case, the government alleged missing documentation of necessity and higher-level billing even when therapy was needed. Each asks how the resident’s individual needs and the clinician’s work made their way into the claim.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the Carenow announcement, the Justice Department said the former employee would receive a share of the government’s recovery.

You Know the Care Behind the Claim

If you worked with nursing-facility psychotherapy records or billing and saw care represented differently on a claim, speak to one of our Whistleblower Experts about what you saw. We work with you to build your strongest healthcare fraud whistleblower case, bring in healthcare fraud whistleblower lawyers who understand psychotherapy billing, and stay beside you through the pursuit of a recovery.