Healogics: The Contractor Behind Hospital Hyperbaric Oxygen Claims

The Healogics hyperbaric oxygen settlement required a $17.5 million payment, potentially rising to $22.51 million to resolve allegations that the company caused hospital wound centers to bill Medicare for medically unnecessary hyperbaric oxygen therapy. The company managed the centers, and the government’s case followed that management role. Inside the whistleblowers’ complaint were procedure targets, automatic coding instructions and a staffing decision allegedly tied to how much hyperbaric oxygen therapy a center delivered. The alleged pressure reached the treatment decision before it reached the bill.

What the Hyperbaric Oxygen Claims Were About

The government alleged that Healogics knowingly submitted or caused unnecessary or unreasonable hyperbaric oxygen claims from 2010 through 2015. The therapy exposes the whole body to oxygen under increased atmospheric pressure, and Medicare covers it as an add-on treatment for certain chronic wounds.

At the time of the settlement, the Florida company managed nearly 700 hospital-based wound care centers nationwide. That scale matters to the allegation: the complaint described guidance reaching physicians and program directors across centers. Its account connected decisions about which wounds qualified, which procedures to perform and which codes to bill.

The Alleged Healogics Way

The whistleblowers’ corrected second amended complaint went beyond hyperbaric oxygen bills. It alleged a management system that pushed debridement, hyperbaric oxygen eligibility and testing toward higher revenue. It described the Healogics Way as a combination of upcoding, false treatment eligibility and frequently unnecessary transcutaneous oxygen measurement, or TCOM testing.

The alleged debridement benchmarks were remarkably specific. Physicians were supposed to debride 60% of the wounds they assessed, with 80% of those debridements classified as the higher-paying surgical or excisional procedure. The complaint alleged that Healogics singled out physicians and program directors who fell below its debridement benchmark and treated them as insufficiently aggressive.

The allegation was about what happened to the bill when the work did not match that target:

The complaint also described an automatic coding instruction. If a wound extended into subcutaneous tissue and had depth, the guidance allegedly treated the debridement as surgical or excisional. The wound’s depth became the shortcut to the higher-paying code. What the clinician actually did was the part the whistleblowers said the shortcut skipped.

Hyperbaric Oxygen Volume Reached Staffing and Eligibility

According to the complaint, a program director repeatedly heard that his center’s hyperbaric oxygen volume was too low to justify another nurse. The complaint said that volume was separate from the wound-care visits the nurses staffed. The alleged bargain was more chamber treatments in exchange for another nurse.

Patients and taxpayers bore the cost of treatment the government said was unnecessary.

The same program director objected to guidance that allegedly classified any wound on a patient with diabetes as a diabetic ulcer. In the complaint’s account, false eligibility was a way to bill for unnecessary hyperbaric oxygen therapy. A diagnosis label and a volume target could therefore reach the same patient from different directions.

The TCOM Testing Target Was Universal

The complaint alleged that Healogics implemented a 100% TCOM directive at numerous centers, generating tens of thousands of unnecessary test claims. It put the expense at approximately $89 to $140 per test. A universal instruction turned the individual test into a repeatable source of billing across the network.

That is why the testing allegation belongs beside the treatment and coding allegations. The complaint described pressure on several decisions in the same care process: the procedure, its classification, the patient’s eligibility and the test. Each had a route to a claim.

The Treatment Decision Comes Before the Claim

The final code captures only part of the alleged pressure on care. Hospital Manipulations in the DRG System: A Systematic Scoping Review, published in Asian Biomedicine in 2013, grouped manipulation of inpatient payments into corporate, clinical and coding practices.

That distinction helps explain the Healogics complaint. The corporate side is the benchmark and staffing pressure. The clinical side is the treatment or eligibility decision. The coding side is how the procedure appears on the bill. Looking only at the final code would miss much of what the whistleblowers alleged.

Why the Wound-Care Contractor Matters

Healogics’ role put a management company between the hospital and decisions about care. The Justice Department expressly included contractors in its explanation of accountability for knowingly causing false claims. The False Claims Act case reached the company behind the hospital claims. In the Healogics complaint, the financial pressure appeared in decisions about visits, procedures and tests.

The connection between eligibility and documentation also appears in the King’s Daughters Medical Center case. The government alleged that physicians falsified records to justify unnecessary cardiac procedures, including coronary stents and diagnostic catheterizations. Its 2014 settlement announcement described both the unnecessary procedures and the records used to support them. The common point is the gap between the patient’s condition and the documentation offered to justify treatment. In Healogics, the complaint traced that gap back to management guidance about wound classification.

Healogics Whistleblowers Worked in Research and Wound Care

Four whistleblowers with research, quality, clinical and program experience brought two qui tam cases in the Middle District of Florida. One was a former Healogics director for research and quality for medical affairs. The other case came from two doctors and a former program director who worked at affiliated wound care centers.

The Healogics hospital wound center research and quality whistleblower brought a view from inside the management company. The clinicians and program director saw where its guidance reached patients. The complaint put management benchmarks beside the coding and eligibility instructions received at the centers.

For an insider, the useful connection is between the instruction and the claims it produced. A benchmark, a coding directive or an objection to automatic eligibility can explain how a policy became a billing practice. That is the connection our whistleblower experts work through with you.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Healogics agreement provided for a combined whistleblower share of up to about $4.28 million.

The Healogics Hyperbaric Oxygen Settlement Included More Than a Payment

The Healogics hyperbaric oxygen settlement made an additional $5.01 million conditional on certain financial events within five years. The larger headline figure was the ceiling, not the fixed payment.

Healogics entered a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. An independent review organization would review both claims and systems. The settlement reached the processes behind the bills as well as the bills themselves.

The Contractor Decisions You Know

If you have seen wound-center targets override the care a patient needed, speak with our whistleblower experts about the instructions behind those claims. We connect what you know about treatment, testing and coding to the management decisions behind it, and bring in whistleblower lawyers who know hospital medical-necessity cases. We stay on your side from that first account through the case’s resolution.