Psychiatric Services in Nursing Facilities: Blanket Evaluations and Unsupported Therapy

Nursing home psychiatric billing fraud can involve automatic evaluations without individual medical necessity, therapy billed beyond what a resident received, or claims for residents who were somewhere else. The outside clinician, the nursing facility and the billing company can each hold a different part of the story. A nurse knows the resident went to the hospital. A therapist knows what happened during the visit. A billing employee knows what the company charged. Putting those accounts together can expose a claim that none of them could see in full.

What Nursing Home Psychiatric Billing Fraud Looks Like

The nursing-facility cases concern automatic evaluations, repeated examinations, inflated therapy and facility fees billed through an outside treatment company.

This part of behavioral health fraud follows outside mental-health professionals into nursing facilities. The health care provider’s account of a visit can be compared with the nursing home’s own record. Inpatient psychiatric facilities have a separate payment structure built around active hospital treatment and daily facility payments.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The useful starting point for a clinician or facility employee is the gap between the service they know and the claim the company submitted.

Where the Evaluation, Therapy and Claim Part Company

Automatic Evaluations for New Admissions

Vericare Management agreed in October 2015 to pay more than $1 million to resolve allegations concerning psychiatric services in nursing facilities. The Department of Justice’s announcement described standing orders at 128 facilities for evaluations of all new admissions, without individualized medical-necessity orders.

The alleged trigger was admission to the building. The appointment followed the admission list, rather than a decision about that resident’s care. A whistleblower case brought the standing-order allegations forward.

The resolution also covered evaluation-and-management claims that Vericare disclosed itself because they lacked medical-record support.

The problem had appeared much earlier. In its 1996 report, Mental Health Services in Nursing Facilities, the HHS Office of Inspector General described standing orders for psychiatric services as needed. Reviewers found examples of testing without a documented reason or an identifiable referral and recommended orders based on individual needs.

Repeated Examinations and Bonuses for Volume

Park Avenue Medical Associates agreed to a $1 million settlement in July 2013 concerning psychiatric examinations and psychotherapy for elderly residents. In the settlement admissions described by the Department of Justice, Park Avenue acknowledged inadequately documented examinations, repeated examinations without demonstrated prerequisites, and psychotherapy claims without demonstrated capacity to benefit.

The government’s allegations also included clinician bonuses linked to volume. That makes the company’s compensation system relevant alongside the clinical chart.

The OIG report shows why the resident’s needs matter more than the routine. Its reviewer considered weekly psychotherapy excessive for a resident with Alzheimer’s disease and thought occasional therapy, alongside social activities, would have been helpful.

The report also described a resident with major depression who needed intensive psychotherapy but received irregular, inconsistent sessions. Unnecessary services and unmet needs appeared in the same review. Residents lose when the volume billed substitutes for attention to the care they need.

Therapy Billed at the Wrong Intensity

Carenow Services and its chief executive agreed to a $2 million settlement announced in August 2021 after a former employee brought a whistleblower case. The government alleged that nursing-facility psychotherapy lacked documented medical necessity or was upcoded above the appropriate intensity.

The visit and the bill can tell different stories. The resident’s condition, the clinician’s work and the time spent providing psychotherapy need to match the service charged to the government.

Psychotherapy and medication-management work also need to remain distinguishable. First Coast’s Medicare coding instructions effective in January 2025 require start and stop times or total psychotherapy time, excluding evaluation-and-management time. A visiting clinician’s daily schedule lets us compare the psychotherapy time claimed with the time available to treat residents.

A separate outpatient case shows the same problem at the add-on claim. American Psychiatric Centers, doing business as Comprehensive Psychiatric Services, settled allegations in August 2025 that it billed psychotherapy add-ons with evaluation-and-management visits when the psychotherapy was absent or inadequately documented.

The Resident Was Somewhere Else

Supportive Care and its chief executive paid $4,595,739 in a settlement announced in June 2024. The Department of Justice described allegations that the psychological-service providers billed Q3014 telehealth originating-site fees belonging to nursing facilities. It also alleged claims for nursing-home residents who were actually hospitalized elsewhere.

Under those allegations, the claim put the resident in the nursing home while the resident was in a hospital. The facility staff who handled the transfer would know where the billing went wrong.

Location had also mattered in the OIG inspection. The report described a provider group alternating between nursing-facility and office billing for group therapy:

The location changed on the claim and payment followed. The original submission and the resubmission can therefore be as revealing as the final paid claim.

What Evidence Is Needed to Prove Fraud?

The strongest evidence connects the claim to the resident’s actual care and to the people who decided what to bill. Orders, visit notes and location records can show the gap. For a Medicare claim, the service date and billed service tie those records to the payment. We work out with you what they show.

The Facility Chart Gives the Visit Its Context

The OIG chose nursing-facility records for its inspection because they gave a fuller account of care than fragmented provider records. Nursing notes, medication orders and patient assessments let reviewers compare the psychiatric claim with the resident’s broader care.

In the report’s review of services billed in 1993, 126 of the 397 medical records received contained medically unnecessary services. Reviewers based that finding on the resident’s condition, need for treatment and ability to benefit.

The report found missing treatment plans and records that did not show whether a plan had been carried out or its goals met. It also found psychotherapy billed where the documented work appeared to be medication management, and group sessions that appeared to be social activities. Those details explain why a repeated therapy note needs the context of the resident’s broader care.

The Rendering Professional and Billing Organization Have Different Records

The clinical note identifies who did the work. The submitted claim shows whose services the organization billed. Staffing and credential records help connect the two.

The OIG review found records in which reviewers could not identify the person who provided the service. In other records, a psychiatrist or psychologist submitted the bill while the chart showed another kind of worker, including social workers and nurses, had performed the service.

Individual psychotherapy time, a group session and an inpatient facility day describe different services. We match what the claim says was done to what was actually done, and by whom. Approval for a course of treatment and the record of each delivered visit answer different questions.

When the Facility Controls the Referral

A facility can hold the resident’s chart, initiate a referral and host an outside clinician. The relationship between the facility and the treatment business can therefore explain both how the visits started and who controlled the resulting claims.

A parallel from partial hospitalization shows how the referral itself can become a purchased service. In its opinion in the criminal case involving Health Care Solutions Network, the Eleventh Circuit described the business buying patient referrals from hospital employees and assisted-living owners through cash kickbacks. The people directing patients toward treatment occupied a different position from the clinicians delivering it.

For a nursing-facility insider, this makes the referral arrangement part of the conversation alongside the visit. We examine who selected the outside provider, what payments or incentives accompanied that relationship, and how the resulting services reached the billing system. The facility relationship, clinical decision and payment each have their own witnesses.

What an Insider Can Bring to the Conversation

A facility employee may know the resident’s movements and care needs. An outside therapist may know the work performed and the instructions for documenting it. A billing worker may know how the company selected codes or resubmitted claims. Those perspectives can connect a resident’s experience to a company’s billing decisions.

We work with the part you know: the automatic referral, the repeated evaluation, the overstated therapy or the claim that continued while the resident was elsewhere. The case becomes more specific as those observations connect to the orders, clinical records and claims behind them.

When You Know What Happened to the Resident

If the visits you know do not match the psychiatric claims, speak with our whistleblower experts about the resident, the provider and the billing decisions. We build the case with you across the facility chart, the clinician’s work and the company’s claims, and bring in healthcare fraud whistleblower lawyers who understand psychiatric billing. We stay beside you as the case moves forward.