(Adds Senate report starting in third paragraph.)
Oct. 3 (Bloomberg) -- Amedisys Inc., LHC Group Inc. and Gentiva Health Services Inc. fell more than 5 percent in Nasdaq trading after a U.S. inquiry found the home-care providers made added visits to Medicare patients to trigger federal bonuses.
A Senate Finance Committee report released today alleges that companies encouraged employees to make enough home-therapy visits to reach thresholds for bonuses, no matter whether the sessions were medically necessary, from the federal program for the elderly and disabled.
The panel, after saying in May it was reviewing whether the largest home-therapy providers manipulated visits, called today for changes in government payment policy. Medicare has paid companies a bonus since 1997 for providing patients multiple therapy sessions in an effort to discourage inadequate care.
“The longer this kind of policy continues, the more Medicare’s budget balloons, and the bigger the burden on taxpayers,” said Senator Charles Grassley of Iowa, who was the committee’s senior Republican when the inquiry began last year.
The report highlights behavior by executives of Baton Rouge, Louisiana-based Amedisys, LHC of Lafayette, Louisiana, and Gentiva of Atlanta, who are alleged to have encouraged unnecessary therapy. The panel said no documents provided by a fourth company investigated, Almost Family Inc. of Louisville, Kentucky, indicated any similar behavior by the provider.
LHC Group slid $1.06, or 6.2 percent, to $16 at 12:12 p.m. on the Nasdaq Stock Market, while Amedisys fell 92 cents, or 6.2 percent, to $13.90, Almost Family tumbled $1.30, or 7.8 percent, to $15.33 and Gentiva dropped $1.03, or 19 percent, to $4.49, its lowest since Feb. 1, 2001.
The committee’s recommendations aren’t binding. Medicare pays for home care in 60-day increments when prescribed and doesn’t limit the number of visits. The U.S. Centers for Medicare and Medicaid Services has proposed reducing payments for higher amounts of therapy next year while paying companies more for patients that receive little or no therapy, the Finance Committee said.
“Elderly patients in the Medicare system should not be used as pawns to increase a company’s profits,” the committee’s chairman, Senator Max Baucus, a Montana Democrat, said in a statement.
The bonus -- almost double the normal payment -- was initially triggered at 10 therapy visits. A 2006 PowerPoint presentation included in the report the committee obtained from Amedisys encouraged the company’s managers to “look for patients that have seven, eight, nine visits and try to get the 10 visits to make therapy threshold.”
Treatment Patterns Altered
In 2008, after noticing that many patients tended to have about 10 therapy sessions, regardless of need, the government changed its payment structure to award smaller bonuses at different stages of treatment -- six, 14 and 20 visits.
“Home health agencies rapidly altered their treatment patterns to match the new system,” the committee’s report said. The number of patients receiving 10 to 13 visits dropped about 28 percent. The number receiving between six and nine visits, or 14 or more, increased.
After the payment change, Amedisys’ directors formed a committee called the “A-Team” to “develop strategic clinical programs and cost-cutting/efficiency measures” to adapt, according to minutes of a July 24 board meeting held in Los Cabos, Mexico, that the panel obtained.
Amedisys managers pressured therapists to adjust their visits to meet the new incentive pattern, e-mails obtained by the committee show.
“We need to work immediately to adjust our ‘10 therapy threshold’ mindset,” one manager in Florida, Dan Cundiff, wrote his staff on Feb. 27, 2008. “I would rather be profitable than have a low visits/episode.”
Amedisys said in a statement issued today that it cooperated with the investigation and did nothing wrong.
“We are disappointed with the committee’s conclusions, and we stand by our company’s integrity, ethics, and patient-care practices,” Amedisys said.
Gentiva established a system to measure the performance of its therapists, and regional branches were encouraged to compete against each other for bonuses.
The push to link therapy visits to bonus thresholds instead of patient need “is just wrong,” one departing therapist wrote the company’s chief executive officer, Tony Strange, in May 2010.
At LHC, an executive sent an e-mail on April 2, 2008, telling therapists to “look at increasing the number of therapy visits if warranted to move these patients into the higher therapy buckets.” The executive, Angie Begnaud, said that at the time, 47 percent of patients were receiving fewer than five therapy sessions.
“This cannot continue to happen,” she wrote.
A Gentiva spokesman, Scott Cianciulli, didn’t immediately respond to an e-mail seeking a response to the committee’s report. Steve Guenthner, a spokesman for Almost Family, didn’t immediately return a phone message.
LHC Group settled on Sept. 30 a “civil inquiry” by the government into its Medicare billings between 2006 and 2008. The company said in a statement it paid $65 million in the settlement and admitted no wrongdoing. An LHC spokeswoman, Casey Stavropoulos, didn’t immediately return a phone message.
--Editors: Steve Walsh, Adriel Bettelheim
To contact the reporter on this story: Alex Wayne in Washington at Awayne3@bloomberg.net.
To contact the editor responsible for this story: Adriel Bettelheim at Abettelheim@bloomberg.net