As announced in an recent press release, Extended Care Health Services, Inc. (“Extendicare”), an operator of skilled nursing facilities, and its subsidiary Progressive Step Corporation (“Pro Step”), a provider of physical, speech, and occupational rehabilitation services, entered into a settlement to resolve allegations that, in part, Pro Step billed Medicare for medically unreasonable and unnecessary rehabilitation services.  In addition to resolving allegations related to substandard skilled nursing services, the settlement resolves allegations that Extendicare provided medically unreasonable and unnecessary rehabilitation services to Medicare Part A beneficiaries, particularly during the patients’ assessment reference periods, therefor allowing Extendicare to bill Medicare a higher per diem rate for those patients.

In addition to the settlement agreement, Extendicare entered into a Corporate Integrity Agreement with the Office of Inspector General to promote compliance with Medicare, Medicaid, and other federal healthcare programs.  The Corporate Integrity Agreement (“CIA”) runs for a period of five (5) years and contains substantial obligations for Extendicare.  These obligations include requirements to establish a compliance program and name a compliance officer; appoint a compliance committee to, among other things, establish an internal quality audit and review program; establish a staff review committee; and develop a code of conduct and written policies and procedures, including extensive policies and procedures relating to the delivery, management, and oversight of rehabilitation therapy services.  Additionally, the CIA requires general training, training related to individual’s specific responsibilities, and periodic training on quality of care issues.  The CIA also requires that an independent review organization be engaged to perform independent and objective reviews of Extendicare’s compliance obligations, including those related to rehabilitation therapy systems.

The above case is yet another illustration of the importance of assuring that rehabilitation services are provided in compliance with all applicable federal laws and regulations.  It also serves as a good reminder of the need for rehabilitation providers to continually consider whether their compliance programs are sufficient to promote a culture of compliance and avoid regulatory scrutiny.