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Home health company sues HHS and federal contractor

Home health companies often rely on payments from Medicare to continue operations. Even a brief suspension in these payments can be detrimental to patient care and business. In this case, a home health company alleges a federal contractor wrongly continued a suspension of Medicare payments for months, ultimately leading the home health business to shut down.

A case that provides lessons for other home health businesses: What went wrong?

The case began when the federal contractor requested patient documents from the home health business in 2016. Nine months after it received the requested documents, the contractor suspended payments from Medicare to the business. The contractor stated the suspension was the result of overpayments. The contractor also requested additional documentation within 15 days.

The business put together over 20,000 pages of patient record documents, as requested, and also included a rebuttal letter in their response. The contractor stated the suspension would continue because the allegations against the business had changed from one of overpayment to one of alleged fraud.

Law requires the government consult with law enforcement prior to moving forward with accusations of fraud. The contractor stated it did not conduct the required consultation. As a result, the contractor should have lifted the suspension on payments. It did not. After more than five months of operations without receiving Medicare payments, the business was contacted by the government and told it owed Medicare $5.4 million. The business counters that this is an error due to improper calculations by the contractor.

Due to the lack of incoming payments and alleged debt, the business was forced to close operations.

What will happen next?

The business has filed a lawsuit against the federal contractor and the United States Department of Health and Human Services (HHS). The lawsuit states the contractor intentionally made errors in their case in the government’s favor and inflated billable hours in an attempt to win additional contracts from the government. If successful, the business could recoup its financial losses.

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