OIG Smacks Kindred with Largest-Ever Penalty of Its Kind

The country’s largest provider of post-acute care, Louisville-based Kindred Healthcare, Inc. (NYSE: KND), has paid a penalty of over $3 million after failing to comply with a corporate integrity agreement (CIA) it signed with the federal government.

The penalty came after Kindred failed to correct improper billing practices in the fourth year of the five-year agreement. This penalty of nearly $3.1 million was the largest issued for CIA violations to date, the Department of Health and Human Services Office of Inspector General (OIG) announced Tuesday. The violations were discovered after several unannounced site visits were completed by OIG.

Kindred agreed to a number of corrective actions, including outside scrutiny of billing practices as part of the five-year CIA. In exchange for the agreement, OIG agreed not to exclude Kindred from participating in Medicare, Medicaid or other Federal health care programs.

Typically CIAs are negotiated by the OIG with Medicare providers who have settled allegations of the False Claims Act. Kindred’s CIA stems from a False Claims Act settlement that Gentiva Healthcare completed in 2012 for $25 million. Gentiva then agreed to the five-year CIA, but it became Kindred’s when the company acquired Gentiva for $1.8 billion in 2015.

For companies that agree to a CIA, there are audits required each year of the agreement. Kindred’s audits were performed by the company’s internal auditors. In 2013, 2014 and 2015, the audits found that the company and its predecessors failed to uphold the policies and procedures that were agreed upon in the CIA. In addition, the audit uncovered a number of error rates and overpayments due to poor claims submission practices, according to the OIG.

The overpayments came from Kindred billing Medicare for hospice patients who weren’t eligible for the services or who weren’t eligible for the highest level and most highly paid service category, the OIG said.

After the findings of the CIA audits were released, Kindred closed 18 locations that the company said had been underperforming since early 2015.

This year however, the OIG found that Kindred took significant corrective actions such as upgrading internal audits and investigations as well as tracking resolutions of issues that were identified.

Written by Alana Stramowski