Villages Health System Sees $350 Million in Medicare Overcharges

A health-care system serving the largest retirement community in the US has filed for bankruptcy after disclosing it potentially overbilled Medicare by at least $350 million, according to court filings.

The Villages Health System LLC, which operates clinics for retirees living in the Villages in Central Florida, said in a July 3 court filing that it logged patient diagnoses that “were not clinically supported or otherwise did not meet Medicare coding and payment guidance.”

TVH said it discovered the problem in August, disclosed it to the Department of Health and Human Services in December and sent a written notice to its patients. The health-care system filed Chapter 11 last week.

The bankruptcy comes weeks after the Trump administration announced plans to expand audits of Medicare Advantage plans, the type of coverage used by most of TVH’s 55,000 patients.

More than half of people on Medicare get benefits from private Medicare Advantage plans, which are operated by private insurers, Bloomberg has reported. A complicated system of diagnosis codes determine payments to the insurance companies in Medicare Advantage. Those plans are paid a monthly premium that is adjusted for how sick their members are.

TVH was formed in 2012 in collaboration with the University of South Florida and operates ten primary and specialty care clinics, according to court documents. The broader Villages area spans 57 square miles and houses more than 150,000 residents, according to its website. Last year, Kamala Harris’ husband Doug Emhoff made a stop to the retirement community, where Republicans outnumber Democrats three-to-one, as part of Harris’ presidential campaign.

Humana Inc.’s CenterWell Senior Primary Care unit has agreed to acquire TVH, a deal that must be approved by a bankruptcy judge and is subject to better offers in Chapter 11. TVH said the bankruptcy filing and proposed sale to CenterWell won’t interrupt its operations.

Unsupported Claims

A complicated system of diagnosis codes determine payments to the insurance companies. How health plans record and submit diagnoses and maximize their payments under the program has drawn rising attention in Washington, with lawmakers of both parties calling for reforms, Bloomberg has reported.

TVH Chief Restructuring Officer Neil Luria said in a July 3 court filing that last year the company hired outside law firms and FTI Consulting Inc. to evaluate the accuracy of the health-care provider’s coding and to investigate any potential over-payments related to Medicare.

That investigation “identified codes TVH submitted that did not appear to be supported by a sufficiently documented clinical basis,” Luria said. The inquiry also identified amendments to patient medical records “appear to have been inconsistent with [the Centers for Medicare and Medicaid Services] guidance and based on a misunderstanding of the relevant guidance on medical record amendments, including when it is appropriate to amend a patient record more than 90 days after an encounter,” he said.

A preliminary analysis indicated TVH’s potential overpayments “could be at or above $350 million,” Luria said.

TVH said it has since brought in independent managers to improve its compliance program and enhanced training “on sound medical documentation practices” and “Medicare coding guidance.” TVH said it’s also implementing an anonymous compliance hot-line.

The health-care provider has been in contact with the civil division of the US Department of Justice and the HHS’ Office of Inspector General, according to court documents. When it filed Chapter 11, TVH said it had been working “toward a resolution with the US government” on the overpayment issue as well as “likely significant accompanying penalties.”

The case is The Villages Health System LLC, number 25-05156, in the U.S. Bankruptcy Court for the Middle District of Florida.

Photo: The bankruptcy comes weeks after the Trump administration announced plans to expand audits of Medicare Advantage plans. (Carsten Koall/Getty Images)