In April 2024, the Utah-based PACS Group, founded in 2013 with two California nursing facilities, became a publicly traded company, with more than 200 facilities in nine states. PACS Group now manages at least 284 nursing facilities in 16 states, with more than 29,000 residents, and is the second largest nursing home chain in the country. On November 4, 2024, Hindenburg Research reported that PACS Group engaged in fraudulent schemes and knowingly submitted false claims for Medicare coverage. The Federal Government is now investigating the nursing home chain.
In PACS Group: How To Become A Billionaire In The Skilled Nursing Industry By Systematically Scamming Taxpayers Hindenburg Research contends that PACS Group illegally benefited from the waiver of the 3-day inpatient hospital requirement for Medicare coverage in a skilled nursing facility during the public health emergency by converting residents to Medicare Part A coverage if they were exposed to Covid-19 during the pandemic. A former employee of a company acquired by PACS told Hindenburg, ““When [PACS] took over, they had a much more aggressive view of things, where you could have, let’s say that same nurse that was sick got COVID, you would end up picking up every single patient who has [Medicare Part A] in the entire building… we’d go from like 20 Medicare patients to 70 or 80 overnight.’” Through this practice, PACS Group increased its Medicare revenues from $52.2 million in 2019 to $151.5 million in 2022, a 190% increase.
Hindenburg points out that the Justice Department settled a False Claims Act case with ReNew Healthcare, a California nursing home chain, on this exact issue – “routinely submitting claims for nursing home residents when they did not have COVID-19 or any other acute illness or injury, but merely had been near other people who had COVID-19.” U.S. Department of Justice, “California-Based Nursing Home Chain and Two Executives to Pay $7M to Settle Alleged False claims for Nursing Home Residents Who Merely Had Been Near Other People With COVID-19” (Press Release, Apr. 26, 2024).
Hindenburg identifies other PACS Group practices to increase revenue after the public health emergency ended in 2023 and the statutory three-day inpatient requirement was in effect and enforced again. These practices included “billing thousands of unnecessary respiratory and sensory integration therapies to Medicare Part B regardless of clinical need or outcomes,” charting and billing for therapy services that were not provided, allowing unlicensed people to run facilities while “renting” a license from retired administrators to hang on the wall, employing uncertified nurse aides and reporting them as certified nurse aides, adding registered nurse hours that were not worked, and more.
As of November 6, 2024, federal affiliated entity information reported by PACS Group for 181 facilities in nine states indicates below average staffing levels (1.8 stars on a 5-point scale), low average health inspection ratings (2.6 stars), 25 facilities with an abuse icon, and 246 federal fines totaling $4,678,734.28 (and average $25,849.36 per facility).
Hindenburg Research is a short-selling activist firm that targets publicly traded companies. It conducts research and shares findings with partners. If partners take a short position on the company’s stock, they can profit if the company stock price falls. Hindenburg reports that its investigations have resulted in federal criminal indictments against 14 individuals and SEC proceedings against 64 individuals.
November 14, 2024 – T. Edelman