Audit: Tennessee Taxpayers Lose Huge Sum After Nursing Home Inflates Expenses

Tennessee taxpayers lost more than $3 million after a corporate-run nursing facility billed the state that much money for expenses not covered under Medicaid.

This, according to a new audit Tennessee Comptrollers released this week.

That corporation, AltaCare, is based out of Alpharetta, Georgia, according to Comptrollers.

“The audit found that AltaCare included $3,224,767.49 of nonallowable home office expenses on the cost reports it submitted to the State of Tennessee,” Comptrollers wrote.

“Cost reports are used to calculate a nursing facility’s Medicaid reimbursement rate and should only include expenses that are reasonable, allowable, and in accordance with state and federal rules, regulations, and reimbursement principles. Auditors determined that AltaCare’s home office cost reports submitted in 2014, 2015, and 2016 each contained nonallowable amounts. These included legal expenses, unsupported expenses, late fees, penalties, expenses not related to AltaCare, and donations.”

Auditors also found that certain personal expenses of AltaCare’s director, Doug Mittleider, were also included on the 2015 cost report. These included expenses for his wife’s flight from Sanborn, New York to France, church donations, a veterinarian expense, a guitar center purchase, and other unspecified personal expenses, according to Comptrollers.

“Because the home office cost reports include amounts allocated to nursing facilities in other states, auditors determined that $855,679.32 of the $3.2 million can be attributed to The Cambridge House in Bristol, Tennessee. As a result of these nonallowable expenses, The Cambridge House was overpaid an estimated $324,999 between July 1, 2015 and June 30, 2018,” Comptrollers wrote.

“Auditors with the Comptroller’s Office are continuing to review these matters.”

The AltaCare Corporation operated and provided home office services for eight nursing facilities in six states, including Tennessee, for the years ended December 31, 2014, and December 31, 2015, according to the audit.

For the year ended December 31, 2016, it operated and provided home office services for five facilities in four states, including Tennessee.

As The Tennessee Star reported this month, employees at an Oak Ridge health care facility billed Medicaid more than $25,000 for items that Medicaid wasn’t supposed to cover.

As The Star reported in July, the Bureau of TennCare overpaid more than $600,000 to a now-closed health care clinic in Madisonville. Officials at this facility, the Women’s Wellness and Maternity Center, also over-reported nearly 5,000 paid TennCare visits.

These same officials also under-reported more than $50,000 in payments from managed care organizations, third parties, and patients, auditors wrote.

As reported in April, members of a Franklin-based facility, ProHealth Rural Services, Inc., allegedly committed fraud to get $6 million in TennCare benefits to which it was not entitled.

As The Star reported last year, TennCare gave out more than $700,000 to duplicate members and to people who were already dead or incarcerated.

All those recipients were ineligible to receive TennCare money.

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].

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