Brattleboro Retreat: Vermont AG Investigating Largest Psych Facility for Medicaid Fraud

August 9, 2023

The Vermont Attorney General’s Office is investigating the Brattleboro Retreat for potentially defrauding the state.

The probe centers around whether the Retreat violated the Vermont False Claims Act by billing Medicaid for services it never provided. Investigators say they have evidence suggesting that the Retreat may have engaged in an illegal billing practice known as “upcoding,” in which providers overstate the severity of a patient’s illness to receive a higher payment.

The investigation has been under way since 2020 but quietly spilled into public view last week. The AG’s Office filed a petition in court seeking to force the nonprofit hospital to comply with a detailed request for information, known as a civil investigative demand, that it sent in June.

Investigators say the Retreat has refused to comply without legal justification.

"If the False Claims Act is to serve any purpose in interdicting suspected fraud, The Retreat cannot be permitted to stall — or worse yet, evade — an explicit, authorized and relevant State investigative demand," assistant attorney general Douglas Keehn wrote in a court filing this week. The AG’s Office declined to comment on the matter.

The Retreat refused an interview request and declined to comment on the investigation. But in a statement, a spokesperson said state investigators were seeking documents beyond the scope of their authority.

“Like all hospitals, the Retreat is subject to various audits and reviews, and we look forward to continuing to collaborate with the attorney general’s office in its important oversight function,” the statement read.

The Brattleboro Retreat is Vermont’s largest psychiatric hospital, providing both addiction and mental health inpatient treatment. It has been on shaky financial ground for years, which leaders have blamed in part on the state's reluctance to raise Medicaid reimbursement rates to keep pace with costs; roughly half of the nonprofit hospital's revenue comes from Medicaid.

The fraud probe began after the agency that oversees Medicaid — the Department of Vermont Health Access — identified “suspicious” changes to the Retreat's billing practices, court documents show.

In particular, state investigators found that the Retreat had begun using one specific billing code much more without any explanation. That code, according to court records, results in a “significantly higher” payment than others the hospital once relied on.

The Department of Vermont Health Access reported its findings to the AG’s Office in March 2020. A Seven Days records request for that report was denied on the basis that it could “interfere with enforcement proceedings.”

The report prompted the AG’s Medicaid Fraud & Residential Abuse Unit to subpoena the hospital for documents related to its billing practices.

A review of more than 50,000 pages of material showed that the hospital had “frequently” submitted billing codes that were unsupported by the patient’s diagnosis and treatment, according to the recent court filing. Investigators also found emails referencing pertinent documents that the hospital did not fork over.

The AG’s Office spent a year trying to schedule a meeting with the Retreat’s leadership, the filing says. When the two sides finally met in March 2022, investigators laid out their most concerning findings and requested the still-outstanding documents.

“From that date forward, other than nonspecific assurances of cooperation and requests to repeat information already provided, The Retreat has not provided any substantive response, document or witness,” the filing says.

The hospital has already been the subject of one major state probe in the last decade.

In 2013, then-attorney general Bill Sorrell began investigating whistleblower claims that the Retreat had committed Medicaid fraud. Two years later, Auditor Doug Hoffer recommended the state expand the scope of its investigation.

The probe concluded in 2018, when Sorrell’s successor, T.J. Donovan, announced that while the hospital was deficient in “several areas” of its billing practices, none appeared to have financially harmed the state.

The hospital agreed to hire a third party to review its billing procedures and outline recommendations. Asked on Friday whether those steps were ever accomplished, a spokesperson declined comment.

Source: Colin Flanders, “Attorney General Investigating Brattleboro Retreat for Medicaid Fraud,” Seven Days, Aug. 4, 2023, URL: https://www.sevendaysvt.com/vermont/attorney-general-investigating-brattleboro-retreat-for-medicaid-fraud/Content?oid=38814711