Villages Health System Files Chapter 11 Amid $350M Medicare Overbilling Probe
The Villages Health System LLC, a healthcare provider serving the largest retirement community in the U.S., has filed for Chapter 11 bankruptcy following the disclosure of a potential $350 million Medicare overbilling. The overbilling stemmed from inaccurately recorded patient diagnoses that did not align with Medicare coding and payment guidelines. TVH discovered these discrepancies in August, reported them to the Department of Health and Human Services in December, and notified its patients accordingly.
TVH operates multiple clinics catering predominantly to retirees in Central Florida's Villages retirement community, which spans 57 square miles with over 150,000 residents, most of whom rely on Medicare Advantage plans. These plans, operated by private insurers, determine payments based on member diagnoses coded by healthcare providers, making accurate medical record documentation critical to compliance and reimbursement.
The bankruptcy filing coincides with recent federal initiatives to intensify audits on Medicare Advantage plans, highlighting broader regulatory scrutiny on diagnosis coding practices. TVH engaged external consultants to audit its coding accuracy, uncovering that some submitted codes lacked sufficient clinical support and involved inappropriate amendments to medical records, some beyond the 90-day acceptable amendment window set by CMS.
As part of its restructuring, TVH has implemented stronger compliance measures, including enhanced training on coding and documentation standards and an anonymous compliance hotline. The provider remains operational during bankruptcy proceedings and has an acquisition agreement pending bankruptcy court approval with Humana Inc.'s CenterWell Senior Primary Care unit.
This case underscores the growing regulatory focus on Medicare Advantage billing integrity. Accurate diagnosis coding is central to ensuring appropriate payments and minimizing legal and financial risks for healthcare providers and insurers. The ongoing resolution involves coordination with the U.S. Department of Justice and HHS Office of Inspector General, reflective of the significant penalties likely accompanying the overpayment issue.
Healthcare and insurance professionals should monitor evolving Medicare Advantage oversight trends, as coding compliance continues to be a critical factor influencing provider financial stability and payer reimbursement frameworks in the U.S. senior healthcare market.