Acadia Healthcare faces an investigation by the Department of Veterans Affairs for potential insurance fraud

The Department of Veterans Affairs is currently looking into Acadia Healthcare, a major operator of psychiatric facilities, for allegedly committing insurance fraud by extending patients’ stays without medical necessity. This investigation arises from Acadia’s own admissions to investors regarding ongoing investigations by various federal agencies, including prosecutors in Manhattan and a grand jury in Missouri, who rely heavily on revenue from government programs such as Medicare and Medicaid .

The focus of these investigations is whether Acadia engaged in practices that unfairly increased their financial returns at the expense of government insurance programs. The Securities and Exchange Commission, along with other regulatory bodies, are also expected to increase scrutiny of the company.

In response to these allegations, Acadia Healthcare has maintained that its healthcare decisions are made by competent medical professionals and denies any misconduct in retaining patients longer than necessary. The company has expressed its commitment to fully cooperate with all requests.

This new investigation was prompted by a September report from the New York Times, which suggested that Acadia may be holding patients longer than medically required, potentially violating state regulations. The report highlighted cases where people seeking routine mental health support were held in Acadia facilities until their insurance benefits were fully used, with no medical basis for such prolonged care. This report was based on a variety of sources, including complaints, legal documents, and statements from more than fifty current and former company employees.

Additionally, Acadia recently agreed to pay nearly $20 million to resolve disputes with the Department of Justice related to similar allegations of holding patients longer than necessary and admitting people who did not require hospital care, from 2014 to 2017. Acadia has not acknowledged any wrongdoing as part of this settlement.

The ongoing investigation is focusing on more recent behavior where Acadia billed for services when patients were stable enough to be discharged and did not require the level of care provided to them. These allegations come primarily from confidential sources involved in the ongoing investigation.

Additionally, recent interactions with former Acadia employees in states such as Georgia and Missouri by the FBI and the Department of Health and Human Services’ Office of the Inspector General appear to support concerns regarding Acadia’s operational practices.

To date, the Department of Veterans Affairs has not commented publicly on the matter. The investigation is ongoing and further developments are likely as more information becomes available. The results of these investigations could have significant implications for Acadia Healthcare’s operations and financial position, as well as the healthcare and insurance industries generally.