CORPORATE INTEGRITY AGREEMENT BETWEEN THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND LHC GROUP, INC.

BETWEEN THE

OFFICE OF INSPECTOR GENERAL

OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES

AND

I.PREAMBLE

LHC GROUP, INC. (LHC) hereby enters into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements). Contemporaneously with this CIA, LHC is entering into a Settlement Agreement with the United States.

LHC established a voluntary compliance program (“Compliance Program”) in 1996. The Compliance Program currently includes, among other things, a Compliance Officer, a Compliance Committee, a Code of Conduct and Ethics, written policies and procedures, a disclosure program that allows for the confidential disclosure and investigation of potential compliance violations, screening measures for Ineligible Persons (as defined in Section III.F.l.a below), regular compliance training to all employees, various compliance auditing programs, and oversight from LHC’s Board of Directors. LHC represents that its Compliance Program was and continues to be aimed at LHC’s goal of promoting the highest standards of professionalism, ethics and integrity in the conduct of LHC's business practices. LHC will continue to operate its Compliance Program throughout the term of this CIA. LHC may modify its Compliance Program as appropriate (subject to the terms of this CIA), but shall ensure that during the term of this CIA it complies with the obligations of LHC set forth herein.

II. TERM AND SCOPE OF THE CIA

A. The period of the compliance obligations assumed by LHC under this CIA

shall be five years from the effective date of this CIA. The “Effective Date” shall be the date on which the final signatory of this CIA executes this CIA, unless otherwise specified. Each one-year period, beginning with the one-year period following the Effective Date, shall be referred to as a “Reporting Period.”

B. Sections VII, X, and XI shall expire no later than 120 days after OIG’s receipt of: (1) LHC’s final annual report; or (2) any additional materials submitted by LHC pursuant to OIG’’s request, whichever is later.

C. The scope of this CIA shall be governed by the following definitions:

1. “Covered Persons” includes:

a.	all owners of LHC who are natural persons (other than shareholders who: (1) have an ownership interest of less than 5%, and (2) acquired the ownership interest through public trading) (“Owners”);

b.	all officers, directors, and employees of LHC;

c .

all contractors, subcontractors, agents, and other persons who provide patient care items or services or who perform billing or coding functions on behalf of LHC, excluding vendors whose sole connection with LHC is selling or otherwise providing medical supplies or equipment to LHC and who do not bill the Federal health care programs for such medical supplies or equipment.

Notwithstanding the above, this term does not include part-time or per diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per year, except that any such individuals shall become “Covered Persons” at the point when they work more than 160 hours during the calendar year.

2. “Relevant Covered Persons” includes persons involved in the

delivery of home health patient care items or services and/or in the preparation or submission of claims for reimbursement for home health care from any Federal health care program.

III.CORPORATE INTEGRITY OBLIGATIONS

LHC shall maintain a Compliance Program that includes the following elements:

A. Compliance Officer and Committee

1. Compliance Officer. LHC has a Compliance Officer responsible for developing and implementing policies, procedures, and practices

designed to ensure compliance. LHC shall maintain a Compliance Officer for the term of the CIA who will be responsible for ensuring compliance with the requirements set forth in this CIA and with Federal health care program requirements. The Compliance Officer shall remain a member of senior management of LHC, shall continue to make periodic (at least quarterly) reports regarding compliance matters directly to the LHC Board of Directors’ Audit Committee, and shall be authorized to report on such matters to the Board of Directors at any time. The Compliance Officer shall continue to report directly to the Audit Committee of the Board of Directors and indirectly to the Chief Executive Officer of LHC. LHC shall maintain a Compliance Officer who is not and shall not be subordinate to the General Counsel or Chief Financial Officer. The Compliance Officer shall be responsible for monitoring the day-to-day compliance activities engaged in by LHC as well as for any reporting obligations created under this CIA. Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.

LHC shall report to OIG, in writing, any change in the identity of the Compliance Officer, or any actions or changes that would affect the Compliance Officer’s ability to perform the duties necessary to meet the obligations in this CIA, within five days after such a change.

2. Compliance Committee. LHC shall maintain its Compliance Committee. The Compliance Committee shall, at a minimum, include the Compliance Officer and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant departments, such as billing, clinical, human resources, audit, and operations). The Compliance Officer shall continue to chair the Compliance Committee and the Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of the LHC’s risk areas and shall oversee monitoring of internal and external audits and investigations). The Compliance Committee shall continue to meet at least quarterly.

LHC shall report to OIG, in writing, any changes in the composition of the Compliance Committee, or any actions or changes that would affect the Compliance Committee’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

3. Board of Directors Compliance Obligations. The Board of Directors (Board) shall remain responsible for the review and oversight of matters related to compliance with Federal health care program requirements and the obligations of this CIA.

The Board shall, at a minimum, be responsible for the following:

a.	meeting at least quarterly to review and oversee LHC's Compliance Program, including but not limited to the performance of the Compliance Officer and Compliance Committee;

b.	ensuring that LHC adopts and implements policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and Federal health care program requirements; and

c.	for each Reporting Period of the CIA, adopting a resolution, signed by each member of the Board summarizing its review and oversight of LHC’s compliance with Federal health care program requirements and the obligations of this CIA.

At minimum, the resolution shall include the following language:

“The Board of Directors has made a reasonable inquiry into the operations of LHC’s Compliance Program including the performance of the Compliance Officer and the Compliance Committee. Based on its inquiry and review, the Board has concluded that, to the best of its knowledge, LHC has implemented an effective Compliance Program to meet Federal health care program requirements and the obligations of the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at LHC.

LHC shall report to OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

B. Written Standards

1.Code of Conduct. LHC shall continue to adhere to and promote its Code of Conduct and Ethics and use it as an element in evaluating the performance of all employees. LHC’s Code of Conduct and Ethics shall, at a minimum, set forth:

LHC’s commitment to full compliance with all Federal health care program requirements, including its commitment to prepare and submit accurate claims consistent with such requirements;

LHC’s requirement that all of its Covered Persons shall be expected to comply with all Federal health care program requirements and with LHC’s own Policies and Procedures;

the requirement that all of LHC’s Covered Persons shall be expected to report to the Compliance Officer, or other appropriate individual designated by LHC, suspected violations of any Federal health care program requirements or of LHC’s own Policies and Procedures; and

d.the right of all individuals to use the Disclosure Program described in Section III.E, and LHC’s commitment to nonretaliation and to maintain, as appropriate, confidentiality and anonymity with respect to such disclosures.

Since June 1, 2011, every LHC officer and employee has certified that he or she has received, read, understood, and shall abide by LHC’s Code of Conduct and Ethics. Within 120 days of the Effective Date, all Covered Persons shall certify, in writing or in electronic form, that he or she has received, read, understood, and shall abide by LHC’s Code of Conduct and Ethics. New Covered Persons shall receive the Code of Conduct and Ethics and shall complete the required certification within 60 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later.

LHC shall periodically review the Code of Conduct and Ethics to determine if revisions are appropriate and shall make any necessary revisions based on such review. Any revised Code of Conduct and Ethics shall be distributed within 60 days after any revisions are finalized. Each Covered Person shall certify, in writing, that he or she has received, read, understood, and shall abide by the revised Code of Conduct and Ethics within 60 days after the distribution of the revised Code of Conduct and Ethics.

2.Policies and Procedures. Within 90 days after the effective date, LHC will implement written Policies and Procedures regarding the operation of its compliance program, which include the compliance program requirements outlined in this CIA and LHC’s compliance with Federal health care program requirements.

To the extent not completed prior to the Effective Date, within 90 days after the Effective Date, the Policies and Procedures shall be made available to all Covered Persons. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), LHC shall assess and update, as necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions, any such revised Policies and Procedures shall be made available to all Covered Persons.

C. Training and Education

1. General Training. Within 120 days after the Effective Date, LHC shall provide at least one hour of General Training to each Covered Person. This training, at a minimum, shall explain LHC’s:

CIA requirements; and

Compliance Program, including the Code of Conduct and Ethics.

New Covered Persons shall receive the General Training described above within 60 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later. After receiving the initial General Training described above, each Covered Person shall receive at least one hour of General Training in each subsequent Reporting Period.

2. Specific Training. Within 120 days after the Effective Date, each Relevant Covered Person shall receive at least 2 hours of Specific Training in addition to the General Training required above. This Specific Training shall include a discussion of:

a.the Federal health care program requirements regarding home bound status;

b.the Federal health care program requirements regarding medical necessity;

c.the Federal health care program requirements regarding the accurate coding and submission of home health claims;

d.	policies, procedures, and other requirements applicable to the documentation of medical records;

e.	the personal obligation of each individual involved in the claims submission process to ensure that such claims are accurate;

f.	applicable reimbursement statutes, regulations, and program requirements and directives;

g.	the legal sanctions for violations of the Federal health care program requirements; and

h.	examples of proper and improper claims submission practices.

New Relevant Covered Persons shall receive this training within 60 days after the beginning of their employment or becoming Relevant Covered Persons, or within 120 days after the Effective Date, whichever is later.

After receiving the initial Specific Training described in this section, each Relevant Covered Person shall receive at least 2 hours of Specific Training, in addition to the General Training, in each subsequent Reporting Period.

3. Board Member Training. Within 120 days after the Effective Date, LHC shall provide at least two hours of training to each member of the Board of Directors, in addition to the General Training. This training shall address the responsibilities of board members and corporate governance.

New members of the Board of Directors shall receive the Board Member Training described above within 30 days after becoming a member or within 120 days after the Effective Date, whichever is later.

4. Certification. Each individual who is required to attend training shall certify, in writing or in electronic form that he or she has received the required training. The certification shall specify the type of training received and the date received. The Compliance Officer (or designee) shall retain the certifications, along with all course materials.

5. Qualifications of Trainer. Persons providing the training shall be knowledgeable about the subject area.

6. Update of Training. LHC shall review the training annually, and, where appropriate, update the training to reflect changes in Federal health care program requirements, any issues discovered during internal audits or the Claims Review, and any other relevant information.

7. Computer-based Training. LHC may provide the training required under this CIA through appropriate computer-based training approaches. LHC shall make available appropriately qualified and knowledgeable staff or trainers to answer questions or provide additional information to the individuals receiving such training.

D. Review Procedures

1. General Description

Engagement of Independent Review Organization. Within 90 days after the Effective Date, LHC shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform the reviews listed in this Section III.D. The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference.

Retention of Records. The IRO and LHC shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports (those exchanged between the IRO and LHC) related to the reviews.

2. IRO Review. The IRO Review shall consist of three components:

Selection of LHC Facilities to be Reviewed. LHC shall provide the OIG and the IRO with information for each LHC home health facility in order for the IRO to select facilities for review, as outlined in Appendix B.

Internal Compliance Audit Review. The IRO shall review a sample of LHC’s Internal Compliance Audits of its home health facilities (as defined in Appendix B, which is incorporated by reference) to confirm that any corrective

actions recommended as a result of such audits have been, or are in the process of being, implemented (Internal Compliance Audit Review) and shall prepare an Internal Compliance Audit Review Report, as outlined in Appendix B, Section A.3 to this CIA.

Claims Review. The IRO shall review LHC’s claims submitted to the Federal health care programs for compliance with the homebound status and the medical necessity requirements for the home health services furnished (Claims Review) and shall prepare a Claims Review Report, as outlined in Appendix B to this CIA.

4. Unallowable Cost Review. For the first Reporting Period, the IRO shall conduct a review of LHC’s compliance with the unallowable cost provisions of the Settlement Agreement. The IRO shall determine whether LHC has complied with its obligations not to charge to, or otherwise seek payment from, federal or state payors for unallowable costs (as defined in the Settlement Agreement) and its obligation to identify to applicable federal or state payors any unallowable costs included in payments previously sought from the United States, or any state Medicaid program. This unallowable cost analysis shall include, but not be limited to, payments sought in any cost reports, cost statements, information reports, or payment requests already submitted by LHC or any affiliates. To the extent that such cost reports, cost statements, information reports, or payment requests, even if already settled, have been adjusted to account for the effect of the inclusion of the unallowable costs, the IRO shall determine if such adjustments were proper. In making this determination, the IRO may need to review cost reports and/or financial statements from the year in which the Settlement Agreement was executed, as well as from previous years.

5. Unallowable Cost Review Report. The IRO shall prepare a report based upon the Unallowable Cost Review performed (Unallowable Cost Review Report). The Unallowable Cost Review Report shall include the IRO’s findings and supporting rationale regarding the Unallowable Cost Review and whether LHC has complied with its obligation not to charge to, or otherwise seek payment from, federal or state payors for unallowable costs (as defined in the Settlement Agreement) and its obligation to identify to applicable federal or state payors any unallowable costs included in payments previously sought from such payor.

6. Validation Review. In the event OIG has reason to believe that: (a) LHC’s Internal Compliance Audit Review, Claims Review or Unallowable Cost Review fails to conform to the requirements of this CIA; or (b) the IRO’s findings or Internal Compliance Audit Review or Claims Review or Unallowable Cost Review

results are inaccurate, OIG may, at its sole discretion, conduct its own review to determine whether the Internal Compliance Audit Review, Claims Review or Unallowable Cost Review complied with the requirements of the CIA and/or the findings or Claims Review or Unallowable Cost Review results are inaccurate (Validation Review). LHC shall pay for the reasonable cost of any such review performed by OIG or any of its designated agents. Any Validation Review of Reports submitted as part of LHC’s final Annual Report shall be initiated no later than one year after LHC’s final submission (as described in Section II) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify LHC of its intent to do so and provide a written explanation of why OIG believes such a review is necessary. To resolve any concerns raised by OIG, LHC may request a meeting with OIG to: (a) discuss the results of any Internal Compliance Audit, Claims Review or Unallowable Cost Review submissions or findings; (b) present any additional information to clarify the results of the Internal Compliance Audit, Claims Review or Unallowable Cost Review or to correct the inaccuracy of the Internal Compliance Audit, Claims Review or Unallowable Cost Review; and/or (c) propose alternatives to the proposed Validation Review. LHC agrees to provide any additional information as may be requested by OIG under this Section III.D.5 in an expedited manner. OIG will attempt in good faith to resolve any Internal Compliance Audit, Claims Review or Unallowable Cost Review issues with LHC prior to conducting a Validation Review. However, the final determination as to whether or not to proceed with a Validation Review shall be made at the sole discretion of OIG.

7. Independence and Objectivity Certification. The IRO shall include in its report(s) to LHC a certification that the IRO has (a) evaluated its professional independence and objectivity with respect to the reviews conducted under this Section III.D and (b) concluded that it is, in fact, independent and objective, in accordance with the requirements specified in Appendix A to this CIA.

E. Disclosure Program

LHC shall maintain its Disclosure Program which includes a toll-free compliance telephone line that enables individuals to disclose, to the Compliance Officer, any identified issues or questions associated with LHC’s policies, conduct, practices, or procedures with respect to a Federal health care program believed by the individual to be a potential violation of criminal, civil, or administrative law. LHC shall appropriately publicize the existence of this hotline through periodic communications to employees and by posting the information in prominent common areas.

LHC shall emphasize the Disclosure Program’s nonretribution, nonretaliation policy, and shall include a reporting mechanism for anonymous communications for

which appropriate confidentiality shall be maintained. Upon receipt of a disclosure, the Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that he or she has obtained all of the information necessary to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, LHC shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.

The Compliance Officer (or designee) shall maintain a disclosure log, which shall include a record and summary of each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews.

F. Ineligible Persons

1. Definitions. For purposes of this CIA:

an “Ineligible Person” shall include an individual or entity who:

i. is currently excluded, debarred, suspended, or otherwise ineligible to participate in the Federal health care programs or in Federal procurement or nonprocurement programs; or

ii. has been convicted of a criminal offense that falls within the scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or otherwise declared ineligible.

“Exclusion Lists” include:

i. the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at xxxx://xxx.xxx.xxx.xxx); and

ii. the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at xxxx://xxx.xxxx.xxx).

2. Screening Requirements. LHC shall ensure that all prospective and current Covered Persons are not Ineligible Persons, by implementing the following screening requirements:

LHC shall screen all prospective Covered Persons against the Exclusion Lists prior to engaging their services and, as part of the hiring or contracting process, shall require such Covered Persons to disclose whether they are Ineligible Persons.

LHC shall screen all Covered Persons against the Exclusion Lists within 120 days after the Effective Date and on an annual basis thereafter.

LHC shall maintain its policy requiring all Covered Persons to disclose immediately any debarment, exclusion, suspension, or other event that makes that person an Ineligible Person.

Nothing in Section III.F affects LHC’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by excluded persons. LHC understands that items or services furnished by excluded persons are not payable by Federal health care programs and that LHC may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether LHC meets the requirements of Section III.F.

3. Removal Requirement. If LHC has actual notice that a Covered Person has become an Ineligible Person, LHC shall remove such Covered Person from responsibility for, or involvement with, LHC’s business operations related to the Federal health care programs and shall remove such Covered Person from any position for which the Covered Person’s compensation or the items or services furnished, ordered, or prescribed by the Covered Person are paid in whole or part, directly or indirectly, by Federal health care programs or otherwise with Federal funds at least until such time as the Covered Person is reinstated into participation in the Federal health care programs.

4. Pending Charges and Proposed Exclusions. If LHC has actual notice that a Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s employment or contract term, LHC shall take all appropriate actions to ensure that the responsibilities of that Covered Person have not and shall not

adversely affect the quality of care rendered to any beneficiary, patient, or resident, or any claims submitted to any Federal health care program.

G. Notification of Government Investigation or Legal Proceedings

Within 30 days after discovery, LHC shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to LHC conducted or brought by a governmental entity or its agents involving an allegation that LHC has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. LHC shall also provide written notice to OIG within 30 days after the resolution of the matter, and shall provide OIG with a description of the findings and/or results of the investigation or proceedings, if any.

H. Repayment of Overpayments

1. Definition of Overpayments. For purposes of this CIA, an “Overpayment” shall mean the amount of money LHC has received in excess of the amount due and payable under any Federal health care program requirements.

2. Repayment of Overpayments

If, at any time, LHC identifies or learns of any Overpayment, LHC will repay the Overpayment to the appropriate payor (e.g., Medicare fiscal intermediary or carrier) within 30 days after identification of the Overpayment and take remedial steps within 30 days after identification (or such additional time as may be agreed to by the payor) to correct the problem, including preventing the underlying problem and the Overpayment from recurring. If not yet quantified, within 30 days after identification, LHC shall notify the payor of its efforts to quantify the Overpayment amount along with a schedule of when such work is expected to be completed. Notification and repayment to the payor shall be done in accordance with the payor’s policies.

Notwithstanding the above, notification and repayment of any Overpayment amount that routinely is reconciled or adjusted pursuant to policies and procedures established

by the payor should be handled in accordance with such policies and procedures.

I. Reportable Events

1. Definition of Reportable Event. For purposes of this CIA, a “Reportable Event” means anything that involves:

a substantial Overpayment;

a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program for which penalties or exclusion may be authorized;

the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.F.1.a; or

the filing of a bankruptcy petition by LHC.

A Reportable Event may be the result of an isolated event or a series of occurrences.

2. Reporting of Reportable Events. If LHC determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, LHC shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3. Reportable Events under Section III.I.1.a. For Reportable Events under Section III.I.1.a, the report to OIG shall be made at the same time as the repayment to the payor required in Section III.H, and shall include:

a copy of the notification and repayment to the payor required in Section III.H.2;

a description of the steps taken by LHC to identify and quantify the Overpayment;

a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program authorities implicated;

a description of LHC’s actions taken to correct the Reportable Event; and

any further steps LHC plans to take to address the Reportable Event and prevent it from recurring.

4. Reportable Events under Section III.I.1.b and c. For Reportable Events under Section III.I.1.b and III.I.1.c, the report to OIG shall include:

a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program authorities implicated;

a description of LHC’s actions taken to correct the Reportable Event;

any further steps LHC plans to take to address the Reportable Event and prevent it from recurring; and

if the Reportable Event has resulted in an Overpayment, a description of the steps taken by LHC to identify and quantify the Overpayment.

5. Reportable Events under Section III.I.1.d. For Reportable Events under Section III.I.1.d, the report to the OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program authorities implicated.

6. Reportable Events Involving the Xxxxx Law. Notwithstanding the reporting requirements outlined above, any Reportable Event that involves only a probable violation of section 1877 of the Social Security Act, 42 U.S.C. §1395nn (the Xxxxx Law) should be submitted by LHC to the Centers for Medicare & Medicaid Services (CMS) through the self-referral disclosure protocol (SRDP), with a copy to the OIG. The requirements of Section III.H.2 that require repayment to the payor of any identified Overpayment within 30 days shall not apply to any Overpayment that may result from a probable violation of only the Xxxxx Law that is disclosed to CMS pursuant to the SRDP.

IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

A. Change or Closure of Unit or Location

In the event that, after the Effective Date, LHC changes home health locations or closes a home health business unit or home health location related to the furnishing of items or services that may be reimbursed by Federal health care programs, LHC shall notify OIG of this fact as soon as possible, but no later than within 30 days after the date of change or closure of the location.

B. Purchase or Establishment of New Unit or Location

In the event that, after the Effective Date, LHC purchases or establishes a new business unit or location related to the furnishing of items or services that may be reimbursed by Federal health care programs, LHC shall notify OIG at least 30 days after such purchase or the operation of such new business unit or location. This notification shall include the address of the new business unit or location, phone number, fax number, the location’s Medicare and state Medicaid program provider number and/or supplier number(s); and the name and address of each Medicare and state Medicaid program contractor to which LHC currently submits claims. Each new business unit or location and all Covered Persons at each new business unit or home health location shall be subject to the applicable requirements of this CIA.

C. Sale of Unit or Location

In the event that, after the Effective Date, LHC proposes to sell any or all of its business units or locations that are subject to this CIA, LHC shall notify OIG of the proposed sale at least 30 days prior to the sale of such business unit or location, if possible, or no later than 30 days after the sale. This notification shall include a description of the business unit or location to be sold or sold, a brief description of the terms of the sale, and the name and contact information of the prospective purchaser. This CIA shall be binding on the purchaser of such business unit or location, unless otherwise determined and agreed to in writing by the OIG.

V. IMPLEMENTATION AND ANNUAL REPORTS

A. Implementation Report

Within 120 days after the Effective Date, LHC shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:

1. the name, address, phone number, and position description of the Compliance Officer required by Section III.A, and a summary of other noncompliance job responsibilities the Compliance Officer may have;

2. the names and positions of the members of the Compliance Committee required by Section III.A;

3. a copy of LHC’s Code of Conduct and Ethics required by

Section III.B.1;

4. the number of individuals required to complete the Code of Conduct and Ethics certification required by Section III.B.1, the percentage of individuals who have completed such certification, and an explanation of any exceptions (the documentation supporting this information shall be available to OIG upon request);

5. a summary of all Policies and Procedures required by Section III.B (copies of the Policies and Procedures shall be made available to OIG upon request);

6. the following information regarding each type of training required by Section III.C:

description of such training, including a summary of the topics covered, the length of sessions, and a schedule of training sessions; and

the number of individuals required to be trained, percentage of individuals actually trained, and an explanation of any exceptions.

A copy of all training materials and the documentation supporting this information shall be made available to OIG upon request.

7. a description of the Disclosure Program required by Section III.E;

8. the following information regarding the IRO(s): (a) identity, address, and phone number; (b) a copy of the engagement letter; (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A to this CIA; (d) a summary and description of any and all current and prior engagements and agreements between LHC and the IRO; and (e) a certification from the IRO regarding its professional independence and objectivity with respect to LHC;

9. a description of the process by which LHC fulfills the requirements of Section III.F regarding Ineligible Persons;

10. a list of all of LHC’s locations (including mailing addresses and identification of home health facilities); the corresponding name under which each location is doing business; the corresponding phone numbers and fax numbers; each location’s Medicare and state Medicaid program provider number and/or supplier number(s); and the name and address of each Medicare and state Medicaid program contractor to which LHC currently submits claims;

11.a description of LHC’s corporate structure, including identification of any parent and sister companies, subsidiaries, and their respective lines of business; and

12.the certifications required by Section V.C.

B. Annual Reports

LHC shall submit to OIG annually a report with respect to the status of, and findings regarding, LHC’s compliance activities for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum:

1. any change in the identity, position description, or other noncompliance job responsibilities of the Compliance Officer and any change in the membership of the Compliance Committee described in Section III.A;

2. the Board resolution required by Section III.A.3;

3. a summary of any changes or amendments to LHC’s Code of Conduct and Ethics required by Section III.B.1 and the reason for such changes, along with a copy of the revised Code of Conduct and Ethics;

5. a summary of any significant changes or amendments to the Policies and Procedures required by Section III.B and the reasons for such changes (e.g., change in contractor policy);

6. the following information regarding each type of training required by Section III.C:

a description of the initial and annual training, including a summary of the topics covered, the length of sessions, and a schedule of training sessions; and

the number of individuals required to complete the initial and annual training, the percentage of individuals who actually completed the initial and annual training, and an explanation of any exceptions.

A copy of all training materials and the documentation to support this information shall be made available to OIG upon request.

7. a complete copy of all reports prepared pursuant to Section III.D, along with a copy of the IRO’s engagement letter;

8. LHC’s response to the reports prepared pursuant to Section III.D, along with corrective action plan(s) related to any issues raised by the reports;

9. a summary and description of any and all current and prior engagements and agreements between LHC and the IRO (if different from what was submitted as part of the Implementation Report);

10. a certification from the IRO regarding its professional independence and objectivity with respect to LHC;

11. a summary of Reportable Events (as defined in Section III.I) identified during the Reporting Period and the status of any corrective action relating to all such Reportable Events;

12. a report of the aggregate Overpayments that have been returned to the Federal health care programs. Overpayment amounts shall be broken down into the following categories: Medicare, Medicaid (report each applicable state separately, if applicable), and other Federal health care programs. Overpayment amounts that are routinely reconciled or adjusted pursuant to policies and procedures established by the payor do not need to be included in this aggregate Overpayment report;

13. a summary of the disclosures in the disclosure log required by Section III.E that relate to Federal health care programs (the complete disclosure log shall be made available to OIG upon request);

14. any changes to the process by which LHC fulfills the requirements of Section III.F regarding Ineligible Persons;

15. a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Section III.G. The summary shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding;

16. a description of all changes to the most recently provided list of LHC’s home health locations (including addresses) as required by Section V.A.10; the corresponding name under which each home health location is doing business; the corresponding phone numbers and fax numbers; each home health location’s Medicare and state Medicaid program provider number(s) and/or supplier number(s); and the name and address of each Medicare and state Medicaid program contractor to which LHC currently submits claims; and

17. the certifications required by Section V.C.

The first Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.

C. Certifications

The Implementation Report and each Annual Report shall include a certification by the Compliance Officer that:

1. to the best of his or her knowledge, except as otherwise described in the report, LHC is in compliance with all of the requirements of this CIA;

2. he or she has reviewed the report and has made reasonable inquiry regarding its content and believes that the information in the report is accurate and truthful; and

3. to the best of his or her knowledge, LHC has complied with its obligations under the Settlement Agreement: (a) not to resubmit to any Federal health care program payors any previously denied claims related to the Covered Conduct addressed in the Settlement Agreement, and not to appeal any such denials

of claims; (b) not to charge to or otherwise seek payment from federal or state payors for unallowable costs (as defined in the Settlement Agreement); and (c) to identify and adjust any past charges or claims for unallowable costs.

D. Designation of Information

LHC shall clearly identify any portions of its submissions that it believes are trade secrets, or information that is commercial or financial and privileged or confidential, and therefore potentially exempt from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. LHC shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.

VI. NOTIFICATIONS AND SUBMISSION OF REPORTS

Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:

OIG:

Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General

U.S. Department of Health and Human Services Xxxxx Building, Room 5527

000 Xxxxxxxxxxxx Xxxxxx, X.X.

Washington, DC 20201

Telephone: 000.000.0000

Facsimile: 202.205.0604

LHC:

Xxxxxx X. Xxxxxxxx

Senior Vice President / Chief Compliance Officer 000 Xxxx Xxxxxxx Xxxx

Lafayette, LA 70503

Xxxx.Xxxxxxxx@XXXxxxxx.xxx

000-000-0000

Unless otherwise specified, all notifications and reports required by this CIA may be made by certified mail, overnight mail, hand delivery, or other means, provided that there is proof that such notification was received. For purposes of this requirement, internal facsimile confirmation sheets do not constitute proof of receipt. Upon request by OIG, LHC may be required to provide OIG with an electronic copy of each notification or report required by this CIA in searchable portable document format (pdf), in addition to a paper copy.

VII. OIG INSPECTION, AUDIT, AND REVIEW RIGHTS

In addition to any other rights OIG may have by statute, regulation, or contract, OIG or its duly authorized representative(s) may examine or request copies of LHC’s books, records, and other documents and supporting materials and/or conduct on-site reviews of any LHC locations for the purpose of verifying and evaluating: (a) LHC’s compliance with the terms of this CIA; and (b) LHC’s

compliance with the requirements of the Federal health care programs in which it participates. The documentation described above shall be made available by LHC to OIG or its duly authorized representative(s) at all reasonable times for inspection, audit, or reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized representative(s) may interview any of LHC’s employees, contractors, or agents who consent to be interviewed at the individual’s place of business during normal business hours or at such other place and time as may be mutually agreed upon between the individual and OIG. LHC shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon XXX’s request. LHC’s employees may elect to be interviewed with or without a representative of LHC present.

VIII. DOCUMENT AND RECORD RETENTION

LHC shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs and to compliance with this CIA for 6 years (or longer if otherwise required by law) from the Effective Date.

IX. DISCLOSURES

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify LHC prior to any release by OIG of information submitted by LHC pursuant to its obligations under this CIA and identified upon submission by LHC as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, LHC shall have the rights set forth at 45 C.F.R. § 5.65(d).

X. BREACH AND DEFAULT PROVISIONS

LHC is expected to fully and timely comply with all of its CIA obligations.

A. Stipulated Penalties for Failure to Comply with Certain Obligations

As a contractual remedy, LHC and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as “Stipulated Penalties”) in accordance with the following provisions.

1. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day LHC fails to establish and implement any of the following obligations as described in Section III:

a Compliance Officer;

a Compliance Committee;

the Board of Directors compliance obligations;

a written Code of Conduct and Ethics;

written Policies and Procedures;

the training of Covered Persons, Relevant Covered Persons, and Board Members;

a Disclosure Program;

Ineligible Persons screening and removal requirements;

notification of Government investigations or legal proceedings; and

reporting of Reportable Events.

2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day LHC fails to engage and use an IRO, as required in Section III.D, Appendix A, and Appendix B.

3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day LHC fails to submit the Implementation Report or any Annual Reports to OIG in accordance with the requirements of Section V by the deadlines for submission.

4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day LHC fails to submit any Internal Audit Review, Claims Review Report or Unallowable Cost Review Report in accordance with the requirements of Section III.D and Appendix B.

5. A Stipulated Penalty of $1,500 for each day LHC fails to grant access as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date LHC fails to grant access.)

6. A Stipulated Penalty of $5,000 for each false certification submitted by or on behalf of LHC as part of its Implementation Report, Annual Report, additional documentation to a report (as requested by the OIG), or otherwise required by this CIA.

7. A Stipulated Penalty of $1,000 for each day LHC fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to LHC stating the specific grounds for its determination that LHC has failed to comply fully and adequately with the CIA obligation(s) at issue and steps LHC shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days after LHC receives this notice from OIG of the failure to comply.) A Stipulated Penalty as described in this Subsection shall not be demanded for any violation for which OIG has sought a Stipulated Penalty under Subsections 1- 6 of this Section.

B. Timely Written Requests for Extensions

LHC may, in advance of the due date, submit a timely written request for an extension of time to perform any act or file any notification or report required by this CIA. Notwithstanding any other provision in this Section, if OIG grants the timely written request with respect to an act, notification, or report, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until one day after LHC fails to meet the revised deadline set by OIG. Notwithstanding any other provision in this Section, if OIG denies such a timely written request, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until three business days after LHC receives OIG’s written denial of such request or the original due date, whichever is later. A “timely written request” is defined as a request in writing received by OIG at least five business days prior to the date by which any act is due to be performed or any notification or report is due to be filed.

C. Payment of Stipulated Penalties

1. Demand Letter. Upon a finding that LHC has failed to comply with any of the obligations described in Section X.A and after determining that Stipulated Penalties are appropriate, OIG shall notify LHC of: (a) LHC’s failure to comply; and (b) OIG’s exercise of its contractual right to demand payment of the Stipulated Penalties. (This notification shall be referred to as the “Demand Letter.”)

2. Response to Demand Letter. Within 10 days after the receipt of the Demand Letter, LHC shall either: (a) cure the breach to OIG’s satisfaction and pay the applicable Stipulated Penalties or (b) request a hearing before an HHS administrative law judge (ALJ) to dispute OIG’s determination of noncompliance, pursuant to the agreed upon provisions set forth below in Section X.E. In the event LHC elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until LHC cures, to OIG’s satisfaction, the alleged breach in dispute. Failure to respond to the Demand Letter in one of these two manners within the allowed time period shall be considered a material breach of this CIA and shall be grounds for exclusion under Section X.D.

3. Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.

4.Independence from Material Breach Determination. Except as set forth in Section X.D.1.c, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that LHC has materially breached this CIA, which decision shall be made at OIG’s discretion and shall be governed by the provisions in Section X.D, below.

D. Exclusion for Material Breach of this CIA

1. Definition of Material Breach. A material breach of this CIA

means:

a repeated or flagrant violation of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A;

a failure by LHC to report a Reportable Event, take corrective action, and make the appropriate refunds, as required in Section III.I;

a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C; or

a failure to engage and use an IRO in accordance with Section III.D, Appendix A, and Appendix B.

2. Notice of Material Breach and Intent to Exclude. The parties agree that a material breach of this CIA by LHC constitutes an independent basis for

LHC’s exclusion from participation in the Federal health care programs. Upon a determination by OIG that LHC has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify LHC of: (a) LHC’s material breach; and (b) OIG’s intent to exercise its contractual right to impose exclusion. (This notification shall be referred to as the “Notice of Material Breach and Intent to Exclude.”)

3. Opportunity to Cure. LHC shall have 30 days from the date of

receipt of the Notice of Material Breach and Intent to Exclude to demonstrate to OIG’s satisfaction that:

LHC is in compliance with the obligations of the CIA cited by OIG as being the basis for the material breach;

the alleged material breach has been cured; or

the alleged material breach cannot be cured within the 30 day period but that: (i) LHC has begun to take action to cure the material breach; (ii) LHC is pursuing such action with due diligence; and (iii) LHC has provided to OIG a reasonable timetable for curing the material breach.

4. Exclusion Letter. If, at the conclusion of the 30 day period, LHC fails to satisfy the requirements of Section X.D.3, OIG may exclude LHC from participation in the Federal health care programs. OIG shall notify LHC in writing of its determination to exclude LHC. (This letter shall be referred to as the “Exclusion Letter.”) Subject to the Dispute Resolution provisions in Section X.E, below, the exclusion shall go into effect 30 days after the date of LHC’s receipt of the Exclusion Letter. The exclusion shall have national effect and shall also apply to all other Federal procurement and nonprocurement programs. Reinstatement to program participation is not automatic. After the end of the period of exclusion, LHC may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

E. Dispute Resolution

1. Review Rights. Upon OIG’s delivery to LHC of its Demand Letter or of its Exclusion Letter, and as an agreed-upon contractual remedy for the resolution of disputes arising under this CIA, LHC shall be afforded certain review rights comparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated Penalties or exclusion sought pursuant to this CIA. Specifically, OIG’s determination to demand payment of Stipulated Penalties or to seek exclusion shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS Departmental Appeals Board (DAB), in a

manner consistent with the provisions in 42 C.F.R. § 1005.2-1005.21. Notwithstanding the language in 42 C.F.R. § 1005.2(c), the request for a hearing involving Stipulated Penalties shall be made within 10 days after receipt of the Demand Letter and the request for a hearing involving exclusion shall be made within 25 days after receipt of the Exclusion Letter.

2. Stipulated Penalties Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for Stipulated Penalties under this CIA shall be: (a) whether LHC was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. LHC shall have the burden of proving its full and timely compliance and the steps taken to cure the noncompliance, if any. OIG shall not have the right to appeal to the DAB an adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with OIG with regard to a finding of a breach of this CIA and orders LHC to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless LHC requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.

3. Exclusion Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be:

whether LHC was in material breach of this CIA;

whether such breach was continuing on the date of the Exclusion Letter; and

whether the alleged material breach could not have been cured within the 30-day period, but that: (i) LHC had begun to take action to cure the material breach within that period; (ii) LHC has pursued and is pursuing such action with due diligence; and (iii) LHC provided to OIG within that period a reasonable timetable for curing the material breach and LHC has followed the timetable.

For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for LHC, only after a DAB decision in favor of OIG. LHC’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude LHC upon the issuance of an ALJ’s decision in favor of OIG. If the ALJ sustains the determination of OIG and determines

that exclusion is authorized, such exclusion shall take effect 20 days after the ALJ issues such a decision, notwithstanding that LHC may request review of the ALJ decision by the DAB. If the DAB finds in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take effect 20 days after the DAB decision. LHC shall waive its right to any notice of such an exclusion if a decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB finds in favor of LHC, LHC shall be reinstated effective on the date of the original exclusion.

4. Finality of Decision. The review by an ALJ or DAB provided for above shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s decision if not appealed) shall be considered final for all purposes under this CIA.

XI. EFFECTIVE AND BINDING AGREEMENT

LHC and OIG agree as follows:

A. This CIA shall be binding on the successors, assigns, and transferees of LHC.

B. This CIA shall become final and binding on the date the final signature is obtained on the CIA.

C. This CIA constitutes the complete agreement between the parties and may not be amended except by written consent of the parties to this CIA.

D. OIG may agree to a suspension of LHC’s obligations under this CIA based on a certification by LHC that it is no longer providing health care items or services that will be billed to any Federal health care program and that it does not have any ownership or control interest, as defined in 42 U.S.C. §1320a-3, in any entity that bills any Federal health care program. If LHC is relieved of its CIA obligations, LHC will be required to notify OIG in writing at least 30 days in advance if LHC plans to resume providing health care items or services that are billed to any Federal health care program or to obtain an ownership or control interest in any entity that bills any Federal health care program. At such time, OIG shall evaluate whether the CIA will be reactivated or modified.

E. The undersigned LHC signatories represent and warrant that they are authorized to execute this CIA. The undersigned OIG signatory represents that he is signing this CIA in his official capacity and that he is authorized to execute this CIA.

F. This CIA may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same CIA. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this CIA.

ON BEHALF OF LHC GROUP, INC.

/s/ XXXXX X. NOVEMBER 9/29/11

XXXXX X. NOVEMBER DATE

Executive VP/General Counsel

LHC Group, Inc.

/s/ XXXXXXX X. XXXXXX 9/29/11

XXXXXXX X. XXXXXX DATE

Xxxxxx & Bird LLP

Counsel for LHC Group, Inc.

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

/s/ XXXXXXX X. XXXXXX 9/29/11

XXXXXXX X. XXXXXX

Assistance Inspector General for Legal Affairs DATE

Office of Inspector General

U. S. Department of Health and Human Services

/s/ XXXXXXX XXXXXXXXXXXX 9/29/11

XXXXXXX XXXXXXXXXXXX

Associate Counsel DATE

Office of Inspector General

U. S. Department of Health and Human Services

APPENDIX A

INDEPENDENT REVIEW ORGANIZATION

This Appendix contains the requirements relating to the Independent Review Organization (IRO) required by Section III.D of the CIA.

A. IRO Engagement

1. LHC shall engage an IRO that possesses the qualifications set forth in Paragraph B, below, to perform the responsibilities in Paragraph C, below. The IRO shall conduct the review in a professionally independent and objective fashion, as set forth in Paragraph D. Within 30 days after OIG receives the information identified in Section V.A.8 of the CIA or any additional information submitted by LHC in response to a request by OIG, whichever is later, OIG will notify LHC if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, LHC may continue to engage the IRO.

2. If LHC engages a new IRO during the term of the CIA, this IRO shall also meet the requirements of this Appendix. If a new IRO is engaged, LHC shall submit the information identified in Section V.A.8 of the CIA to OIG within 30 days of engagement of the IRO. Within 30 days after OIG receives this information or any additional information submitted by LHC at the request of OIG, whichever is later, OIG will notify LHC if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, LHC may continue to engage the IRO.

B. IRO Qualifications

The IRO shall:

1. assign individuals to conduct the Internal Compliance Audit Review, Claims Review and Unallowable Cost Review who have expertise in the documentation requirements for home bound status and medical necessity, billing, coding, reporting, and other requirements of home health care and in the general requirements of the Federal health care program(s) from which LHC seeks reimbursement;

2. assign individuals to design and select the Claims Review sample who are knowledgeable about the appropriate statistical sampling techniques;

3. assign individuals to conduct the Claims Review portion of the IRO Review who have relevant clinical credentials and expertise in the documentation requirements for homebound status and medical necessity and who have maintained these clinical credentials (e.g., completed applicable continuing education requirements); and

4. have sufficient staff and resources to conduct the reviews required by the CIA on a timely basis.

C. IRO Responsibilities

The IRO shall:

1. perform each Internal Compliance Audit Review, Claims Review and Unallowable Cost review in accordance with the specific requirements of the CIA;

2. follow all applicable Medicare rules and reimbursement guidelines in making assessments in the Claims Review;

3. if in doubt of the application of a particular Medicare policy or regulation, request clarification from the appropriate authority (e.g., fiscal intermediary or carrier);

4. respond to all OIG inquires in a prompt, objective, and factual manner; and

5. prepare timely, clear, well-written reports that include all the information required by Appendix B to the CIA.

D. IRO Independence and Objectivity

The IRO must perform the IRO Review in a professionally independent and objective fashion, as defined in the Government Auditing Standards (July 2007 Revision) issued by the United States Government Accountability Office.

E. IRO Removal/Termination

1. Provider and IRO. If LHC terminates its IRO or if the IRO withdraws from the engagement during the term of the CIA, LHC must submit a notice explaining its reasons for termination or the reason for withdrawal to OIG no later than 30 days after termination or withdrawal. LHC must engage a new IRO in accordance with Paragraph A of this Appendix and within 60 days of termination or withdrawal of the prior IRO or at least 60 days prior to the end of the current Reporting Period, whichever is earlier.

2. OIG Removal of IRO. In the event OIG has reason to believe the IRO does not possess the qualifications described in Paragraph B, is not independent and objective as set forth in Paragraph D, or has failed to carry out its responsibilities as

described in Paragraph C, OIG may, at its sole discretion, require LHC to engage a new IRO in accordance with Paragraph A of this Appendix. LHC must engage a new IRO within 60 days of termination of the prior IRO or at least 60 days prior to the end of the current Reporting Period, whichever is earlier.

Prior to requiring LHC to engage a new IRO, OIG shall notify LHC of its intent to do so and provide a written explanation of why OIG believes such a step is necessary. To resolve any concerns raised by OIG, LHC may present additional information regarding the IRO’s qualifications, independence or performance of its responsibilities. OIG will attempt in good faith to resolve any differences regarding the IRO with LHC prior to requiring LHC to terminate the IRO. However, the final determination as to whether or not to require LHC to engage a new IRO shall be made at the sole discretion of OIG.

Appendix B

IRO Review

A. IRO Review. The IRO Review shall consist of three components: 1) Selection of Facilities; 2) an Internal Compliance Audit Review; and 3) a Claims Review.

The IRO shall perform the IRO Review annually to cover each of the five Reporting Periods. The IRO shall perform all components of each IRO Review.

1. Definitions. For the purposes of the IRO Review, the following definitions shall be used:

Overpayment: The amount of money LHC has received in excess of the amount due and payable under any Federal health care program requirements.

Paid Claim: A claim submitted by LHC and for which LHC has received reimbursement from the Medicare program.

Population: The Population shall be defined as all Paid Claims during the 12-month period covered by the Claims Review.

Error Rate: The Error Rate shall be the percentage of net Overpayments identified in the sample. The net Overpayments shall be calculated by subtracting all underpayments identified in the sample from all gross Overpayments identified in the sample. (Note: Any potential cost settlements or other supplemental payments should not be included in the net Overpayment calculation. Rather, only underpayments identified as part of the Discovery Sample shall be included as part of the net Overpayment calculation.)

The Error Rate is calculated by dividing the net Overpayment identified in the sample by the total dollar amount associated with the Paid Claims in the sample.

Internal Compliance Audit: LHC’s internal home health medical record compliance audits are conducted by the Compliance Department. LHC audits by provider number. Provider numbers may or may not be used by multiple home health facilities. The Compliance Department reviews at least

30 random closed and paid claims and associated medical records per provider number. Every LHC home health provider number undergoes an Internal Compliance Audit at least once every 24 months.

2. Selection of LHC Facilities. At least 60 days prior to the end of each Reporting Period, LHC shall provide OIG with the following information for each LHC home health facility for the preceding 12 months:

a)	the name of the home health facility, its location (city, state), and its affiliated Medicare provider number(s);

b)	the total dollar amount of Paid Claims per home health facility;

c)	the Medicare payor mix per home health facility;

d)	if subject to an Internal Compliance Audit during the preceding 12 months, the date the Internal Compliance Audit was completed by the Compliance Department; and

e)	a list of those home health facilities not subject to an Internal Compliance Audit during the preceding 12 months.

3. Internal Compliance Audit Review. For each Reporting Period, from the list of home health facilities that were subject to an Internal Compliance Audit during the previous 12 months, the IRO shall select a random sample of 10 Internal Compliance Audits and conduct an independent review to determine whether LHC has appropriately implemented any suggestions, recommendations, or potential corrective actions identified in the Internal Compliance Audits.

4. Claims Review. At the end of each Reporting Period, the IRO shall select 10 home health facilities from the list described in section A.2.e of this Appendix, in the following manner. The IRO shall divide the facilities on the list into two groups:

(1) Group A shall include the 50 home health facilities with the highest total dollar amount of Paid Claims and the 50 home health facilities with the highest percentage of Medicare Revenues.

(2) Group B shall include all other home health facilities on the list.

The IRO shall randomly select eight home health facilities from Group A and two home health facilities from Group B. For each of these 10 home health facilities, the IRO will conduct a Claims Review as described below.

a. Discovery Sample. For each home health facility selected, the IRO shall randomly select and review a sample of 30 Paid Claims (Discovery Sample), resulting in a separate Discovery Sample for each home health facility. The Paid Claims shall be reviewed based on the supporting documentation available at each home health facility or under LHC’s control to determine whether the medical record documentation supports homebound status and medical necessity of the home health services furnished. If the Error Rate (as defined above) for the Discovery Sample for any home health facility is less than 5%, no additional sampling is required, nor is the Systems Review required. (Note: The guidelines listed above do not imply that this is an acceptable error rate. Accordingly, LHC should, as appropriate, further analyze any errors identified in the Discovery Sample. LHC recognizes that OIG or other HHS component, in its discretion and as authorized by statute, regulation, or other appropriate authority may also analyze or review Paid Claims included, or errors identified, in the Discovery Sample or any other segment of the universe.)

If the Error Rate for the Discovery Sample for any home health facility is 5% or greater, the IRO shall perform a Full Sample and a Systems Review for the applicable home health facility, as described below.

b. Full Sample. If necessary, as determined by procedures set forth in Section A.4a above, the IRO shall select an additional sample of Paid Claims from that home health facility (Full Sample) using commonly accepted sampling methods. The Full Sample shall be designed to: (1) estimate the actual Overpayment in the population with a 90% confidence level and with a maximum relative precision of 25% of the point estimate; and (2) conform with the Centers for Medicare and Medicaid Services’ statistical sampling for overpayment estimation guidelines. The Paid Claims selected for the Full Sample shall be reviewed based on supporting documentation available at LHC or under LHC’s control to determine whether the medical record documentation supports homebound status and the medical necessity of the home health services furnished. For purposes of calculating the size of the Full Sample, the Discovery Sample may serve as the probe sample, if statistically appropriate. Additionally, the IRO may use the Paid Claims sampled as part of the Discovery Sample, and the corresponding findings for those Paid Claims, as part of its Full Sample, if: (1) statistically appropriate and (2) the IRO selects the Full Sample Paid Claims using the seed number generated by the Discovery Sample. OIG, in its sole discretion, may refer the findings of the Full Sample

(and any related workpapers) received from LHC to the appropriate Federal health care program payor, including the Medicare contractor (e.g., carrier, fiscal intermediary, or DMERC), for appropriate follow-up by that payor.

c. Systems Review. If the Discovery Sample for any home health facility identifies an Error Rate of 5% or greater, LHC’s IRO shall also conduct a Systems Review for the applicable home health facility. The Systems Review shall consist of the following:

a review of LHC’s policies and processes for determining a patient’s home bound status and the medical necessity of home health care services furnished to the patient; and

ii.

for each claim in the Discovery Sample and Full Sample that resulted in an Overpayment, the IRO shall review the system(s) and process(es) that generated the claim and identify any problems or weaknesses that may have resulted in the identified Overpayments. The IRO shall provide its observations and recommendations on suggested improvements to the system(s) and the process(es) that generated the claim.

Other Requirements

Supplemental Materials. The IRO shall request all documentation and materials required for its review of the Paid Claims selected as part of each Discovery Sample or Full Sample (if applicable), and LHC shall furnish such documentation and materials to the IRO prior to the IRO initiating its review of each Discovery Sample or Full Sample (if applicable). If the IRO accepts any supplemental documentation or materials from LHC after the IRO has completed its initial review of each Discovery Sample or Full Sample (if applicable) (Supplemental Materials), the IRO shall identify in the Claims Review Report the Supplemental Materials, the date the Supplemental Materials were accepted, and the relative weight the IRO gave to the Supplemental Materials in its review. In addition, the IRO shall include a narrative in the Claims Review Report describing the process by which the Supplemental Materials were accepted and the IRO’s reasons for accepting the Supplemental Materials.

ii.

Paid Claims without Supporting Documentation. Any Paid Claim for which LHC cannot produce documentation sufficient to support the Paid Claim shall be considered an error and the reimbursement received by LHC for such Paid Claim, net of the reimbursement received by LHC for which it has supporting documentation, shall be deemed an Overpayment. Replacement sampling for Paid Claims with missing documentation is not permitted.

iii.

Use of First Samples Drawn. For the purposes of all samples (Discovery Sample(s) and Full Sample(s)) discussed in this Appendix, the Paid Claims selected in each first sample shall be used (i.e., it is not permissible to generate more than one list of random samples and then select one for use with the Discovery Sample or Full Sample).

Repayment of Identified Overpayments. LHC shall repay within 30 days any Overpayment(s) identified in any Discovery Sample or the Full Sample (if applicable), regardless of the Error Rate, to the appropriate payor and in accordance with payor refund policies. LHC shall make available to OIG all documentation that reflects the refund of the Overpayment(s) to the payor.

B. IRO Review Report. The IRO shall prepare an IRO Review Report for each Reporting Period. The IRO Review Report shall include both an Internal Compliance Audit Review Report and a Claims Review Report, as described below.

1. Internal Compliance Audit Review Report. The Internal Compliance Audit Review Report shall include: (1) a list of the home health facilities that were subject to an Internal Compliance Audit and that were subject to an IRO review, (2) for those home health facilities listed, a summary description of errors identified by LHC’s Compliance Department in the Internal Compliance Audit and the corrective action recommended by the Compliance Department, and (3) a narrative explanation of the IRO’s findings regarding whether LHC has implemented, or is in the process of implementing, corrective action in response to the findings of each Internal Compliance Audit conducted by LHC and reviewed by the IRO.

2. Claims Review Report. The following information shall be included in the Claims Review Report for each Discovery Sample and Full Sample (if applicable).

Claims Review Methodology

Claims Review Population. A description of the Population subject to the Claims Review.

ii.

Claims Review Objective. A clear statement of the objective intended to be achieved by the Claims Review.

iii.

Source of Data. A description of the specific documentation relied upon by the IRO when performing the Claims Review (e.g., medical records, physician orders, certificates of medical necessity, requisition forms, local medical review policies (including title and policy number), CMS program memoranda (including title and issuance number), Medicare carrier or intermediary manual or bulletins (including issue and date), other policies, regulations, or directives).

iv.

Review Protocol. A narrative description of how the Claims Review was conducted and what was evaluated.

Supplemental Materials. A description of any Supplemental Materials as required by A.4.d.i, above.

Statistical Sampling Documentation

A copy of the printout of the random numbers generated by the “Random Numbers” function of the statistical sampling software used by the IRO.

ii.

A copy of the statistical software printout(s) estimating how many Paid Claims are to be included in the Full Sample, if applicable.

iii.

A description or identification of the statistical sampling software package used to select the sample and determine the Full Sample size, if applicable.

Claims Review Findings

Narrative Results

A narrative explanation of the IRO’s findings and supporting rationale (including reasons for errors, patterns noted, etc.)

regarding the Claims Review, including the results of each Discovery Sample, and the results of the Full Sample (if any).

ii. Quantitative Results

I. Total number and percentage of instances in which the IRO determined that the Paid Claims submitted by LHC (Claim Submitted) differed from what should have been the correct claim (Correct Claim), regardless of the effect on the payment.

II. Total number and percentage of instances in which the Claim Submitted differed from the Correct Claim and in which such difference resulted in an Overpayment to LHC.

III. Total dollar amount of all Overpayments in the sample.

IV. Total dollar amount of Paid Claims included in the sample and the net Overpayment associated with the sample.

V. Error Rate in the sample.

VI. A spreadsheet of the Claims Review results that includes the following information for each Paid Claim: Federal health care program billed, beneficiary health insurance claim number, date of service, code submitted (e.g., DRG, CPT code, etc.), code reimbursed, allowed amount reimbursed by payor, correct allowed amount (as determined by the IRO), dollar difference between allowed amount reimbursed by payor and the correct allowed amount.

Recommendations. The IRO’s report shall include any recommendations for improvements to LHC’s processes for determining and documenting homebound status and for establishing the medical necessity of home health care services.

3. Systems Review Findings. The IRO shall prepare a Systems Review Report based on the Systems Review performed (if applicable) that shall include the

IRO’s observations, findings, and recommendations regarding the strengths and weaknesses in LHC’s processes for determining and documenting homebound status and for establishing the medical necessity of home health care services.

4. Credentials. The names and credentials of the individuals who: (1) designed the statistical sampling procedures and the review methodology utilized for the Internal Compliance Audit Review and the Claims Review and (2) performed the Internal Compliance Audit Review and the Claims Review.

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CORPORATE INTEGRITY AGREEMENT BETWEEN THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND LHC GROUP, INC.

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