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Home Health Agency Fights Back Against Hospital Based Patient Steering

April 11, 2020

American Home Healthcare System, Inc.; a free standing home health agency in Indiana; has sued Floyd Memorial Hospital and Baptist Healthcare System for violations of antitrust laws related to patients’ right to freedom of choice.  In a recent Memorandum Opinion and Order, the U.S. District Court refused to dismiss the case [American Home Healthcare Servs, Inc. v. Floyd Mem’l Hosp. and Health Servs, No. 4-17-cv-00089-TWP-DML, (S.D. on Mar. 5, 2018)].  In this case, American Home Healthcare claims that the Hospital engaged in tortious and anti-competitive conduct specifically intended to monopolize home health agency referrals from the Hospital to Floyd Home Health and to interfere with patients’ relationships with their existing home health providers.  Floyd Hospital in New Albany, Indiana, owns Floyd Home Health.  American is also a home health agency and is located in Jeffersonville, Indiana.  Both agencies operate in six identical counties.


According to the Court, when home health services are necessary, Medicare regulations require the Hospital to provide patients with a list of home health agencies that are Medicare-certified, available and that serve the geographic area in which patients reside.  According to the Court, home health agencies must request to be listed by the Hospital as available.  As part of the discharge planning process, the Hospital may not specify or limit the qualified providers that are available to patients and must inform patients of their freedom to choose among participating Medicare-certified home health agencies.



American claims that, although it is included on the list presented to patients, the hospital has built mechanisms into the discharge planning process that increase the likelihood that Floyd Home Health will receive the most patient referrals. Specifically, American claims that physicians who make home health referrals must go through an extra step to select any home health agency other than Floyd due to the fact that the only two choices on the computer drop-down menu are “Floyd” and “other.”  If patients want to use the “other” category, physicians have to go through an extra step to write down which agency patients chose.


American also claims that 64% of the Medicare patients discharged from the Hospital to home health agencies were referred to Floyd Home Health, while the remaining 30.2% of referrals were spread among six other home health agencies.  American says that in 2015 it received eleven referrals from the Hospital or 1.3% of Medicare patients discharged from the Hospital. American also says that many referrals received from the Hospital included patients with undesirable payor sources, such as the Medicaid