SNF owner billed Medicaid $2 million for unallowable, personal expenses, audit finds

A Tennessee nursing home owner allegedly billed Medicaid more than $2 million in non-allowable expenses, including hundreds of thousands of dollars on personal shopping trips and entertainment.

Kathleen Graves, owner of Mabry Healthcare & Rehabilitation in Gainesboro, TN, allegedly used $1.27 million of the Medicaid money on personal expenses unrelated to resident care between 2010 and 2014, according to an audit released Wednesday by the Tennessee Comptroller of the Treasury.

That total includes $176,619 spent on gift cards, $81,070 in personal legal expenses, $322,500 to support a business run by Graves' husband, and $258,381 spent at discount stores that included Wal-Mart. Thousands more of the Medicaid dollars went toward Graves' daughter's wedding and college tuition, personal florist expenses, and “western wear” purchased from horse supply stores, the audit found.

The audit also accused Mabry of charging higher room and board rates for Medicaid residents than those on private pay. The facility also allegedly charged residents for Medicaid-covered services and items such as haircuts and disposable diapers, and mismanaged resident trust funds.

State auditors have adjusted Mabry's reimbursement rates, and determined that the facility owes $1,243,724 to TennCare, the state's Medicaid program, along with $16,632 to residents.

The facility's management did not provide responses for inclusion in the audit, according to the state report. Nobody at Mabry was available to comment on the audit's findings, a staff member told McKnight's on Wednesday.

“It goes without saying that nursing homes should never claim personal expenses on a cost report,” said Comptroller Justin P. Wilson. “State and federal tax dollars serve their highest use when they benefit the patients and residents in these facilities.”