As a result of billing inappropriate claims to Medicare, the nation’s skilled nursing facilities (SNFs) erroneously received $1.5 billion from taxpayers in 2009, according to a report released Tuesday by the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS).

The report indicated that one-quarter of the claims filed in that period were billed in error, and that a majority of them were for ultra-high therapy. Remaining claims that were billed in error did not meet Medicare’s coverage requirements or were downcoded, according to the report, which was posted on the agency’s website.

The OIG also noted that SNFs misreported information on the Minimum Data Set (MDS) for 47 percent of the claims, allegedly putting beneficiaries into higher-paying resource utilization groups (RUGs). 

“For 57 percent of the upcoded claims, SNFs reported providing more therapy on the MDS than was indicated in the medical record,” the OIG’s report read. “For a quarter of the upcoded claims, reviewers determined that the amount of therapy indicated in the beneficiaries’ medical records was not reasonable and necessary.”

The OIG also noted that, for upcoded claims, the difference in payments between the RUGs billed by the SNFs and the RUGs supported by the medical records was often quite large. In many instances, it amounted to more than $100 per day, and in one case, the difference was $414 per day.

“All SNFs, as well as therapy contractors to SNFs, should be on red alert into what the OIG believes is a pattern by SNFs to place patients into higher-therapy RUGS,” industry expert Nancy Beckley said in a written statement to RACmonitor. “The OIG, noting in its report that SNFs are incentivized to place patients in higher RUGs for … higher pay in their report, has generated a CMS response that concurs with all six of the OIG recommendations.” 

Strongly suggesting that more needs to be done to reduce inappropriate payments to SNFs, the OIG recommended that CMS take the following actions:

  1. Increase the number of reviews of SNF claims, and expand their scope;
  2. Use the existing fraud prevention system to identify SNFs that are billing for higher-paying RUGs;
  3. Monitor compliance with new therapy assessments;
  4. Change the current method for determining how much therapy is needed to ensure appropriate payments;
  5. Improve the accuracy of MDS items; and
  6. Follow up on the SNFs that billed in error.

“This will spell immediate scrutiny through not only MAC claims review, but reviews by ZPICs and recovery auditors,” Beckley said.

In recent years, the OIG has identified a number of problems with SNF billing, including the submission of inaccurate, medically unnecessary, and fraudulent claims. Furthermore, the Medicare Payment Advisory Commission has raised concerns about SNFs improperly billing for therapy to obtain additional Medicare payments.

In the 2012 fiscal year, Medicare paid $32.2 billion for SNF services.

“This is coming at a time when SNFs are braced to become the first provider category to be subject to the implementation of mandatory compliance programs mandated by the (Patient Protection and) Affordable Care Act,” Beckley warned.

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Chuck Buck is publisher of RACmonitor

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