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Medicare Payments Continue to Be in the Spotlight for OIG

December 17, 2012

George W. Thomas

On November 13, 2012, the Department of Health and Human Service’s Office of the Inspector General (OIG) released a report addressed to the Center for Medicare and Medicaid Services (CMS)  titled “Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More Than a Billion Dollars in 2009”. Based on that title it appears the department was trying to get the attention of everyone involved in the skilled nursing community. The overall dollar impact of this was $1.5 billion and represented 5.6% of the $26.9 billion which was paid to skilled nursing facilities in 2009.  The details of the report indicate that:

  1. 25% of all Medicare-skilled nursing home claims were in error for 2009
  2. The 25% is made up of:
    • 20.5% of claims for up-coding of Resource Utilization Groups (RUGs);
    • 2.5% of claims down-coding for RUGs; and
    • 2% of claims not meeting coverage requirements.
  3. Within the 20.5% of up-coded RUGs:
    • 57% related to billing for more therapy services than were supported in the medical record, and
    • 25% related to determining that the amount of therapy in the medical record was not reasonable or necessary for the specific patient based on condition or need

The report suggests that CMS should:

  1. Work with Medicare contractors to perform more reviews of Skilled Nursing Facility (SNFs)  claims, including expanding the scope of medical review and identifying nursing home chains with recurring problems to potentially refer for additional investigation
  2. Use the CMS Fraud Prevention System in place to target SNFs that have a high percentage of claims in the ultra-high billing categories
  3. Monitor the usage of new therapy and therapy assessment forms that were put in place in October 2011 to confirm that SNFs are accurately identifying when therapy services are discontinued for three days
  4. Consider changing the method in which therapy treatment is reimbursed for the Medicare population in the future
  5. Instruct nursing home surveyors to monitor the accuracy of MDS
  6. Follow up with SNFs that were included in the report for appropriate action

It is clear that the OIG is going to act on these numbers.  On November 30, 2012 the department filed a complaint in Tennessee vs. Life Care Centers of America alleging that the company, from its executives through lower level supervisors, encouraged therapists to bill higher levels of therapy as well as provide therapy to patients who did not need or could be harmed by the therapy. Life Care Centers billed 68% of its Medicare rehabilitation days at the ultra-high level compared to 35% at this level for all skilled nursing facilities, which was a key benchmark the OIG used to identify this issue.

As the federal government navigates through the fiscal cliff issues, Medicare payments, specifically those which appear to be fraudulent, will continue to be under a spotlight. 

To be prepared, your facility should be doing the following to deal with this issue:

  1. Compare your Medicare utilization to industry standards in total and by RUGs classification to identify any abnormalities.  Where do your billings fall in the RUGs range?  Are you comfortable that your medical records will adequately support the claims?
  2. Discuss this issue with your internal therapy manager or contract service provider to determine an approach that will reduce your organization’s risk in this area.  Are there any therapy services being provided that OIG may classify as unnecessary?  Are the 2011 assessment forms being properly used?
  3. You may also want to bring in an independent third party reviewer to review your medical record documentation and medical necessity of therapy services.  You should consider some reviews prior to billing, as more prepayments reviews from the intermediary can be expected.

As we are all aware, the federal government is looking for ways to control costs.  In response to this, the government appears to be increasing its aggressiveness in looking for Medicare savings.  The government continues to develop more sophisticated software to identify these issues and, due to a strong rate of return on investment, is willing to hire individuals in CMS, HHS-OIG and the FBI to continue to track these potential overpayments.  This does not appear to be an issue that anyone should expect to disappear soon.


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