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New Compliance Tool to be Available Soon for Skilled Nursing Facilities

August 26, 2013

George W. Thomas, CPA
 Principal

The Centers for Medicare and Medicaid Services (CMS) has contracted with TMF Health Quality Institute to produce the Program for Evaluating Payment Patterns Electronic Report (PEPPER) for Skilled Nursing Facilities (SNF).  CMS has historically prepared these reports for hospitals. Your facility should begin receiving these reports this fall in the mail addressed to the administrator.  These reports are on a fiscal year basis, October 1 through September 30, and will compare your facility’s data to the corresponding state data, your fiscal intermediary’s data from its jurisdiction and national statistics for the last three years.

Based, in part, on this data, the Office of the Inspector General has indicated that they believe 25% of all SNF Medicare claims were billed in error during 2012. The intent of the PEPPER report is to identify areas in which CMS believes that SNFs are most likely having billing, coding and documentation errors resulting in improper Medicare payments. At inception, the reports will contain six target areas (including calculations based on billed activity):

  1. Therapy RUGs with High ADL’s- Therapy RUGs days with ADLs in excess of 16 in RUGs III/Therapy RUG Days
  2. Non-Therapy RUGs with High ADLs- Non-Therapy RUGs days with ADLs in excess of 16 in RUGs III/ Non-Therapy RUG Days
  3. Change of Therapy Assessment - Count of Assessments with 2nd digit D/Total Assessments
  4. Ultrahigh Therapy RUGs - Ultrahigh Therapy RUGs days/Total Therapy RUGs days
  5. Therapy RUGs- Total Therapy RUGs days/Total Therapy and Non-Therapy RUGs
  6. 90+ Episodes of Care - Cases with Length of Stay in excess of 90 days/Total Cases

These target areas identify situations in which residents may be receiving more or less assistance than needed in activities of daily living, a facility is experiencing challenges with delivering services needed to residents, a facility is billing improperly for therapy services and/or a facility is continuing treatment beyond the point services are considered necessary.  A variance in these areas between your facility and the comparison group does not necessarily indicate a problem but should be investigated. Specifically, variances that place your facility in the 80% or greater percentile of all facilities in your comparison groups will likely attract CMS’ attention. Earlier this year, SNFs were required to implement a compliance program. The PEPPER report should be used in conjunction with certain elements of your compliance program, including auditing and monitoring of billing, coding and documentation.

As all of this data is coming from CMS, they are fully aware of the billings of your facility, and it is only a matter of time before the Recovery Audit Contractors (RAC) and other government auditors will begin to test the underlying supporting documentation to confirm these billings. Facilities should consider this an opportunity to validate or modify practices and procedures to ensure that appropriate patient care is being provided to residents and that accurate billing is being submitted to the Medicare program before a third party auditor requests to review your facility.

 

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