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The Impact on Nursing Homes of the 2012 Office of the Inspector General Work Plan

November 09, 2011

George W. Thomas, CPA

The Office of the Inspector General (OIG) issued its 2012 work plan in October.  The 165-page document provides guidance from the Inspector General on areas which it plans on reviewing in fiscal year 2012 as part of its goal to protect the integrity of Health and Human Services programs and operations.  The work plan covers all areas of healthcare including hospitals, nursing homes, home care, hospice, medical equipment providers, drug providers, Medicare contractors, insurers and public health agencies.  The Inspector General uses the work plan to identify fraud, waste and abuse; create opportunities to improve program economy, efficiency and effectiveness; and hold accountable those who do not meet program requirements or who violate federal laws.

Of the 165 pages, only two pages specifically relate to nursing homes and these pages highlight eight initiatives that the Inspector General will focus on in 2012. These eight initiatives are explained below:

  1. Medicare Requirements for Quality of Care in Skilled Nursing Facilities (SNFs)
    We will review how SNFs have addressed certain federal requirements related to quality of care.  We will determine the extent to which SNFs developed plans of care based on assessments of beneficiaries, provided services to beneficiaries in accordance with the plans of care and planned for beneficiaries’ discharges.  We will also review SNFs’ use of Resident Assessment Instruments (RAI) to develop nursing home residents’ plans of care.  Prior OIG reports revealed that about a quarter of residents’ needs for care, as identified through RAIs, were not reflected in care plans and that nursing home residents did not receive all the psychosocial services identified in care plans.  Federal laws require nursing homes participating in Medicare or Medicaid to use RAIs to assess each nursing home resident’s strengths and needs.
  2. Safety and Quality of Post-Acute Care for Medicare Beneficiaries (New)
    We will review the quality of care and safety of Medicare beneficiaries transferred from acute care hospitals to post-acute care.  We will evaluate the transfer process and also identify rates of adverse events and preventable hospital readmissions from post-acute care settings.  We will focus on three post-acute settings:  SNFs, Inpatient Rehabilitation Facilities (IRFs) and long-term care hospitals.  Average hospital stays for Medicare beneficiaries have fallen steadily over several decades, resulting in increased transfers to post-acute care facilities.  Patients recovering in these facilities often require substantial clinical care, and the capabilities of the facilities to care for residents vary by facility type and access to appropriate equipment and staffing.  The hospital discharge planning process and the degree of communication and collaboration between acute care and post-acute care providers also affect a beneficiary’s experience and the ability of providers to ensure a smooth and safe transition.
  3. Nursing Home Compliance Plans (New)
    We will review Medicare- and Medicaid-certified nursing homes’ implementation of compliance plans as part of their day-to-day operations and whether the plans contain elements identified in OIG’s compliance program guidance.  We will assess whether Centers for Medicare and Medicaid Services (CMS) has incorporated compliance requirements into Requirements of Participation and oversees provider implementation of plans.  Section 6102 of the Affordable Care Act requires nursing homes to operate a compliance and ethics program, containing at least 8 components to prevent and detect criminal, civil and administrative violations and promote quality of care.
  4. Oversight of Poorly Performing Nursing Homes
    We will review CMS’ and states’ use of enforcement measures to determine their impact on improving the quality of care that beneficiaries received in poorly performing nursing homes and evaluate the performance of these nursing homes.  We will also determine the extent to which CMS and states follow up to ensure that poorly performing nursing homes implement correction plans.  Federal requirements include a survey and certification process, including an enforcement process, to ensure that nursing homes meet federal standards for participation in Medicare and Medicaid.
  5. Nursing Home Emergency Preparedness and Evacuations During Selected
    Natural Disasters
    We will review nursing homes’ emergency plans and emergency preparedness deficiencies cited by state surveyors to determine the sufficiency of the nursing homes’ plans and their implementation of the plans.  We will also describe the experiences of selected nursing homes, including challenges, successes and lessons learned when they implemented their plans during recent disasters, such as hurricanes, floods and wildfires.  Federal regulations require that Medicare- and Medicaid-certified nursing homes have plans and procedures to meet all potential emergencies and train all employees in emergency procedures (42 CFR § 483.75(m)).  In 2006, OIG reported that nursing homes in certain gulf states had plans that lacked a number of features suggested by emergency preparedness experts and that staff members did not always follow plans during emergencies.
  6. Medicare Part A Payments to Skilled Nursing Facilities
    We will review the extent to which payments to SNFs meet Medicare coverage requirements.  We will conduct a medical review to determine whether claims were medically necessary, sufficiently documented and coded correctly during calendar year (CY) 2009.  The amount paid to SNFs for all covered services is established by the Social Security Act, §1888(e).  Medicare pays Part A SNF stays using a system that categorizes each beneficiary into a group according to care and resource needs.  The groups are referred to as Resource Utilization Groups (RUG).  In a prior report, OIG found that 26 percent of claims had RUGs that were not supported by patients’ medical records.  The percentage represented $542 million in potential overpayments for FY 2002.
  7. Hospitalizations and Re-Hospitalizations of Nursing Home Residents
    We will review the extent to which Medicare beneficiaries residing in nursing homes have been hospitalized and re-hospitalized.  We will also assess CMS’ oversight of nursing homes whose residents have high rates of hospitalization.  Hospitalizations and re-hospitalizations of nursing home residents are costly to Medicare and may indicate quality of care problems at nursing homes.  A 2007 OIG study found that 35% of hospitalizations during a SNF stay were caused by poor quality of care or unnecessary fragmentation of services.
  8. Questionable Billing Patterns During Non-Part A Nursing Home Stays (New)
    We will identify questionable billing patterns associated with nursing homes and Medicare providers for Part B services provided to nursing home residents whose stays are not paid for under Medicare’s Part A SNF benefit.  Part B services provided during a non-Part A stay must be billed directly by suppliers and other providers.

These eight initiatives can be grouped into three types of analysis that the OIG will be performing: payment errors, quality of care concerns and overall compliance. 

The work plan since its inception has dealt with payment errors and the importance of accurate billing to the Medicare program.  The OIG believes that significant overpayments have been made to nursing homes who have incorrectly documented, coded and billed for services which are not supported.  Nursing homes should put in place policies and procedures and be reviewing processes to eliminate the potential for unsupported claims, reviewing select complex claims prior to submission for accuracy, as well as performing audits to verify billing.

In recent years the work plan has emphasized the importance of quality of care.  Aside from the obvious reason of appropriate care for the elderly, the OIG has used these initiatives to reduce and eliminate payments to providers that it believes have provided substandard care.  A new initiative in this area deals with transfer of patients from an acute care organization to a post-acute care provider.  This is a high profile area of interest to the OIG and CMS as Medicare looks to implement Accountable Care Organizations and bundled payments for healthcare providers.  The inappropriate transfer and subsequent re-admission of patients to acute care organizations from post-acute care providers are a significant cost to the system and have made the implementation of these new payments systems challenging.

While each of the initiatives is important, one of particular interest is the new initiative related to nursing home compliance plans.  Over a decade ago the OIG indicated the importance of healthcare providers to have an active compliance program and noted eight key elements that each provider should implement.  The OIG believes that nursing facilities have not implemented a compliance program or have allowed their program to become a stale paper-only program.  This area is very black and white and can easily be audited at any nursing home by the OIG with very limited notice.  It is critical that this area be reviewed internally to ensure that your compliance program is operating as intended based on the OIG guidance.  It is easy to be lulled into a false sense of security that your program is operating effectively when it actually has begun to fail.

These are a lot of initiatives for smaller organizations to deal with at one time, but a plan should be put in place to address each of these areas within the next year.  The entire work plan can be found at

If you have questions, please contact George Thomas at or 860-561-6853.

George W. Thomas, CPA, is a Director at BlumShapiro, specializing in hospitals and long-term care organizations.  BlumShapiro is the largest regional accounting, tax and business consulting firm based in New England, with offices in West Hartford and Shelton, Connecticut and Rockland, Massachusetts.  The firm serves as business advisors for today's leading companies, non-profit organizations and government entities, working to strategically tailor and consistently deliver tested solutions for unlocking an organization's full potential. 


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