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OIG REPORTS: Inappropriate payments to SNFs cost Medicare more than $1.5 billion in 2009

By Suzanne Szymonik, JD

An HHS Office of Inspector General (OIG) study of skilled nursing facility (SNF) billing practices based on a sampling of 2009 claims found that a quarter of the claims were billed incorrectly, resulting in approximately $1.5 billion in inappropriate Medicare payments (OIG Report, No. OEI-02-09-00200, November, 2012). Most claims were "upcoded" in the Minimum Data Set (MDS) tool, but some were "downcoded" or did not meet Medicare coverage requirements. Information was misreported on the MDS for 47 percent of claims in 2009. SNFs commonly miscoded therapy, which largely determined a patient's billing classification, called a resource utilization group (RUG), and the amount that Medicare pays the SNF.

Recent improvements. The OIG study is part of a larger body of work about SNF payments and quality of care. A previous OIG study found that from 2006 to 2008, SNFs increasingly billed for higher paying categories, even though beneficiary characteristics remained unchanged. In 2011 and 2012, in response, CMS made a number of changes to SNF payments: (1) increasing the number of RUGs from 53 to 66 to allocate payments more accurately; (2) changing how SNFs must account for therapy provided to multiple beneficiaries concurrently or in group settings; (3) requiring SNFs to complete a "change of therapy" assessment when the amount of therapy provided no longer reflects the RUG and an "end of therapy" assessment when therapy has been discontinued for three consecutive days; and (4) reducing payments to SNFs to correct for unintended excessive payments. However, CMS still bases SNF payments for therapy RUGs on the amount of therapy SNFs provide during "look-back" periods, an amount that is often much more than provided at other times.

OIG recommendations. In addition to continuing the recent improvements, the OIG recommends that CMS: (1) increase and expand reviews of SNF claims, (2) use its 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 SNFs that billed in error. CMS agreed with the six recommendations.

TopStory: MainStory BillingNews SNFNews

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