The OIG Identifies Substantial SNF Medicare Overpayments

OIG has Identified significant SNF Medicare overpayments.

(November 18, 2012): A recent report issued by the Department of Health and Human Services, Office of Inspector General (OIG), OEI-02-09-00200 (Report), found substantial errors in payments made by Medicare to skilled nursing facilities (SNFs) for FY 2009. The Report also found substantial errors in SNF reporting on the Minimum Data Set (MDS) forms. Specifically, the OIG found that 25% of the claims reviewed were paid in error. Of these claims, HHS-OIG found that 20% were the result of upcoded RUGs, 2.5% were the result of downcoded RUGs, and approximately 2% of the claims did not meet coverage requirements. According to the OIG's Report, this was projected to account for $1.5 billion in improper payments, or 5.6% of all Medicare payments to SNFs in that year.

OIG found that approximately 50% of the allegedly upcoded claims involved billing at the ultrahigh therapy RUG level. For 57% of these claims, HHS-OIG found that SNFs reported providing more therapy on the MDS than was indicated in the medical record, while it found that 25% of these claims involved facilities providing more therapy than was appropriate for the resident’s/patient’s condition.

Additionally, the Report found that 47% of the claims had errors on the MDS. 30% of these claims involved misreporting the amount of therapy. Reviewers also found instances where SNFs provided more therapy during the look-back period than other periods. The Report also concluded that 17% of the alleged misreporting of information on the MDS involved special care, with most of those claims involving intravenous medication. Finally, 7% of the claims involved findings of misreporting of Activities of Daily Living (“ADLs”).

I. Recommendations by the OIG to Address SNF Medicare Overpayments:

Based on the findings, the OIG recommended that CMS take the following actions:

  • Instruct its contractors to increase the amount of medical reviews of SNF claims;
  • Increase the use of its Fraud Prevention System to identify SNFs that are billing at high paying RUGs, with specific emphasis on claims for ultrahigh therapy and high ADL levels;
  • Instruct MACs and RACs to monitor closely the use of “end of therapy” and “change of therapy” assessments through analyses of claims data;
  • Change how Medicare pays for therapy;
  • Instruct surveyors to focus more heavily on monitoring the accuracy of the MDS’; and
  • Follow up on SNFs that had errors in the sample.

CMS agreed with each of these findings.

II. What SNF Providers Should Expect and What Actions Should They Take:

SNF providers have already seen a significant increase in the scrutiny and denial of claims by MACs, RACs, and ZPICs. This has been especially significant for SNFs that have significant sub-acute programs, and that therefore have a disproportionate number of ultrahigh RUG cases. SNFs can expect increased scrutiny in this area, as well as an increasing number of in-person visits by ZPIC auditors. Additionally, facilities can expect increased emphasis on the accuracy of their MDS’s from state surveys and federal look behind surveys.

SNFs should ensure that their compliance programs monitor the accuracy of claims and MDS’s through periodic audits in order to identify and catch potential issues early on, and take corrective action where they find issues. As part of this activity, they should re-emphasize the importance of ensuring that the medical records are complete and support the care that is claimed. Additionally, mock surveys should pay particular attention to the accuracy of MDS’s. While we all know that therapists, nurses, and aides are tremendously busy simply providing care, the documentation must support that care.

We have all heard the saying, “if it wasn’t documented, it wasn’t done." That statement will take on increased importance as a result of OIG's report.

SNFs should also be prepared to act quickly in the face of post-payment audits. Facilities can delay recoupment by identifying and filing appeals of denials with which they disagree within specified time limits for the first two levels of review – redetermination and reconsideration. It is also critical that they utilize counsel who are experienced in the area, and where statistical extrapolations are utilized, that they challenge the extrapolation where they suspect errors. Finally, there may be a number of legal arguments, including certain waivers under the Social Security Act, that counsel may raise. Likewise, staff should be trained in survey management and the conduct of IDRs.

Finally, facilities should ensure that their employees understand how to address instances where reviewers such as ZPIC auditors make in-person visits. SNFs have seen an “uptick” in ZPIC auditors coming to their facilities - this activity is only likely to increase as a result of OIG’s Report and tremendous budget pressures on the federal government.

Liles Parker attorneys have substantial experience in handling Medicare and Medicaid post payment denials in audits, compliance plans and issues, and survey management.

Michael Cook - Partner - Senior Health care lawyer- Liles Parker

Anyone seeking more information or having a problem in this area should contact Michael Cook at (202) 298-8750. Michael has more than 30 years’ experience in representing SNFs and also served at the beginning of his career as an attorney with the federal regulators of the Medicare and Medicaid programs.