The Department of Health and Human Services Office of Inspector General (OIG) recently issued a report that calls for CMS to accelerate its efforts to implement a new method for paying for changes in skilled nursing facility (SNF) therapy to prevent SNFs from billing for higher-paying services when a patient is set to receive lower-intensity therapy services. 

In its report, OIG analyzed billing by SNFs for changes in therapy under recently implemented Medicare policies that were designed to address concerns that SNF billing did not adequately reflect changes in therapy that occurred during a beneficiary’s stay.  In FYs 2011 and 2012, CMS introduced three types of assessments to capture when SNF beneficiaries (1) started therapy, (2) ended therapy, and (3) decreased or increased therapy.  Under these policies, the choice of assessments determines when the SNF begins billing for the therapy and for changes in therapy.  Because these assessments were intended to capture changes in a beneficiary’s therapy more timely than scheduled assessments, the ultimate goal was that SNF billing and Medicare payments would be better aligned. 

OIG specifically analyzed SNFs’ billing for (1) changes in therapy under the new policies, (2) the uses of assessments for decreases and increases in therapy, and (3) how often SNFs used the new therapy assessments incorrectly.  OIG found that:

  1. Under the recently implemented billing policies, SNFs slightly increased their billing for changes in therapy (by only 4 percent).
  2. SNFs used scheduled assessments and combined change-of-therapy assessments very differently when decreasing therapy than when increasing.  The new billing policies permit SNFs in certain circumstances to choose between conducting a scheduled assessment or a combined change-of-therapy assessment when a level of therapy changes.  The choice determines when the SNF begins billing for the new therapy resource utilization group (RUG).  Using a combined change-of-therapy assessment results in more timely billing.  On the contrary, the choice of a scheduled assessment when a SNF decreases therapy, rather than a combined change-of-therapy assessment, allows the SNF to delay billing for the lower paying therapy RUG.  This ultimately results in increased costs to Medicare.  According to OIG, SNFs were more likely to use scheduled assessments when they decreased therapy (versus when they increased therapy).  According to OIG, SNFs’ use of scheduled assessments to change therapy levels in FYs 2012 and 2013 cost Medicare $143 million more than if SNFs had used combined change-of-therapy assessments.
  3. SNFs frequently used the start-of-therapy assessments incorrectly.

OIG noted that the SNF billing policies are “complex and create challenges for effective oversight.”  As a result of its report, OIG recommended that CMS:

  1. Reduce the financial incentive for SNFs to use assessments differently when decreasing therapy than when increasing it by potentially eliminating SNFs’ ability to choose a scheduled assessment over a combined change-of-therapy assessment when changing therapy levels; and
  2. Strengthen the contractor oversight of SNF billing for changes in therapy.

CMS agreed with these recommendations.  OIG’s report, entitled “Skilled Nursing Facility Billing for Changes in Therapy: Improvements Are Needed,” can be found here.