The OIG recently issued a report (OEI-02-09-00200) concerning improper skilled nursing facility (SNF) Medicare payments in calendar year 2009 (the Report). The OIG reviewed a stratified random sample of SNF claims from 2009 and, as part of its review, determined whether: (1) the claims satisfied Medicare SNF coverage requirements, and (2) the medical records supported the information reported by the SNFs on the Minimum Data Sets (MDS). According to the Report, SNFs billed one-quarter of all claims in error in 2009, which equates to $1.5 billion in improper Medicare payments.

The OIG explained that it undertook this review because in recent years the OIG “has identified a number of problems with billing by skilled nursing facilities (SNF), including the submission of inaccurate, medically unnecessary, and fraudulent claims.”  The OIG also noted that the Medicare Payment Advisory Commission (MedPAC) has recently raised concerns that the SNFs may be inappropriately billing for therapy services in order to obtain additional Medicare payments. 

While OIG recognized CMS’ recent SNF payment changes that are designed to reduce inappropriate payments, OIG believes that further actions are needed to reduce inappropriate SNF payments.  Accordingly, OIG recommended that CMS:

  • Increase and expand reviews of SNF claims,
  • Use CMS’ Fraud Prevention System to identify SNFs that are billing for higher paying resource utilization groups (RUGs),
  • Monitor compliance with new therapy assessments,
  • Change the current method for determining how much therapy is needed to ensure appropriate payments,
  • Improve the accuracy of MDS items, and
  • Follow up on the SNFs that billed in error.

CMS concurred with all six of the OIG’s recommendations.  To view the Report, click here.