OIG Takes Aim at Skilled Nursing Therapy Billing

OIG Takes Aim at Skilled Nursing Therapy Billing


In September, the United States Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) issued a report, “The Medicare Payment System for Skilled Nursing Facilities Needs To Be Reevaluated,” in which the OIG was very critical of SNF therapy billing and reported its findings as follows:

OIG indicated that it conducted the study because of its own as well as the Medicare Payment Advisory Commission (MedPAC) and other entities’ long-standing concerns regarding Medicare’s SNF payment system. OIG also noted some of its prior findings including that SNFs billed one quarter of all 2009 claims in error, primarily by billing for higher levels of therapy than they provided or were reasonable or necessary, which resulted in $1.5 billion in inappropriate Medicare payments.

The study was based on a number of data sources, including Medicare Part A SNF claims, Medicare cost reports, and patient assessments over a ten-year period.

OIG asserts that there is need for CMS to reevaluate the Medicare SNF payment system. It suggests that payment reforms could save Medicare billions of dollars and encourage SNFs to provide services that are better aligned with patient needs.  OIG’s specific recommendations are that CMS:

Particularly noteworthy to SNF providers, OIG indicates that the Centers for Medicare and Medicaid Services (CMS” “concurred with all four of our recommendations.”

Does the OIG’s report necessarily mean more downward pressure on rates/more therapy billing scrutiny? Commenting in media coverage on the OIG report, acting CMS Administrator Andrew Slavitt stated that the current system incentivizes SNFs to “provide as much therapy to a resident as that resident can tolerate” and that Medicare therapy rates should be reduced. Slavitt acknowledged that CMS will need “additional statutory authority” from Congress to reduce rates, but at the same time he also stated that CMS will be stepping up its efforts to prevent fraud and detect “suspicious billing behavior” by nursing homes.

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