SNF therapy billing controversy rises from the dead

Elizabeth Newman
Elizabeth Newman

Despite my love of Halloween, there is one component of it that is distinctly not for me: Horror movies. Still, I'm enough of a pop culture enthusiast that I can appreciate those with an appetite for scary movies and their sequels. If you want to watch the 10 “Halloween” movies or six versions of “Paranormal Activity,” I'm not going to judge you. (Much.)


That's why October seems appropriate to delve into the release of the latest HHS OIG report slamming skilled nursing facilities and therapy overbilling. It's a retread of Freddy Krueger and Michael Myers on a mission to kill, only this time with a bit more zealousness.  


For those unfamiliar with the original equivalent of “Halloween,” from 2006 to 2008 the OIG said skilled nursing facilities were billing for the highest levels of therapy even though beneficiary demographics were unchanged. In 2009, the OIG says 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. By December 2010, OIG “found that SNFs increasingly billed for the highest level of therapy, even though key beneficiary characteristics remained largely unchanged.”


Payment rates for therapy RUGs are generally higher than non therapy RUGs. The average daily payment rate for Ultra High therapy RUGS was $620 in fiscal year 2013, compared to $362 for low therapy RUGS. It's easy to see how that adds up.


To be fair, many providers counter with how much money they lose on Medicaid residents. There's a certain logic to robbing Peter to pay Paul, or, to keep with our movie analogy, sacrificing the comic-relief best friend to let the hero live. Industry people understand how many aspects of running a SNF aren't reimbursable. Putting aside the fresh American Senior Communities debacle and various federal whistleblower cases settling for millions, it's fair to say a healthy chunk of providers are billing at the level of therapy they believe the residents need.


But the bottom line is the OIG asserts Medicare payments for therapy exceeds SNFs costs, and there is too much incentive to bill higher. The increase in SNF billing, specifically at the Ultra High rate, has resulted in $1.1 billion in Medicare payments in fiscal years 2012 and 2013, which is a number lawmakers start paying attention to.


Not to mention there are the report's conclusions, which said that not only did CMS agree a re-evaluation of the system was needed, but concurred with the OIG recommendation to  seek changes to the method of paying for therapy.


Another sign of change is the lack of defensive, aggressive response to the report. While leading provider-focused organizations pointed out the thin operating margins for skilled nursing centers and urged thoughtfulness, there's a sense the best hope for saving the franchise is to base payment around outcomes.


If all of this bums you out, let me direct you to another symbol of Halloween: A cat. Specifically, a nursing home cat that comforts residents who are dying, a la Oscar. The best part? His name is Newman.


Elizabeth Newman is Senior Editor at McKnight's Long-Term Care News. Follow her @TigerELN.


Elizabeth's Etiquette Tip

Scheduling often can be tight at conferences. Announce your time constraints politely at the beginning of a business breakfast, lunch or coffee, i.e. “Before we start, I wanted to let you know I have a conference call in an hour.”

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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Emily Mongan.

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