Following the money

John O'Connor
John O'Connor

To really understand what is going on in the wacky world of Medicare therapy billing, here's all you really need to know:

A recent Wall Street Journal analysis of federal financial reports found that nursing homes gave Ultra-High therapy to 7% of the days they billed Medicare in 2002. Yet by 2013, the figure was up to 54%. 

I'm willing to acknowledge that residents may have been a bit sicker in 2013 than a decade prior. But more than seven times sicker, on average? Not likely.

So what's the deal here? It's simple, really: The industry found another loophole and cashed in. It certainly wasn't the first time we've seen this phenomenon. Nor is it likely to be the last.

The loophole in this instance was discovered in the changing way Medicare paid for care. Under the new system, a set price would be paid at predetermined levels (or to use a more familiar term, Resource Utilization Groups).

That would seem to be a logical progression, except for a tiny matter that was overlooked: Operators would now have built-in incentives to give residents as much high-end therapy as possible. 

One can argue whether the response was ethical. What can't be argued was whether it was legal. It was (except in cases of provable fraud). And in hindsight, did CMS really expect a field that had historically survived by finding Medicaid and Medicare loopholes to suddenly change its spots?

Right now, some miffed CMS officials are taking a “just-you-wait” attitude toward skilled operators. Regulators' new ace in the hole? Managed care and bundled payments.

To be sure, both may collectively put facilities on an austerity fiscal diet, at least compared to the gorging at the Medicare trough we've seen recently.

But here's the thing: You can bet that industry-hired actuaries, lawyers, consultants and other assorted bean counters are going over new rules with a fine-tooth comb. They are looking for the next generation of potential revenue streams. If they exist, they will be found, and implemented.

Why? Let's just say there must be billions of reasons.