HHS calls for therapy overbilling crackdown

The majority of inappropriate Medicare claims come from therapy overbilling, HHS said
The majority of inappropriate Medicare claims come from therapy overbilling, HHS said

The Medicare payment system for skilled nursing facilities needs to be re-evaluated to weed out exploitative providers, a new report from the Department of Health and Human Services Office of Inspector General says.

SNF Medicare payments for therapy greatly exceeded the costs of therapy over a 10-year period, according to the report, released Wednesday. An increasing number of SNFs overbilled Medicare for the highest level of therapy, despite beneficiary characteristics such as age and reasons for hospitalization remaining unchanged, the report found.

In 2009, nearly 25% of all claims made to Medicare by SNFs were billed in error, resulting in $1.5 billion in inappropriate payments, according to the OIG. The majority of those inappropriate claims came from facilities that billed for higher levels of therapy than were provided or necessary, the agency said.

The Centers for Medicare & Medicaid Services should reform the SNF payment system, in order to save money and provide care that is “better aligned with beneficiaries' care needs,” the report states. It also recommended CMS evaluate the extent to which therapy payment rates should be reduced, change the payment method for therapy, adjust payments to eliminate increases that aren't tied to beneficiary characteristics and increase billing oversight.

Cheryl Phillips, M.D., senior vice president of public policy and advocacy for LeadingAge, said shortcomings in the Medicare payment system need to be "effectively" addressed in the wake of reports like the one from HHS, and another from MedPac and the Urban Institute in January.

"[LeadingAge] supports efforts to develop reimbursement methodologies that accurately account for cost and match a patient's needs with the service and service provider that can produce the highest quality and lowest cost outcome," Phillips said. "However, it must be done in a thoughtful and comprehensive manor that addresses the shortcomings on both the therapy and non therapy categories simultaneously."

The HHS report's focus on Medicare payments doesn't tell the full story, said American Health Care Association Senior Vice President Greg Crist.

"Evaluating only the Medicare portion of the services we provide does not give a true picture of the situation that skilled nursing care providers face," Crist said. "The government's own Medicare Commission acknowledged that, when you include both Medicaid and Medicare, operating margins for skilled nursing care centers are razor thin — less than 2 percent. We agree that the current payment system is flawed, and we think there's a better way than just measuring clinical minutes."

AHCA is working on a proposal to Congress and CMS for a payment structure that "better reflects the success of the therapy our members give," he added.

The administration's scolding over SNF therapy billing is not new. Some of the more notables: A report from the Wall Street Journal took aim at Ultra High therapy billing in August, and an outspoken former CMS administrator drew scrutiny when he called out providers over excessive payments in 2012.