OIG report: Correct nursing home Medicare pay 'immediately'

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CMS Administrator Donald Berwick, M.D.
CMS Administrator Donald Berwick, M.D.

Medicare payments to skilled nursing facilities increased unexpectedly by $2.1 billion (16%) during the first six months of fiscal 2011, according to a new report issued by the Office of the Inspector General. The OIG has asked Centers for Medicare & Medicaid Services Administrator Donald Berwick to take “immediate action” to correct this overpayment.

In 2011, CMS implemented numerous changes in the skilled nursing facility prospective payment system, including breakouts for billing for individual, group and concurrent therapy. CMS expected changes to be budget neutral but found instead that providers were billing at higher levels of therapy and for miniscule amounts of concurrent therapy. While the agency had expected the use of concurrent therapy to be about 25% of all therapy, in reality it was less than 1%. And even that rate is dropping, from 1.4% in October 2010 to 0.7% in March 2011.

Report authors also encourage changes to Rehab Ultra High (RUG)s and Medicare payments to be “more consistent with beneficiaries' care and resource needs.”

The OIG said it would conduct a full review of SNF billing at the end of FY 2011 and could make formal recommendations at that time. But report authors nonetheless urged CMS to take action before then to rectify pay rates.