Recovery Audit Contractors (RACs,) Medicare Audit Contractors (MACs,) Fiscal Intermediary (FI) prepayment and post-payment audits, and Office of the Inspector General (OIG) audits have been changing the face of post-acute care for many years.  With potential changes coming in Medicare, there are important things that skilled nursing facilities need to do to prepare themselves. It is not just about prevailing through an audit—it is about improving patient care and improving outcomes.

Since 2004 there have been more than 145,000 fewer patients admitted to acute inpatient rehabilitation facilities (IRFs) to receive their post-acute care. During that same time period, there were over 400,000 more Rehab RUG (Resource Utilization Group) assessments in skilled nursing facilities (SNFs).ii This is not just a switch from IRFs to SNFs; there are simply more patients receiving their rehab in SNFs. This has been a boon for those facilities geared to accept patients in need of physical, occupational and speech therapy services.

During the last decade, Medicare has begun to focus on pay-for-performance, value-based purchasing, clinical practice guidelines and evidence-based medicine.iii iv Medicare initially targeted hospitals and physicians and it is not unreasonable to expect that post-acute care providers are next. Several studies have suggested that therapy in SNFs does not produce the same outcomes than in IRFs.v vi In addition to the denials occurring for medical necessity reasons, MACs and FIs have begun to look at discharges to acute, patients that remain in therapy past 60 days, patients that discharge to hospice and patients that do not discharge home.

Many SNF providers have recognized the shift and are being proactive. Medicare is demanding that attention be paid to both outcomes and justification for providing therapy services. Nationally based corporations such as RehabCare, Five Star Quality Care, Fundamental and Nexion, as well as regionally based corporations such as Legend Healthcare, and smaller local providers, including Presbyterian Communities and Services and the Veranda at Preston Hollow, have begun to implement strategies to address both outcomes and justification for therapy as well as focusing on how to best appeal denied cases.

For smaller, local providers, mounting a full-scale legal battle to appeal denied cases can be both daunting and, in some cases, not fiscally permissible. In a situation where 10 cases are denied at an average of $200 per case, paying the Fiscal Intermediary back $2,000 is much less expensive than hiring a legal team. Larger organizations such as RehabCare and ManorCare have developed full legal departments. RehabCare’s in-house team with a lawyer and multiple other staff members, has a current overturn rate of more than 90% (based on dollar amount overturned per dollar amount denied).

Recognizing that sicker patients are being discharged to post-acute care, Five Star Quality Care and Fundamental both have selected pilot sites in which to handle more medically complex patients and achieve excellent outcomes. These sites have focused on providing medical supervision, increased nursing hours per patient and increased intensity of therapy, and ensuring that the facility has the medical equipment necessary to care for these types of patients. Investing in bladder scanners, standing frames, 24-hour respiratory therapists, bariatric lifts and wheelchairs will allow these facilities to meet the demands of these sicker patients.

All of the organizations mentioned have begun to look at their outcomes and focus on reducing returns to acute, improving discharge-to-home rates and increasing patient satisfaction. Skilled Rehab Specialists (SRS) has been contracted by several of these companies to help evaluate their current metrics and provide increased physician oversight to directly impact those metrics. What SRS has found is that a physiatrist (physician trained in physical medicine and rehabilitation) seeing patients twice a week (or as medically necessary) reduces returns to acute care.

Even when a facility has a medical director who performs rounds frequently, patients can become acutely ill between visits. In a Dallas facility, for example, the medical director saw a patient on a Monday morning. The patient was fine. Tuesday afternoon, however, the physiatrist saw the patient and noted that the patient had lower extremity edema and crackles in her lungs. The physiatrist contacted the medical director, who started her on a diuretic. The medical director performed rounds again on Thursday and the patient had significantly less lower extremity edema and no crackles in her lungs. Had the patient gone without the extra doctor visit, she could very well have ended up in the emergency room Wednesday night in congestive heart failure.

At a different facility in Dallas, the physiatrist saw a patient on Thursday. The patient reported that she had been complaining for three days of unilateral right lower extremity edema. The tech staff had been encouraging her to elevate her leg to reduce the swelling.  The physiatrist was immediately concerned about a deep vein thrombosis (DVT) and ordered a Doppler that confirmed a DVT.  The physiatrist started medication and the patient was able to participate in therapy the next day. If this patient had continued to go to therapy with a DVT until the following Monday when the medical director next performed rounds, she could very well have developed a pulmonary embolus and died.

Presbyterian Village North, operated by Presbyterian Communities and Services, has been enhancing efforts at increasing the skill level of the facility team with the addition of more RNs, nurse practitioners and physiatrists. Tony Baird, administrator of PVN, reports that “one benefit of providing skilled nursing and rehabilitation in a CCRC environment is the ability to discharge patients safely to their assisted living or retirement living setting and still provide the support of the PVN team.”

It’s clear that Medicare intends to cut cost through several audit programs, so being able to ensure safe discharges while considering stewardship of Medicare resources can be a win-win with the oversight of a highly collaborative team of professionals. Baird also states “the addition of the physiatrist to the team has expedited treatment of conditions that would formerly slow the progress of the rehabilitation plan.”

SRS also has found that when the patient is seen once or twice a week by a physiatrist, not only do discharges to acute decrease but patient satisfaction increases. Patients who are unhappy about some issue pertaining to patient care do not have to “stew” for five  days before they are able to speak to a physician. Problems are resolved quicker and patients and their families are happier.

“I think that having a physiatrist involved with patient rounds and more involved as an interdisciplinary team member leads to stronger clinical decisions regarding medical necessity of therapy, duration, and intensity of services which are all being scrutinized closer than ever,” comments Susan Krall, VP of operations with RehabCare Group commented. “Outcomes are being enhanced by quicker pain management and control of the multitude of issues that can impede therapy and slow progress.”

Justification for therapy services cannot occur in a vacuum with just physician documentation. Therapy and nursing services need to be meeting regularly and discussing and documenting what they are doing for their patients to justify the RUG level that is being billed. It is vital that before your first RAC audit that you do a top down analysis of your vulnerabilities. Are patients going more than 30 days before the team gets together and truly checks the documentation to make sure that the RUG level being billed correlates with the services being provided? Are patients being sent back to acute because of inadequate medical supervision? Were there interventions that could have occurred in the SNF to appropriately treat the patient and prevent a trip to the ER? Are patients making documentable gains that justify the intensity of therapy being provided?  These are questions that auditors are going to ask when they review a chart.

It makes more sense to ask these questions long before a RAC requests your charts.  And it is imperative that facilities begin to understand their real outcomes before Medicare begins to implement pay-for-performance in SNFs.

Kenneth Kei Adams, M.D., is chief operating officer of Skilled Rehab Specialists LLC.

i eRehabData: Inpatient Acute Medical Rehabilitation Discharges Per 12 Month Periods Updated April 20, 2009

ii Centers for Medicare and Medicaid Services. Research, Statistics, Data and Systems. Available at


iv Nonpayment for Performance? Medicare’s New Reimbursement Rule Meredith B. Rosenthal, Ph.D. New England Journal of Medicine Volume 357:1573-1575 October 18, 2007

v Outcomes after rehabilitation for total joint replacement at IRF and SNF: a case controlled comparison Walsh MB, Herbold J American Journal of Physical Medicine and Rehabilitation 85 (1): 1-5 January 2006

vi Functional and Economic Outcomes of Cardiopulmonary Patients: A Preliminary Comparison of the Inpatient Rehabilitation and Skilled Nursing Facility Environments Vincent and Vincent American Journal of Physical Medicine and Rehabilitation 87 (5) 371-380 2008s