The Office of the Inspector General’s recent report about what it calls $1.5 billion in inappropriate Medicare payments to skilled nursing facilities should be yet another wake-up call to providers.

Even after some pensive time to digest the report (“Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More Than A Billion Dollars in 2009”), it’s clear providers should be aware of what’s going on.

The OIG indicated that $1.5 billion was inappropriately paid to nursing facilities under the Part A Medicare benefit. The study targets therapy reporting and utilization as the key problem area. This is both alarming and alerting.

Although the report gives some insight as to how the $1.5 billion was arrived at, it unfairly mixes a large variety of issues into one lump sum and, therefore, one lump problem.

The report lists a variety of categories that caused investigators to calculate $1.5 billion; each talking point is worth discussion. The American Occupational Therapy Association easily outlined summary points of the OIG report, so I amusing that format here.

The OIG report focuses on several items, all of which are linked to therapy:

* Lack of consistency between minimum data set (MDS) information and the medical record; the report found that 47% of nursing facilities misreported data on the MDS.

* The majority of claims that were upcoded were put into the Ultra High therapy category inappropriately.

* Other claims simply did not meet Medicare coverage criteria, including at least one case where there was no authorization from a physician.

* Therapy was provided in some cases, despite the results of a therapy evaluation that indicated the patient was not in need of therapy.

* When claims had incorrect information, the most frequent area was therapy.

* The report was based on claims filed in 2009; the OIG used independent evaluators to conduct the reviews. 

Just some of the big concerns: These findings were based on 2009 claims, which were utilizing the Minimum Data Set 2.0 version, as well as the Resource Utilization Groups III version. The RUGs-III payment system provided coverage on a much different scope of skilled nursing facility services, including therapy.

This was from the “good old days,” when we had no limits on concurrent therapy, limits on group therapy were much more generous, and the only OMRAs (Other Medicare Resident Assessments) we completed were to end skilled therapy services.

The other issue I have with this report is that it lumps coding errors (items #1, #2, and #5) with areas of poor documentation resulting in “lack of medical necessity” (items #2 and #3), and fraud (item #4). The solutions to resolve these major areas of Medicare over-spending all require drastically different approaches. Lumping the problems together suggests we need a single, lumped-together solution.

Regardless, of the interpretation, the end result is that it single-handedly points the finger at rehab for $1.5 billion of overspending. This, therefore, continues to fuel the ongoing efforts to reform healthcare practices and payment methods, with a major emphasis on therapy.

More scrutiny is sure to come.