Nursing homes that fell out of compliance with federal quality-of-care standards in 2004 received more than $5 million in overpayments that year, as a result of processing errors, the Department of Health and Human Services Office of Inspector General recently reported.

The Centers for Medicare & Medicaid Services uses denials of payment as a way to enforce quality-of care-standards. It refuses reimbursements to nursing homes that have dipped below federal standards. In its investigation, the OIG discovered that payment contractors working for CMS incorrectly processed 74% of denials of payment for new admissions from 2004. That resulted in $5 million in overpayments.

Besides processing errors, the OIG also found that problems stemmed from improper coding on nursing home claims. This created more work for the payment contractors, according to the OIG, and hindered CMS’ ability to identify claims that are subject to denials of payment for new admissions.

To view the OIG’s report and to read their recommendations to CMS, go to