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Are SNFs causing their own headaches?

December 18, 2012
by Bob Gatty
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Two reports from the feds could combine to cause a throbbing headache for executives of skilled nursing facilities (SNFs), who are trying to cope with budget difficulties and uncertainties caused, in part, by government policies and the budget deficit crisis.

In November, the Government Accountability Office (GAO) published a scathing report that essentially accused SNFs of fraudulently billing Medicare on 23 percent of claims, charging them all sorts of shenanigans, including upcoding and charging for services that were not performed.

Then, in early December, the Medicare Payment Advisory Commission (MedPAC) recommended that Congress should eliminate the market basket update and direct the Department of Health and Human Services (HHS) to revise the prospective payment system (PPS) for SNFs for 2013. Then, MedPAC said, “Rebasing payments should begin in 2014, with an initial reduction of 4 percent and subsequent reductions over an appropriate transition until Medicare’s payments are better aligned with providers’ costs.”

That recommendation, of course, would be in addition to whatever reductions, if any, emerge from the fiscal cliff negotiations that are currently underway in Washington, and the Alliance for Quality Nursing Home Care is not pleased, to say the least.

“With nearly $4 billion in SNF Medicare cuts scheduled to go into effect on January 1, 2013—and with $65 billion in cumulative SNF funding reductions over 10 years already in place—we must respectfully observe that MedPAC’s recommendations have no bearing on the realities faced by our sector, our patients and our workforce,” declared Alliance president Alan G. Rosenbloom.

“To look at the Medicare side only doesn’t tell the full story of the challenges operators are facing and how they are barely making ends meet,” commented American Health Care Association (AHCA) spokesman Greg Crist. “We are against any sort of rebasing at this time but are pleased MedPAC considered Medicaid.”

In its report, MedPAC said that between 2009 and 2010 Medicare payments increased faster than Medicare costs, resulting in an aggregate 2010 Medicare margin of 18.5 percent.  It said that in fiscal year 2011, program spending for SNF services increased nearly $32 billion, up more than 17 percent from 2010, with larger increases for therapy and nontherapy ancillary services (NTA) and slower increases for routine costs. It added that “cost increases have consistently outpaced market basket updates.”

The report disagreed with the industry’s contention that Medicare payments should help to balance lower payments from Medicaid, saying that “Facilities with high shares of Medicare payments—presumably the facilities that need revenues the least—would receive the most subsidies from the higher Medicare payments.” MedPAC also said such a policy would not discriminate between states with relatively high and low payments. It said higher Medicare payments could further encourage providers to select patients based on payer source or to rehospitalize dual-eligible patients to qualify them for a Medicare-covered higher payment stay.

“If the Congress wishes to help certain nursing facilities (such as those with high Medicaid shares), it would be more efficient to do so through a separate targeted policy,” MedPAC said.

Meanwhile, the GAO report found that SNFs’ over-billing practices in 2009 resulted in $1.5 billion in inappropriate Medicare payments, or 5.6 percent of the $26.9 billion paid to SNFs during that year.

The report said that for 57 percent of upcocded claims, SNFs reported providing more therapy than was indicated in the medical record, and that for a quarter of upcoded claims, reviewers found the amount of therapy indicated on beneficiaries’ medical records was not reasonable and necessary.

GAO cited one case in which the SNF provided the highest level of therapy to the beneficiary even though the medical record indicated the physician refused to sign the order for the therapy. In another example, the SNF reported providing speech therapy even though the medical record said no speech therapy was needed and none had been provided.

GAO said SNFs misreported information for 47 percent of claims, and for 30 percent, the amount of therapy the beneficiaries received or needed was misreported.

Significantly, the reviewers found several instances in which SNFs provided more therapy during the “look-back” period than during periods that did not determine payment rates. In one example, the SNF provided 90 to 110 minutes of therapy a day to the beneficiary during the look-back period, but when that period was concluded, provided only about half that amount of therapy.

For 17 percent of claims, SNFs misreported whether beneficiaries received special care, primarily from one item—intravenous medication. The report continued with additional examples of upcoding and flat-out lying about what had been provided.

Now, GAO acknowledged that significant changes to SNF payments were made for FYs 2011 and 2012. However, the watchdog agency called for more action “to reduce inappropriate payments to SNFs.” It said that “considering the high cost of SNF services, significant savings could result if CMS focused additional attention on these payments.”

GAO recommended that CMS:

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