OIG Report: SNF therapy billing way too high

The OIG’s September 2015 report on skilled nursing facilities, “The Medicare Payment System for Skilled Nursing Facilities Needs to be Reevaluated” found that Medicare payments for therapy “greatly exceeded” SNFs’ costs for therapy, amounting to a $1.1 billion increase in payments in FYs 2012 and 2013. The cause? SNFs billed for the highest level of therapy, ultra-high, considerably more in those years, even though the residents’ characteristics did not show much change. The report found that SNFs increased their billing for this RUG category from 49% in FY 2011 to 57% in FY 2013.

The result of this increased therapy billing resulted in $53.1 billion in Medicare payments to SNFs in FYs 2012 and 2013, a cost that would have been reduced to $52 billion if billing had not increased for higher category RUGs. 80% of the $1.1 billion paid was used on ultra-high therapy. As such, the OIG has recommended that CMS evaluate how it can reduce the base rate for therapy, change the method of payment to one that relies on resident characteristics/care needs, adjust payments to eliminate case mix creep, and strengthen oversight of SNF billing. CMS concurred with all recommendations made by the OIG and noted that the Agency continues to work towards monitoring billing practices for fraud prevention.

Read the OIG report here.

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