The Office of the Inspector General (OIG) at the U.S. Department of Health and Human Services (HHS) found that "inappropriate payments" amounted to about 5.6 percent of all Medicare payments made to skilled nursing facilities (SNFs) in 2009.
Errors affected one-quarter of the Medicare SNF claims, and the errors led to $1.5 billion in inappropriate payments, HHS OIG officials said in an SNF billing report.
Medicare paid a total of $27 billion for SNF services in 2009.
Medicare is not normally supposed to pay for true long-term care (LTC) services, but it does pay for nursing home care -- SNF services -- for Medicare enrollees who need that kind of care to continue to recover after they leave the hospital.
The Centers for Medicare & Medicaid Services (CMS) changed the SNF reimbursement formula in a fashion that increased SNF payments in the fiscal year that started Oct. 1, 2010. CMS then cut SNF spending by $3.9 billion in fiscal year 2012, to make up for what CMS officials regard as being overpayments made in fiscal year 2011.
The Obama administration has proposed cutting an additional $65 billion from SNF reimbursement spending over the next decade.
The HHS OIG investigators conducted their analysis by reviewing a random sample of 499 2009 SNF claims for 245 stays, then having the reviewers decide whether the SNF claims were consistent with the patients' medical records.
The reviewers found that SNFs had included "upcoding" -- use of inaccurate, more expensive billing codes -- in 20 percent of the claims and downcoding in just 2.5 percent of the claims.
The reviewers found that 2.1 percent of the claims did not meet CMS SNF coverage requirements.
"For 57 percent of the upcoded claims, SNFs reported providing more therapy on the [claim] than was indicated in the medical record," HHS OIG officials said in the report. "For a quarter of the upcoded claims, reviewers determined that the amount of therapy indicated in the beneficiaries’ medical records was not reasonable and necessary."
In one case, officials said, an SNF billed Medicare for speech therapy even though a physician indicated in the medical record that no speech therapy was needed and that none had been provided.
HHS OIG officials are recommending that CMS ask its contractors to conduct more medical reviews of SNF claims and to use its fraud prevention system to identify SNFs that are upcoding claims.
CMS officials told HHS OIG officials that they agree with the recommendations and will take the officials' recommendations for trying to reduce the number of inaccurate, medically unnecessary and fraudulent SNF claims.