What I found really interesting about this was the statement that “Other industry officials have said that nursing homes have upcoded Medicare claims to offset steep Medicaid cuts or losses”. Any industry insider knows that this practice has been going on long before the cuts ever came into play.
What we have to remember is that nursing homes are still business that depend on revenue and profits to continue running their operations. Many nursing homes are part of a larger chain and operational targets are typically set at the corporate level. Recent reimbursement cuts have led to organizations setting more aggressive revenue targets to meet owner and shareholder expectations. This leaves a facility under immense pressure to produce the results the company has set. The only problem is that the revenue for skilled nursing facilties (SNFs) depends on the census, that is, people. The ability to consistently bring in the sick, frail and elderly to meet a consistent census goal is difficult, mainly because there is always a level of unpredictability.
This keeps an administrator up at night. Do we have enough residents? What services do they require? How do we get more? What percentage of our residents are on Medicaid? Will the hospital refer any new residents? How do I hit my revenue target? All these questions play into how a facility can “hit its number”.
To sum it up, there are so many moving variables, with some being less under your control then others, that need to be accounted for to make the business of nursing homes run effectively. So what’s a home to do?
Improving your marketing campaigns and relationships with the hospitals are very important steps, but they are not going to solve the problem right now. That leaves facilities with a few options to generate revenue. Numerous stories have administrators asking the MDS nurses to redo resident assessments to find additional services that might have been missed, and/or aggressive selling of therapy services that might not have been needed, all this to meet revenue goals. Just to be clear, I am not suggesting that in the course of all these things, facilities provide poor services. On the contrary, some of these facilities may be very well run with great resident outcomes and a very happy, stable staff. And not all facilities engage in these practices, but obviously there are enough for the OIG to step in.
How many? The inspector general of the Department of Health and Human Services said Tuesday that “25% of all Medicare claims submitted by skilled nursing facilities had errors and the majority of those bills were upcoded for ultra-high therapy that wasn’t necessary.” The two examples noted were a case where the skilled-nursing facility provided the highest level of therapy even though the physician refused to authorize it and a case where speech therapy was billed for even though it wasn’t medically necessary or given. Either way, in these harsh economic times, the inconsistencies have been noted and are on a steady path of coming to an end.
What makes this report actionable is that CMS has agreed to all six of the recommendations made by the OIG to tackle this problem.
- Increase and expand reviews of SNF claims
- Use of the agency’s Fraud Prevention System to identify SNFs that are billing for higher paying RUGs
- 3. Monitor compliance with new therapy assessments
- Change the current method for determining how much therapy is needed to ensure appropriate payments
- Improve the accuracy of MDS items
- Follow up on the SNFs that billed in error.
I believe what we have here are some seeds of change. More actionable activities are sure to be coming out of this that will hit the SNFs at an individual level. That pain will then filter up the chain to management where we will finally start to see real change.
Ultimately I believe that facilities need to start doing what I have been talking about all along: explore other avenues to operational and financial efficiency. Just realize that your workforce accounts for 70% percent of your total operating costs. Evaluate things like the total cost of turnover, overstaffing, and other labor related issues. Just do the math on improved labor force initiatives, it all adds up.
I’m passionate about this topic so I want to hear your comments and questions.