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Transcript for the audio podcast: Skilled Nursing Facilities

From the Office of Inspector General of Department of Health and Human Services

[Roberta Baskin] I'm Roberta Baskin, Director of Media Communications. I'm speaking with Jodi Nudelman, a Regional Inspector General for the Office of Evaluation and Inspections in New York. And, we're talking about the report called Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More Than A Billion Dollars in 2009. So can you tell me Jodi about Medicare's skilled nursing facility benefit? I know it's complicated, but how does it work?

[Jodi Nudelman] Sure. Well skilled nursing facilities are nursing homes that provide skilled nursing care, therapy, and other services, like assistance with eating or bathing, to Medicare patients. They often provide physical, occupational, or speech therapy to patients who really need it, such as those recovering from a hip fracture or stroke.

[Roberta Baskin] And how do they do that?

[Jodi Nudelman] Well Medicare pays these skilled nursing facilities according to the services they provide and the needs of the patient. What happens is the facility assesses each patient and then assigns them to a payment group. Medicare pays a different rate for each group. These rates vary widely from roughly 200 dollars to almost 800 dollars a day for each patient.

[Roberta Baskin] That's a huge difference.

[Jodi Nudelman] Yes. To give you a sense of the size of the benefit, last year, Medicare paid for services provided to nearly two million patients.

[Roberta Baskin] So why did you look into skilled nursing facilities in the first place?

[Jodi Nudelman] Well our prior work has uncovered numerous problems with how these facilities bill Medicare. For example, we have found that some facilities billed for unnecessary services. We also recently found a concerning trend: facilities are increasingly billing for the highest amount of therapy even though the types of patients and their medical conditions have not really changed.

[Roberta Baskin] So that's building on your past work. What did you now find in this most recent study on skilled nursing facilities?

[Jodi Nudelman] We found that Medicare paid 1.5 billion dollars...

[Roberta Baskin] 1.5 billion?

[Jodi Nudelman] Yes, and this is money it should not have paid. This resulted from facilities billing over a quarter of all their claims in error.

[Roberta Baskin] What's really going on?

[Jodi Nudelman] Well for a small percentage of the claims, the patient was not even eligible for care. For a much larger percentage of the claims, the facilities billed for more services than the patient needed or that the facility actually provided. This is a practice called upcoding. And upcoding typically involved how facilities billed for therapy.

[Roberta Baskin] Jodi, why are there so many inaccurate payments for therapy? I mean, why is this such a problem?

[Jodi Nudelman] A huge vulnerability exists with how Medicare pays for therapy. So under the current system, how much nursing facilities get, depends on how much therapy they provided. So they have an incentive to bill for more therapy than the patient may need. The other problem is that facilities billed for more therapy that they actually provided.

In fact, we found that for nearly half of all claims, facilities reported inaccurate information when they assessed the patient; this, of course, contributed to the inaccurate payments for therapy as well as for other services.

[Roberta Baskin] Well these are enormous problems that you've identified. And the Centers for Medicare and Medicaid Services, or CMS, is the responsible agency for Medicare so what are you recommending to them?

[Jodi Nudelman] So in recent years, Medicare has made a number of changes to how they pay for skilled nursing facilities. But, as this study shows, clearly more needs to be done to save taxpayer dollars. Most importantly, Medicare needs to change how it pays for therapy to reduce the incentives for facilities to bill for more therapy than patients need. Medicare should also strengthen its oversight of these payments by increasing its reviews of these claims.

[Roberta Baskin] So how would you do that?

[Jodi Nudelman] Well that means they need to look more closely and scrutinize the information that facilities most commonly misreport. And, finally, it has to improve the accuracy of the information that facilities report. To do this, Medicare should more closely monitor how facilities complete these assessments and they should hold them accountable when the information is incorrect. This is essential to paying skilled nursing facilities accurately.

[Roberta Baskin] Thank you Jodi Nudelman, for sharing this OEI work on skilled nursing facilities and how inappropriate payments cost Medicare more than a billion dollars in one year alone.

[Jodi Nudelman] Thank you Roberta.


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