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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Potential Improper Payments Made by Medicare Part B for Services Covered Under Part A Skilled Nursing Facility Prospective Payment System," (A-01-00-00538)

June 5, 2001

Complete Text of Report is available in PDF format (1.8 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out that Medicare is paying twice for the same service--once to a skilled nursing facility (SNF) under the Medicare Part A prospective payment system (PPS) and again to an outside supplier under Medicare Part B. Under current law a skilled nursing facility (SNF) is reimbursed a prospective payment for covered services (consolidated billing) rendered to its Medicare beneficiaries in a Part A stay. Outside providers and suppliers must bill the SNF (not Medicare Part B) for most services and supplies provided. The potential improper payments to Part B providers and suppliers totaled $47.6 million in 1999, and occurred because edits have not been established to detect and prevent supplier claims noncompliant with the consolidated billing provision. Among other things, we recommended recovery of the improper payments, and that the Health Care Financing Administration establish payment edits within its common working file and the Medicare contractors' claims processing systems to ensure outside providers and suppliers comply with the consolidated billing provision. The HCFA concurred with our recommendations.