Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Improper Payments Made by Medicare Part B for Services Covered Under the Part A Skilled Nursing Facility Prospective Payment System in Calendar Years 1999 and 2000," (A-01-02-00513)

May 28, 2004

Complete Text of Report is available in PDF format (415 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The report points out that Medicare paid 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 $108.3 million.  Moreover, the beneficiaries of these services may have incurred unnecessary charges of $33.1 million in coinsurance and deductibles.  This problem occurred because adequate controls had not been established at SNFs or suppliers to prevent improper billing of Medicare for Part B services included in the Part A SNF payment rate.  Among other things, OIG recommended recovery of the improper payments, and that CMS instruct its contractors to encourage SNFs and suppliers to establish and/or enhance billing controls.