Review of Compliance with the Consolidated Billing Provision Under the Prospective Payment System for Skilled Nursing Facilities

EXECUTIVE SUMMARY:

Under current law a skilled nursing facility (SNF) is reimbursed a prospective payment (PPS) for all covered services (consolidated billing) rendered to its Medicare beneficiaries in a Part A stay and outside providers and suppliers must bill the SNF (not Medicare) for services rendered. A probe judgement sample of 147 Medicare Part A SNF PPS claims submitted by 18 SNFs and paid by 4 fiscal intermediaries (FI) for the 7-month period ending April 30, 1999 disclosed, however, that the FIs continue to make separate Part B payments (50 of the 147 claims) to outside providers and suppliers for services which were subject to consolidated billing. As a result, the Medicare program is paying twice for the same service--once to the SNF under Part A prospective payment and again to an outsider provider or supplier under Part B. Medicare computer edits need to be established to detect and prevent claims noncompliant with the consolidated billing provision. We recommended that the Health Care Financing Administration (HCFA) establish such edits. We also recommended that HCFA work with the OIG in developing a computer application to identify and recover overpayments made subsequent to the implementation of the consolidated billing provision, and issue a fraud alert and memorandum to contractors of the prevalent types of payment errors and directing contractors to educate their providers with respect to compliance with the consolidated billing requirement. The HCFA concurred with our recommendations.

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