Review of Outpatient Therapy Services at Life Care Centers of America Skilled Nursing Facilities in Tennessee

EXECUTIVE SUMMARY:

For the 12-month period ended June 30, 1997, we estimate that Life Care's Tennessee skilled nursing facilities were paid approximately $1.6 million in Medicare Part B outpatient therapy services that did not meet Medicare requirements. Medicare requires that therapy services be reasonable and necessary, and be adequately supported with medical documentation. A statistical sample of therapy services revealed that 59 of the 105 therapy services in our sample were not reasonable and necessary or lacked adequate medical documentation to support the services claimed. The services were not reasonable and necessary because: (1) the level of services rendered did not require a qualified therapist; (2) the beneficiary's condition was not expected to improve materially in a reasonable time; and (3) the amount, frequency, and duration of services were excessive. In addition, the medical records were not specific, adequate and complete to support the services claimed. We believe that Life Care claimed inappropriate services because it did not ensure that the therapy services were billed in accordance with Medicare's reimbursement requirements.