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Compliance alert: OIG wants rate cuts for SNF therapy

Posted by Margaret Scavotto, JD, CHC on 10/16/15 5:30 AM

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The OIG recently issued a new report: The Medicare Payment System for Skilled Nursing Facilities Needs to be Re-evaluated. In this report, the OIG concludes that the current Medicare reimbursement system rewards SNF for providing more therapy than needed, and rate cuts are in order.

The OIG noted that SNFs are incentivized to provide the minimum amount of minutes in the higher therapy levels (e.g. 720 for ultra-high), and increasingly do so - even though beneficiary acuity has not changed. The report also found that the average margin on therapy is 29%, and "Medicare payments for therapy greatly exceeded SNFs' costs for therapy." The OIG recommends that CMS:

  • evaluate a Medicare therapy rate reduction
  • reimburse therapy based on beneficiary characteristics (rather than minutes)
  • increase CMS oversight of SNF billing with more claims review and data analysis

CMS plans to target 1) SNFs with low incidence of changes in therapy, and 2) SNFs who use therapy assessments improperly.

Questions your Compliance Officer should be asking

Time will tell if the reimbursement system changes. What we know now for sure is that therapy is under scrutiny, and the last thing SNFs need is the additional cost of defending false claims. Your compliance program should respond accordingly:

  • Are we managing to the minutes when it comes to therapy? What % of RUH beneficiaries receive exactly 720 minutes? Is this medically appropriate?
  • Are we using our PEPPER report to evaluate our % of RUH days and % of COT assessments against the national benchmarks?
  • Does our compliance auditing program include therapy medical record reviews to evaluate medical necessity of therapy provided?
  • If therapy is a contracted provider, are they part of our compliance approach? Recent false claims settlements with SNFs are due to the actions of contracted therapy. Does the therapy company attend compliance training?  

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