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OIG alleges rampant skilled nursing billing errors

November 19, 2012
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Skilled nursing facility (SNF) operators greeted last week with a bombshell launched by the Office of the Inspector General (OIG). On Tuesday, the OIG published a report ominously titled “Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More Than a Billion Dollars in 2009.” Unfortunately, the contents of the report were perhaps even more foreboding than the title. Indeed, the report alleges that approximately one-quarter of the claims reviewed were incorrect. 

Not surprisingly, the report has been met with concern from the industry, not only questioning the OIG’s individual findings but also its extrapolation methodologies. The OIG reviewed a mere 499 claims from 245 nursing home stays and then extrapolated its findings to the over six million claims nationally for 2009. The nursing homes sampled in the report were not identified.

Using this statistical extrapolation, the OIG concluded that Medicare inappropriately paid $1.5 billion in 2009, representing 5.6 percent of the $26.9 billion paid to SNFs that year. The OIG alleged that the vast majority of the improper payments stemmed from SNFs incorrectly classifying residents within the resource utilization group (RUG) system. The OIG asserted that SNFs improperly described residents in their MDS assessments, resulting in improper RUG classifications and erroneous billings. According to the OIG, this occurred in roughly 23 percent of all claims in 2009, with upcoding—using a RUG higher than necessary—allegedly occurring in 20.3 percent of all claims.

Many of the alleged problems identified by the OIG occurred because the medical records for a beneficiary did not match the procedures for which Medicare was billed. For example, the OIG reported that 57 percent of the upcoded claims had more therapy described in the MDS than was indicated in the medical record. As well, the OIG found that 47 percent of claims had information for at least one MDS item that was not supported or consistent with medical records. An important takeaway from these statistics is the need for providers to properly keep medical records in order to support the MDS descriptions and RUG classification that lead to Medicare billings. Inconsistencies between the documents caught the attention among the OIG’s reviewers.


Jason Bring


Jason E. Bring, Esq., is a member of the Healthcare Group of...