Skilled Nursing Facilities: Steps For Reducing FCA Liability

Several government agencies have voiced concerns related to the level of therapy services necessary to care for residents of Skilled Nursing Facilities (SNFs). The level of therapy services indicated for SNF residents affects the resource utilization groups (RUGs), which in turn determine the reimbursement that SNFs receive under Medicare Part A for providing care to residents. The more acute a resident's physical therapy needs are, and the more therapy minutes are provided in assessment periods to determine RUG rates, the higher the resident's RUG rate and the higher the SNF's reimbursement will be.

Both the Office of Inspector General (OIG) and the U.S. Centers for Medicare and Medicaid Services (CMS) have expressed skepticism with regard to the accuracy of assessments that result in the higher levels of coding, and the U.S. Department of Justice recently extracted a $10 million settlement payment from a SNF chain related to the issue as part of a $38 million total settlement payment—the largest ever paid by a SNF to resolve alleged False Claims Act (FCA) violations.

OIG and CMS Concerns

Both the OIG and CMS have expressed skepticism regarding the proportion of residents needing higher levels of (and thus more expensive) therapy. The recently released OIG 2015 Work Plan notes that Medicare Part A billing remains a topic of interest and that the OIG intends to explore therapy utilization trends. As in the 2014 Work Plan, the OIG has indicated that its prior work reflected that SNFs "increasingly billed for the highest level of therapy even though beneficiary characteristics remained unchanged."

CMS, in comments to the FY 2015 SNF prospective payment system (PPS) Rule—in both Proposed and Final forms—echoed these concerns. In the Proposed Rule, CMS noted that the percentage of SNF residents classified into Ultra-High Rehabilitation groups has increased "rather steadily." CMS also observed that many patients are receiving the minimum minutes of therapy to qualify for a given RUG. In the Proposed Rule, CMS stated that it would continue to follow and analyze these trends and requested comments regarding such "observations."

In the Final Rule, CMS observed that "given the comments highlighting the lack of medical evidence related to the appropriate amount of therapy in a given situation, it is all the more concerning that practice patterns would appear to be as homogenized as the data would suggest." CMS also noted that it found certain commenters' explanations for the therapy trends "troubling and entirely inconsistent with the intended use of the SNF benefit." For example, CMS cited a commenter who noted that the minimum minutes for a RUG level are often perceived as maximum minutes and that some providers might implement internal rules that prohibit clinicians from providing therapy above RUG level minimums contrary to their professional medical judgment...

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