Auditors raise issues with Medicare payments to nursing homes

Skilled nursing facilities have been charging Medicare for more therapy and daily care over the past few years even though "beneficiary characteristics remained largely unchanged," according to a new report.

The Health and Human Services Department's Office of Inspector General in particular found that payments for "ultra high therapy" — the highest level of therapy, with the highest per diem rates — increased 90 percent from 2006 to 2008 ($5.7 billion to $10.7 billion). Also, the report found that for-profit facilities were "far more likely than nonprofit or government" facilities to bill for higher paying categories of care, and "a number" of facilities had "questionable billing" in 2008.

The report makes four recommendations to the Centers for Medicare and Medicaid Services: 

  • monitor overall payments to skilled nursing facilities and adjust rates, if necessary;
  • change the current method for determining how much therapy is needed to ensure appropriate payments;
  • strengthen monitoring of facilities that are billing for higher-paying payment categories; and
  • follow up on the facilities identified as having questionable billing. 

The report adds that the agency agrees with three of the four recommendations. The agency did not concur with the recommendation to change the current method for determining how much therapy is needed but stated it is committed to pursuing additional improvements to the payment system.