Government Review of Rehab in Nursing Homes

The Office of the Inspector General recently released a report about "questionable billing" which found: [Our] findings raise concerns about the potentially inappropriate use of higher paying RUGs, particularly ultra high therapy. The findings also indicate that the current payment system provides incentives to SNFs to bill for ultra high therapy and for high levels of assistance when these levels of care may not be needed. We recognize that the Centers for Medicare & Medicaid Services (CMS) is making several changes to the RUGs in fiscal year 2011. However, more needs to be done to reduce the potentially inappropriate and significant increases in payments for ultra high therapy and other higher paying RUGs.

Based on these findings, we recommend that CMS:

Monitor overall payments to SNFs and adjust rates, if necessary.

As CMS makes changes to the number of RUGs, it should vigilantly monitor overall payments to SNFs and adjust RUG rates annually, if necessary, to ensure that the changes do not significantly increase overall payments.

Change the current method for determining how much therapy is needed to ensure appropriate payments. The amount of therapy that the SNF provides to the beneficiary during the look-back period largely determines the amount that Medicare pays the SNF. CMS should consider several options to ensure that the amount of therapy paid for by Medicare accurately reflects beneficiaries’ needs. CMS should consider requiring each SNF to use the beneficiary’s hospital diagnosis and other information from the hospital stay to better predict the beneficiary’s therapy needs. In addition, CMS should consider requiring that therapists with no financial relationship to the SNF determine the amount of therapy needed throughout a beneficiary’s stay. CMS should also consider developing guidance that specifies the types of patients for whom each level of therapy, including ultra high therapy, is appropriate.

Strengthen monitoring of SNFs that are billing for higher paying RUGs. CMS should instruct its contractors to monitor SNFs’ use of higher paying RUGs using the indicators discussed in this report. CMS should develop thresholds for the indicators and instruct its contractors to conduct additional reviews of SNFs that exceed them. If SNFs from a particular chain frequently exceed the thresholds, then additional reviews should be conducted of the other SNFs in that chain.

While this has no direct impact on our hospital therapy services, it is one more indication that (1) CMS is focused on inappropriate payments to providers, and that (2) overutilization of therapy services is on their radar screens. We can expect that in one form or another, hospital and outpatient therapy services will feel a similar squeeze.