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Just how much money can Medicare lose because of skilled nursing facilities
(SNF) fraud? Apparently, more than a billion dollars a year.

In a 2015 press release, the Department of Justice did not mince words
about why it had several ongoing False Claims Act lawsuits against SNFs:
“Skilled nursing homes and rehabilitation facilities have also been
fertile ground for civil fraud and false claims actions.” In 2013, the Office of Inspector General
for the agency that oversees Medicare slapped a number on the fraud. Using
the 2009 data that was available, OIG concluded that “inappropriate
payments to skilled nursing facilities cost Medicare more than a billion
dollars” — in 2009 alone.

In fact, according to the
OIG report, a staggering ¼ of all SNF billing was in error. In total, Medicare
made “$1.5 billion in inappropriate Medicare payments.” Wow.
Whistleblowers, using the False Claims Act, are stopping a portion of
this fraud, but to stem that sort of tide U.S. taxpayers are going to
need a lot more whistleblowers.

Errors — or fraud?

OIG’s report charitably called the overbilling “errors.”
But it also explained that: “The majority of the claims in error
were upcoded; many of these claims were for ultrahigh therapy.”
Upcoding means that the SNF provided one service but billed as if it really had
provided a more expensive service. Most people would not call upcoding
an “error”; they’d call it fraud.

OIG explained that a minority of the errors were either because the SNF
downcoded the service it provided, which clearly would be an actual error
since the SNF would not be looking to lose money intentionally, or because
the care did not meet Medicare coverage requirements — which of
course easily could be due to fraud, not “error.”

According to the report, “SNFs misreported information on the MDS
for 47 percent of claims.” Since the MDS forms the basis for the
SNFs claims, incorrect information on the MDS can translate into big bucks
for the SNF. I’ll explain more about the MDS in future posts.

OIG also found that SNFs “commonly misreported therapy, which largely
determines the RUG and the amount that Medicare pays the SNF.”

$1.5 billion a year in “errors” — mostly fraud —
is crazy expensive for taxpayers.

A Series on How SNFs Cheat Medicare

In my next posts I will be talking about the various ways SNFs might abuse
the Medicare system.

For example, an unscrupulous SNF might give a patient therapy that will
be of no benefit to the patient, just so that the SNF can bill Medicare
for the service. A skilled nursing facility might give a patient more
therapy than he needs, or more expensive therapy (such as attended e-stim)
when a cheaper therapy (such as unattended e-stim) would have sufficed.
The SNF could charge individually for services that are supposed to be
part of a package deal, a type of fraud called unbundling. The SNF could
provide drugs to patients who don’t need them, or select more expensive
drugs than the patient truly needs.

Unfortunately the list goes on, and creativity seems to go hand-in-hand
with fraud. Do you have more information on how SNFs are cheating Medicare
and Medicaid? Please let me know at
[email protected].


Lee’s peers have named her a Georgia SuperLawyer every year for two decades.