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Have you heard the one about the farmer that had 154 sheep standing out
in a field? He wanted more, so he rounded them up and then he had 200.

A cute joke unless the farmer then sells you the sheep and charges you
for 200! Unfortunately, some skilled nursing facilities are doing just
that: they are rounding up the number of minutes of service that they
provide to patients so that they can charge Medicare more.

In a suit filed against RehabCare/Kindred, the Government collected $133
million to resolve claims of a host of different types of fraud, including
that the company rounded up when it reported the number of minutes of
therapy it provided to patients. The government found out about the fraud
when two whistleblowers filed suit under the False Claims Act. The Government
paid the whistleblowers $24 million as a result of their work in helping
to stop the fraud.

How Rounding Fraud Works Under Part A

Under Part A billing for SNF inpatients, the SNF has to put down the exact
number of minutes of therapy that the patient receives; no rounding is
permitted. If a SNF encourages its therapists to round up the number of
minutes, it will be billing Medicare for more minutes of therapy than
the patient actually received.

How Rounding Fraud Works Under Part B

As with Part A, Medicare makes the unremarkable demand that: “Since
the outpatient therapy benefit under Part B provides coverage only of
therapy services, payment can be made only for those services that constitute
therapy.” CMS Manual, Ch. 15, §220.1. And also as it does with
Part A, Medicare looks at the amount of time that a therapist spends with
a patient when it determines how much to reimburse the medical provider.

However, under Part A, Medicare has the provider add together the exact
number of minutes that each therapy provides, and uses that number to
fit the patient into a general payment category. By contrast, under part
B, Medicare pays per service that a patient receives. For therapy, Medicare
looks at “units” (or increments) of time that the patient
receives skilled therapy.

Some rounding is permitted, but it has to be within certain limits. Medicare
uses 15 minutes as the standard for a "unit" of therapy. Under
what Medicare calls "The Rule of 8", if therapy lasts 7 or fewer
minutes, the time is rounded down and the SNF does not get paid for a
unit. But if the therapy lasts between 8 and 15 minutes, the SNF is allowed
to claim a full “unit.” If the therapist spends more than
15 minutes, Medicare applies the same principle. If the therapist provides
between 16 and 23 minutes of service, then the time rounds down and the
provider can only bill for one unit of therapy. On the other hand, if
the provider spends anywhere between 24 and 30 minutes, the provider can
round up to 30 minutes and bill for 2 full units.

If a SNF urges its therapists to write down 8 or more minutes, when in
fact they actually spent less than 8 minutes with the patient, the SNF
will end up billing more units than the patient actually received, and
Medicare will pay more than it ought to.