Updated on: March 31, 2016

RACs Going After Skilled Nursing Homes: Part II

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Original story posted on: March 30, 2016

EDITOR’S NOTE: This is the second part of a two-part series on the Centers for Medicare & Medicaid Services (CMS) authorizing the Recovery Auditors (RAs) to review therapy services provided by skilled nursing providers (SNFs). In this article, the author discovers that what CMS does not say may be the clue for avoiding auditing problems. Read part one of this two-part series: CMS RACs Eyeing Up Nursing Homes.

The Centers for Medicare & Medicaid Services (CMS) recently issued a release that impacts skilled nursing facilities (SNFS). The agency instructed auditors to review SNFs to determine if they are overbilling for therapy services. 

“To help ensure that patient need rather than payment incentives are driving provision of therapy services, CMS is providing approval to the Medicare Fee-for-Service Recovery Auditor Contractors (RACs) to investigate this issue,” CMS said. 

The agency sent out a group of five Excel files with the release. Let’s take a look at the data files and see what they provide and what they do not. Here are the names of the five files released: 

  • SNF_PUF_Therapy_Minutes_Final.xlsx.
  • SNF_PUF_Provider_by_RUG_Final.xlsx.
  • SNF_PUF_RUG_by_state_Final.xlsx.
  • SNF_PUF_RUG_Final.xlsx.
  • SNF_PUF_Provider_Final.xlsx. 

SNF_PUF_Therapy_Minutes_Final.xlsx 

This file includes a unique listing of providers, listed by Medicare provider number, and the number of ultra-high and very high resource utilization group (RUG) claims reported to CMS during 2013. A percentage of the claims for which the number of minutes by which the claim qualified is within 10 minutes of the threshold for billing is also in the file. The source of the data is the Minimum Data Set, or MDS, for 2013.  

Here are the actual file headings:

Provider ID
Facility Name
Street Address
City
State
Zip Code
RV Assessment Denominator
Percent of RV Assessments within 10 minutes of Threshold
RU Assessment Denominator
Percent of RU Assessments within 10 minutes of Threshold

Since it requires 500 therapy minutes to qualify for “RV” reimbursement, the rate identified for RV claims is the percentage of claims with 500 to 510 minutes of therapy. Similarly, since it requires 720 therapy minutes to qualify for “RU” reimbursement, the rate identified for RU claims is the percentage of RU claims with 720 to 730 minutes of therapy. 

What is the point? It appears that CMS may be saying that if it audits claims for a nursing home that has high ratios within the 10-minute threshold identified on the report, there is a higher chance that the claims may have been “upcoded,” even if only a small number of minutes are adjusted. 

You could also look at the data to show that a provider with very few claims near the threshold may have vastly overstated the number of therapy minutes.

SNF_PUF_Provider_by_RUG_Final.xlsx

For the same nursing homes, this file lists for each the RUGs reported in 2013. The same nursing home is reported on multiple lines, along with that nursing home’s respective RUG activity.

Here are the actual column headings:

Provider ID
Facility Name
Street Address
City
State
ZIP Code
RUG
RUG Description
Total Days
Distinct Beneficiaries Per Provider/RUG
Average SNF Charge Amount Per Day
Average SNF Medicare Allowed Amount Per Day
Average SNF Medicare Payment Amount Per Day
Average SNF Medicare Standard Payment Amount Per Day
Average SNF Charge Amount Per Beneficiary
Average SNF Medicare Allowed Amount Per Beneficiary
Average SNF Medicare Payment Amount Per Beneficiary
Average SNF Medicare Standard Payment Amount Per Beneficiary


SNF_PUF_RUG_by_state_Final.xlsx 

For each state and RUG, this file includes the number of claims and residents. It also has average charge and payment data for each RUG. 

Here are the actual column headings:

RUG
RUG Description
State
Total Days
Distinct Beneficiaries Per RUG/State
Average SNF Charge Amount Per Day
Average SNF Medicare Allowed Amount Per Day
Average SNF Medicare Payment Amount Per Day
Average SNF Medicare Standard Payment Amount Per Day
Average SNF Charge Amount Per Beneficiary
Average SNF Medicare Allowed Amount Per Beneficiary
Average SNF Medicare Payment Amount Per Beneficiary
Average SNF Medicare Standard Payment Amount Per Beneficiary

SNF_PUF_RUG_Final.xlsx

Nationally, for each RUG, this file includes the number of days and residents. It also has average charge and payment data for each RUG.

Here are the actual column headings:

RUG
RUG Description
Total Days
Distinct Beneficiaries Per RUG
Average SNF Charge Amount Per Day
Average SNF Medicare Allowed Amount Per Day
Average SNF Medicare Payment Amount Per Day
Average SNF Charge Amount Per Beneficiary
Average SNF Medicare Allowed Amount Per Beneficiary
Average SNF Medicare Payment Amount Per Beneficiary

SNF_PUF_Provider_Final.xlsx 

This file includes a unique listing of nursing homes, listed by Medicare provider number, and basic information for the nursing home, including:

Provider ID
Facility Name
Address
City
State
ZIP Code
Facility Total Medicare Stays
Facility Total Medicare Residents
Facility Average Medicare Length of Stay
Facility Total Medicare Charges
Facility Medicare Allowed Amounts
Facility Medicare Payments
Facility Standard Medicare Payment Amount

What This Does and Doesn’t Tell Us

We can derive from the data the number of claims for each provider that are near the billing threshold for “ultra-high” and “very high” services. We can see for each state and the nation as a whole the number of claims in each RUG group. 

For each nursing home we have the number of residents falling into each RUG group.  For each nursing home we also have their Medicare number, address, city, state, ZIP code, number of Medicare stays, and unique Medicare residents.

What we don’t have is the number of total Medicare days for each nursing home, state, and the nation as a whole. This is important because the factor that drives most audits is the ratio of RU and RV days for each nursing home as compared to their total patient days as compared to the nation, their state, and the country as a whole. 

A nursing home that bills all or most of its claims as requiring an extremely high number of therapy minutes will likely get audited. A nursing home that bills higher percentages of RU and RV than its peer group, whether on a local, state, or national level, will be an audit target.  

What Do You Do Now?

Review data for your nursing home, looking for the following:

  • Ratios of RU and RV RUG claims to total days that exceed state and national ratios.
  • RU and RV claims that have a very high number of claims in the 10-minute threshold.

Looking at the above will tell you whether you may be an audit target. Next, look at your documentation process and talk to your therapy providers. Discuss with them any areas of concern in the data.

Also take a look at your therapy contract. Does your third-party therapy company indemnify you in case of an audit? Are there clauses that limit liability? Can your therapy provider afford to pay large settlements?

Finally, look at the compliance plan you are required to have. If you don’t have a compliance plan, now is a very good time to start creating one. 

About the Author

Timothy Powell is a nationally recognized expert on regulatory matters including the False Claims Act, Zone Program Integrity Contractor audits and OIG compliance. He is a member of the RACmonitor editorial board.

Contact the Author 

tpowell@tpowellcpa.com

Comment on this Article

editor@racmonitor.com

Timothy Powell, CPA CHCP

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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