Overpayments to Nursing Homes
Center for Medicare Advocacy issued a bulletin about overpayments to nursing homes. The bulletin explains the long history of nursing homes collecting more money than they deserve or are entitled to for services especially for nonexistent rehabilitation. Changes have recently been made to rein in wasteful spending and overpayments.
In March 2009, as in previous years, Medicare Payment Advisory Commission (MedPAC) recommended that Congress not increase Medicare nursing home rates. MedPAC reported that "the aggregate Medicare margin for freestanding" nursing homes was 14.5% in 2007; that for the seventh consecutive year, the aggregate Medicare margins exceeded 10%; and a one quarter of SNFs show profit margins of at least 24.8%. That is a big profit margin paid for by taxpayers.
How overpayments occur:
SNFs are paid for services they do not provide. PPS pays SNFs a daily rate based on the assessed needs of the resident. Although getting paid based on the assessment, most residents were not provided the therapy they required in order to be placed into those assessment categories. SNFs did not provide the amount of rehabilitation services they were paid to provide and rehabilitation services actually provided to residents under PPS decreased. Now it will pay only for services that are actually provided in the SNF. Billions of dollars in overpayments have been wasted. CMS is not recouping the billions of dollars of overpayments from the previous four years.
The falsity of "concurrent" therapy. SNFs shifted from one-on-one therapy to "concurrent" therapy, a method by which one professional therapist works with multiple residents on different therapy tasks at the same time, but SNFs still bill Medicare as if each resident received 100% of the therapist's attention. For example, SNF Medicare reimbursement rules have allowed a therapist treating four patients concurrently during the course of one hour to bill Medicare for four full hours of therapy. CMS reports that more than a quarter (28.26%) of therapy provided in SNFs is now concurrent. CMS will close this loophole when it implements revisions to Medicare by requiring allocation of concurrent therapy time and by limiting concurrent therapy to two residents. CMS is not recouping overpayments for the many past years of "concurrent therapy."
Greed. When several large multi-state nursing home chains filed for bankruptcy protection in the late 1990s, Congress responded by increasing Medicare reimbursement rates for SNFs in multiple ways. Although Congress increased the nursing component of all SNF rates by 16.66%, SNFs did not spend the billion-dollar rate increase on nurse staffing, as Congress intended. The GAO found, "in the aggregate, SNFs' nurse staffing ratios changed little after the increase in the nursing component of the Medicare payment rate took effect. Overall, SNFs' average nursing time increased by 1.9 minutes per patient day." The national for profit chains took the increase and put it in profits to increase their stock instead of using the money to increase staffing to provide proper and adequate care.
CMS has taken strong steps to eliminate some of the waste and overpayments to SNFs that have been well-documented by MedPAC and the GAO for many years. In the final regulations published in August, CMS eliminated the look-back period; recalibrated the rates to maintain budget neutrality; revised the rules for concurrent therapy; and is considering development of a SNF-specific wage index. These changes and the changes included in H.R. 3200 should not result in reduced staffing and quality of care, as suggested by the nursing home industry. Instead, they will improve the integrity of the Medicare program by ensuring that SNFS are reimbursed accurately and fairly for the services they actually provide.
