Concerns Heighten Over Increased Billing of Medicare at Nursing Homes


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This created a new billing category called “ultra-high” which was only to be used for 5% of the patients who needed highly specialized care and rehabilitation.

Within a few years ultra-high category patients were flooding nursing homes resulting in $542 million a year in overpayments. Since then the numbers of ultra-high category patients has quadrupled with the amount of waste and abuse costs billions of dollars a year. The billing problems are targeted in President Obama’s health-care legislation, with proposed changes to two rules that have been exploited by nursing homes over the past decade.

“Facilities have been able to bill the way they want, and they are billing for more services than they are providing to people,” said Toby S. Edelman, a senior attorney for the Center for Medicare Advocacy, a watchdog group in Washington. “There’s been a lot of abuse.”

“There is a lot of vulnerability in the system, and we are concerned by what we’ve seen,” said Jodi Nudelman, regional inspector general for the HHS New York field office, which is conducting the examination.

HCR MoreCare, a Washington-area nursing home, has put patients in the most expensive billing category at almost 5 times the national average. A spokesman for ManorCare, whose headquarters is in Toledo, said residents are coded into billing categories based on their medical and rehabilitative needs.

“There is really nothing else we can add as to why patients fall into any particular category,” said the spokesman, Rick Rump.

North American Health Care, a nursing home chain currently operating in 35 facilities throughout the country, is being investigated by the HHS for its billing discrepancies. Throughout NAHC 64% of its patients are billed in the highest category while the national average in 9%. This trend was found last year by the Service Employees International Union. The Post conducted its own investigation and found that NAHC operated 21 of the top 30 facilities nationally with the highest percentage of residents billed in the most expensive category.

SEIU gave the results of its NAHC investigation to Representative Pete Stark of California; the findings indicated that NAHC “may have overbilled Medicare more than $180 million through upcoding.” John L. Sorensen, NAHC’s president and chief executive, said residents in the highest category are recovering from major surgeries and need specialized care.

“They have not told me about any upcoding or wrongdoing at all,” Sorensen said. “We have honest and forthright business practices in place. . . . We don’t have any need or reason to be doing any kind of upcoding. That would be completely wrong.”

Many nursing homes have tried to capitalize on the aging baby boomers by providing high-end services that were once reserved for hospitals and large rehabilitation centers. There are about 15,000 nursing homes with the highest level of care, skilled nursing facilities, throughout the country who rely heavily on Medicare to turn a profit. Last year alone Medicare spent over $25 billion on these specific nursing homes.

“Upcoding, billing for services not rendered, and billing for worthless services have been significant problems for years, costing taxpayers many millions, if not billions, of dollars,” said Marie-Therese Connolly, who headed the Justice Department’s Elder Justice and Nursing Home Initiative from 1999 to 2007.

In 1999, a HHS inspector examined medical charts of certain nursing homes, discovering 46% of the patients have been incorrectly placed in higher billing categories than were necessary. This brought forward a push for an “audit trail” but this was recommendation was rejected because of the possible widespread confusion over how to assess a patient’s category level.

In 2002, the General Accounting Office said it appeared that nursing homes were using the confusion over coding to profit from charging residents for care in higher billing levels. In 2006 the estimated overpayments amounted to $542 million and within the last four years the number of patients being billed in the highest category has quadrupled according to a report by MedPac. MedPac said the increase in the number of patients is not the underlying factor that has caused such large increases in overpayments.

“Facilities are paid for providing therapy even when a patient’s need for and benefit from it has not been demonstrated,” MedPac wrote to Congress last year.

In 2006, The Centers for Medicare and Medicaid Services tried to limit the unwarranted billing in ultra-high categories but the efforts failed when nursing homes found a loophole that made it easier to categorize patients in high-billing categories.

The new health care legislation calls for closer monitoring of nursing changes and requires skilled-nursing facilities to give more detail in their patient-care staffing and spending. It has specifically changed two rules that have enabled nursing homes to bill excessively for the past decade.

“We have to be watching the broad scope of what’s happening in the industry and where the gaming is taking place,” said Sheila Lambowitz, a supervisor at the Centers for Medicare and Medicaid Services.




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