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Medicare Payments to Skilled Nursing Facilities Reevaluated

Last month, Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS), raised longstanding concerns regarding Medicare's skilled nursing facility (SNF) payment system. Among those concerns were the SNF billings for high levels of therapy without markedly different patient results.

HHS's Office of Inspector General (OIG) found that Medicare payments for therapy greatly exceeded SNFs costs for therapy. They also found that under the current payment system, SNFs increasingly billed for the highest level of therapy even though key beneficiary characteristics remained largely the same. Increases in SNF billings particularly for the highest level of therapy resulted in $1.1 billion in Medicare payments in Fiscal Years 2012 and 2013.

The findings of this and prior OIG reports demonstrate the need for the Centers for Medicare & Medicaid Services (CMS) to reevaluate the Medicare SNF payment system. Payment reform could save Medicare billions of dollars and encourage SNFs to provide services that are better aligned with beneficiaries care needs. The recommendations included:

  • Evaluate the extent to which Medicare payment rates for therapy should be reduced,
  • Change the method for paying for therapy, 
  • Adjust Medicare payments to eliminate any increases that are unrelated to beneficiary characteristics, and
  • Strengthen oversight of SNF billing.

The implications for Legacy and Chronic Case costs are significant, with potential savings of over $500 Million per year to CMS by eliminating fraudulent or wasteful billings.

For more information about the HHs OIG report, please click here >>

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