Industry News

HHS Spends Over $1 Billion in Improper Payments to Skilled Nursing Facilities

Lisa Shuman | November 2012

The Department of Health and Human Services Office of Inspector General (OIG) reported results from a review of 499 Medicare Part A claims from a random sample of 245 skilled nursing facility (SNF) stays in 2009. The OIG examined whether SNFs complied with Medicare coverage requirements.

The OIG found that SNFs reported inaccurate information on the Minimum Data Set (MDS) items and billed Medicare for higher paying Resource Utilization Groups (RUGs) than medically necessary. Notably, Medicare issues additional payments for therapy RUGs and higher levels of therapy. The OIG determined that SNFs incorrectly submitted one-quarter of all sampled claims, resulting in $1.5 billion in improper Medicare payments. The OIG recommends that the Centers for Medicare & Medicaid Services take the following actions:
Expand reviews of SNF claims;

  • Enforce its Fraud and Prevention System to identify SNFs that bill for higher paying RUGs;
  • Monitor SNFs’ compliance with therapy assessments;
  • Change the method for establishing the amount of therapy needed;
  • Increase the accuracy of MDS items; and
  • Follow up on SNFs that bill incorrectly.

The OIG report on inappropriate payments to SNFs is available at:

Department of Health & Human Services Office of Inspector General. “Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More Than a Billion Dollars in 2009.” OEI-02-09-00200. 9 Nov. 2012.

About the Author

Ms. Shuman assists health care organizations to develop, implement and evaluate their compliance programs and HIPAA privacy programs. Ms. Shuman specializes in our firm’s HIPAA Privacy services, including leading privacy investigations, breach risk assessments, breach notification letters, breach reporting to the Office for Civil Rights and corrective actions plans. She specializes in serving as Interim Privacy Officer for large health care systems, managed care organizations, comprehensive cancer center and health care business associate.