SNF Fraud

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In 1998, Medicare implemented its per diem Prospective Payment System (PPS) for SNF care which are based upon resident assessments. All Medicare certified SNFs are required to conduct assessments on residents using a standardized assessment tool, called the Minimum Data Set (MDS). Medicare then uses information from this assessment to categorize SNF patients into seven major categories:

  1. Rehabilitation;
  2. Extensive Services;
  3. Special Care;
  4. Clinically Complex;
  5. Impaired Cognition;
  6. Behavior Problems;
  7. Reduced Physical Function. This is done using the Resource Utilization Group (RUG) III grouper. The RUG III grouper is a computer program that converts resident specific assessment data into a case mix classification. In classifying patients into groups based upon their clinical and functional characteristics, the grouper further subdivides each of these seven categories resulting in specific patient RUGs.

For each of the RUGs, the Medicare SNF per diem payment is calculated as the sum of three parts: the nursing component, the therapy component and the non case mix component. Under the nursing and therapy components of the payment rate, each of the RUGs carries a uniquely assigned relative weight factor. This relative weight factor, or case mix index, represents a relative index or resource consumption. Resource intensive patients are assigned to a RUG that carries a higher relative weight factor. This RUG specific relative weight factor is multiplied by the applicable nursing and therapy base rates (which vary depending on whether the SNF is urban or rural) to develop the nursing and therapy components of the per diem payment rate. These two components are then added to the non case mix adjusted component resulting in the total PPS per diem payment rate.

There are certain requirements for atypical stays. For instance, Medicare covers post hospital extended care services at SNFs for a beneficiary who is transferred to an SNF “from a hospital in which he was an inpatient for not less than 3 consecutive days before his discharge from the hospital in connection with such transfer.” For an SNF resident who receives solely custodial care but no medical care as an “inpatient of a skilled nursing facility,” the entire period of time, combined with adjacent hospitalizations, is one continuous “spell of illness.” Medicare covers only up to 150 days of hospital services for each “spell of illness.”

Accordingly, for a SNF admission to be covered under Medicare and most other Government Healthcare Programs, the beneficiary must have a qualifying hospital stay (meaning an inpatient hospital stay), of not less than three consecutive days before the beneficiary is discharged from the hospital. The beneficiary must enter the SNF within 30 days after discharge from the hospital or within such time as it would be medically appropriate to begin an active course of treatment, where the individual’s condition is such that SNF care would not be medically appropriate within 30 days after discharge from a hospital. The skilled services must be for a medical condition that was either treated during the qualifying three day hospital stay, or started while the beneficiary was already receiving covered SNF care. Additionally, an individual shall be deemed not have been discharged from a SNF, if within 30 days after discharge from a SNF, the individual is again admitted to the same or a different SNF.

Skilled Nursing Facility Fraud can take various forms. Qui tam lawsuits often arise from upcoded RUG rates. Questions to ask include, are the rehabilitation and infusion therapy services provided to Medicare beneficiaries in skilled nursing facilities medically necessary, adequately supported, and actually provided as ordered? What is the extent and nature of consecutive Medicare hospital inpatient stays for its patients in general? Is the SNF billing for services on the day of discharge? Is there a failure to submit no-pay bills (which could contribute to inappropriate calculations of Medicare SNF eligible benefit periods)? Medicare Fraud can take many forms in this provider setting.