OIG to launch study’ of billing fraud in SNFs

If a recent probe in California is any indication, skilled nursing facilities (SNFs) that offer physical and occupational therapy are next on the federal government's health care hit list, with a broad series of audits expected to commence within months.

Indeed, the HHS Office of the Inspector General (OIG) has announced that, based on a small study conducted by its San Francisco office, it is already preparing to launch a nationwide "study" this summer targeting SNFs that bill Medicare for medically unnecessary physical and occupational therapy services.

For the California study, OIG investigators pulled medical records at SNFs picked at random from a list of facilities administered by Blue Cross of CA or Mutual of Omaha. Inaba-Foto Associates, a firm that contracts with several fiscal intermediaries, conducted medical reviews of about 15 patient records at each site. According to OIG, fully 45% of all the records indicated that the physical or occupational therapy that patients received was medically unnecessary according to Medicare guidelines. Indeed, the report notes that at one SNF, the percentage was as high as 80%.

One controversial aspect of the study, however, is the fact that OIG included as medically unnecessary records in which there was no physician order or in which documentation was simply missing. That bothers some critics, such as Frederick P. Somers, associate executive director of the Bethesda, MD-based American Occupational Therapy Association. "While there may be deficiencies in documentation, that doesn't necessarily mean that skilled services were not required or rendered," he says.

Also of concern is the fact that OIG is attempting to justify launching a major nationwide campaign against fraud at SNFs on the basis of 80 records from six facilities in one state. "The sample size that they used is totally inadequate to support the conclusions they draw," Somers says. "I would hope that the national study is a little more rigorous. We'll be very interested in the criteria they're going to use to determine the whole issue of medical necessity."

A source at OIG, however, says it's wishful thinking to believe the criteria in the national study will differ at all from those used in the California inspections. "Basically, they're going to use the same methods and everything that they used in this one," he says.

According to OIG's report on the study, the following factors accounted for the high volume of medically unnecessary services at the six SNFs:

- Services are frequently provided when non-skilled services would be more appropriate.

- Therapists sometimes ignore the beneficiary's prior level of function and set unrealistic goals.

- The frequency of therapy is sometimes excessive.

- Time billed for therapy exceeds the actual time that services are provided.

In its report, OIG contends that the $7 billion billed annually to Medicare for physical and occupational therapy includes "significant amounts for medically unnecessary" services. It also claims that its limited study proves that the Balanced Budget Act's $1,500 cap for therapy services for Part B beneficiaries is totally appropriate, a conclusion Somers calls "absurd." The cap, he claims, represents an arbitrary limit that fails to account for the specific needs of beneficiaries. "I don't know how [the OIG] gets from here to there," he says.