Medicare Fraud by For-Profit Nursing Home Chains

January 14, 2011, 1:20 pm Report Questions Nursing Home Charges By PAULA SPAN The way Medicare pays, and overpays, for nursing home care has been the subject of investigations, calls for reform and general hand-wringing for years. And here it all comes again, but with a new twist. Facilities operated for profit are far more likely to classify patients as needing the highest levels of care, and therefore to collect the biggest payments from Medicare, than nonprofits, according to a recent report by the inspector general’s office of the Department of Health and Human Services. Tellingly titled “Questionable Billing by Skilled Nursing Facilities,” the government study looked into how often nursing homes seek reimbursement for the costliest levels of care and found a huge increase in just two years. Bear with me as I wade into this. In Medicare lingo, a tough language to grasp, people receiving benefits in nursing homes after a hospitalization (the only way Part A pays for nursing homes) are slotted into categories called resource utilization groups, or R.U.G.’s. Which group the beneficiaries fall into depends on how much therapy they receive and how many activities of daily living they need help with. The higher the classification, the more Medicare pays. From 2006 to 2008, the inspector general’s office discovered, the proportion of patients classified in the highest therapy groups jumped to 28 percent from 17 percent, costing an additional $5 billion ”” with a b. Was that because people were older or sicker? No, the researchers said; the demographics and diagnoses hadn’t changed much. And for-profit nursing homes, which constitute more than two-thirds of the nation’s nursing homes, were strikingly more apt to seek the highest reimbursement, the report found. Almost a third of their patients were in the highest R.U.G.’s, compared with 18 percent in nonprofit homes and 13 percent in government facilities. For-profit facilities also kept patients substantially longer, 29 days versus 23 at nonprofit homes. Moreover, among the for-profits, the large chains were the most likely to charge for patients in the highest care categories and to extend their stays. “These billing patterns indicate that certain [skilled nursing facilities] may be routinely placing beneficiaries into higher paying R.U.G.’s” ”” regardless of how much care they need ”” “or keeping beneficiaries in Part A stays longer than necessary,” the report concluded. Unnecessary treatments and therapies can harm patients, not just the Medicare budget, the report noted. The inspector general’s office, continuing its review, made several recommendations (stronger monitoring, for instance) that the Centers for Medicare and Medicaid Services have accepted, and the office also referred the 348 worst offenders to Medicare officials for action. The American Health Care Association, whose members are primarily for-profit nursing homes, responded by saying that the patient population had grown more medically complex and required higher R.U.G. designations, but that it would work cooperatively with Medicare officials. Families looking into nursing home care for their elders already have reason to be conscious of the distinctions between for-profit and nonprofit homes. For years, studies have found that nonprofits do better on some vital measurements. “It’s consistent. The for-profits have the worst staffing ratios and poorer quality based on the number of deficiencies ”” violations of federal requirements ”” and the most serious deficiencies,” said Charlene Harrington, professor emeritus of social and behavioral sciences at the University of California, San Francisco, who has led a lot of that research. In a new study, not yet published, Dr. Harrington also has found that of all forms of ownership, homes owned by the 10 largest chains fared worse than other for-profits. “These facilities are reporting the highest acuity levels” ”” meaning the most serious conditions for patients ”” “and the worst staffing,” she told me. “Facilities are supposed to increase their staffs when people are sicker.” These averages, based on data from thousands of nursing homes, don’t necessarily predict how well a particular facility performs, either for short-term stays or as a permanent home. “There clearly are good for-profit facilities with dedicated owners,” said Catherine Hawes, a professor of health policy and management at Texas A&M. And as a look at the Nursing Home Compare site shows, some nonprofits also have serious problems. But nonprofits don’t have to pay dividends or protect stock prices; they may be more apt to invest their returns in services and care, Dr. Hawes pointed out. “If I had to rely on a single piece of information, deciding about a facility for myself or a loved one, I would choose based on ownership status,” she said. And as a bonus, that choice may help save taxpayers a bundle as well.