Review heightens concerns over Medicare billing at nursing homes

By Scott Higham and Dan Keating
Washington Post Staff Writers
Monday, March 29, 2010

More than a decade ago, Congress set out to squeeze the fraud out of Medicare billing at nursing homes, requiring more precise justifications for costs. It created new "ultra-high" billing categories intended to be used for only 5 percent of the patients needing highly specialized care and rehabilitation.

But within a few years, nursing homes flooded the ultra-high categories with patients, contributing to $542 million a year in potential overpayments, federal analysts found.

Since then, the numbers in the ultra-high categories have quadrupled, and the amount of waste and abuse could reach billions of dollars a year, according to nursing home experts and a Washington Post examination of the program. The billing program is specifically targeted in President Obama's health-care legislation passed last week by Congress, changing two rules that experts said have been exploited by nursing homes to inflate bills.

"Facilities have been able to bill the way they want, and they are billing for more services than they are providing to people," said Toby S. Edelman, a senior attorney for the Center for Medicare Advocacy, a watchdog group in Washington. "There's been a lot of abuse."

Federal analysts assigned to the inspector general's office for the Department of Health and Human Services are examining the billing program.

"There is a lot of vulnerability in the system, and we are concerned by what we've seen," said Jodi Nudelman, regional inspector general for the HHS New York field office, which is conducting the examination.

A separate division of the HHS inspector general's office is investigating North American Health Care, which operates 35 facilities, most of them in California.

Across the chain, 64 percent of NAHC patients are billed in the highest category; the national average is 9 percent. The category covers the most extensive medical care combined with the most intensive rehabilitation.

The pattern was discovered last year by the Service Employees International Union, which has been feuding with NAHC over efforts to organize the homes' employees. The Post independently analyzed an updated version of the data and confirmed the pattern. The Post also found that NAHC operated 21 of the top 30 facilities nationally with the highest percentage of residents billed in the most expensive category.

In the Washington area, two nursing homes owned by HCR ManorCare put their residents in the most expensive billing category at nearly five times the national average, according to the Post analysis. The ManorCare home in Silver Spring put 45 percent into that category, and the ManorCare home in Wheaton put 43 percent.

A spokesman for ManorCare, whose headquarters is in Toledo, said residents are coded into billing categories based on their medical and rehabilitative needs.

"There is really nothing else we can add as to why patients fall into any particular category," said the spokesman, Rick Rump.

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