The New York Times’ Blog called The New Old Age had an informative discussion on Medicare reimbursement and overpayment.  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.

In Medicare, 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. 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.

“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.”


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