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Are You Accurately Coding Medicare SNF RUG Claims?

Based on 2006 research that suggested Medicare had significantly overpaid skilled nursing facility (SNF) Resource Utilization Groups’ (RUGs) claims, the Centers for Medicare & Medicaid Services (CMS) is focusing on coding accuracy to prevent overpayment. It is critical your medical records support the care you are delivering.

“Although this is an important national issue, we are more concerned about our clients under-claiming reimbursement than we are about them over-claiming reimbursement. We want you to receive every penny you are entitled to and not a penny more,” explains Rick Hamilton, a senior living principal with LarsonAllen.

What You Need to Know

What You Can Do Now

How We Can Help

Why are SNFs being targeted?

In a 2006 study, the Office of Inspector General (OIG) reported that 22 percent of SNF claims were up coded. That means Medicare may have overpaid a total of $542 million in SNF claims. Now the Centers for Medicare & Medicaid Services (CMS) is focusing on this issue, and they also plan to identify areas to improve the accuracy of payments.

According to the OIG Work Plan, CMS will “review a national sample of Medicare claims submitted by SNFs to determine the extent to which RUGs included on SNF claims for Medicare reimbursement are accurate and supported by the residents’ medical records.”

Protecting the integrity of Medicare payments continues to be an important focus. Over the last several years, the OIG has allocated about 80 percent of its resources to reviews and investigations of Medicare and Medicaid programs.

This initiative is only one of many targeted areas of risk outlined in the OIG Work Plan. View the full list of work plan components.

Reasons for improper payments from Medicare

CMS has outlined the three primary reasons for improper Medicare payments:
  • Insufficient documentation to support claims
  • Improper coding
  • Lack of medical necessity for claims

Determine if you are subject to a SNF Medicare RUG audit

Even if you’ve never had a claim denied, you could be subject to a medical review. Through increasing probe audits and medical review help letters, Medicare fiscal intermediaries (FIs) have been requesting back up documentation to justify claims.

To be in compliance, your medical records need to support your Minimum Data Set (MDS) submitted for reimbursement.

“For the past two to three years, we haven’t seen a lot of SNF Medicare medical reviews, and consequently CMS fears facilities have become complacent with their clinical record keeping,” says Hamilton.

He explains that some medical records don’t describe the skilled Medicare services in sufficient detail to support the claims. The good news is that this is a fixable situation.

To assess whether your organization is subject to an audit, we recommend taking the following steps by utilizing internal staff or by requesting external assistance:

  • Pull a sampling of your supporting clinical records to analyze the accuracy of coding and sufficiency of documentation
  • Access your RUG clinical profile to compare your Medicare acuity against your peers and find out if you have “atypical” clinical patterns of care

Having this information will allow you to conclude whether you are:

  • Subject to a medical review
  • Claiming too much reimbursement
  • Leaving money on the table

How we can help

Best practice tools and services
LarsonAllen offers best practice tools and services to help organizations determine if they are subject to a SNF Medicare RUG audit and prepare if they are. With our MDS/PPS RUG acuity measurement tools, we can identify atypical utilization and compare your cost report data to your peers nationally or by state, region, or county.

Our senior living professionals specialize in clinical and operational improvement, as well as reimbursement compliance services.

Rick Hamilton is a certified nursing home administrator (CNHA), a registered pharmacist (RPh), and a senior living principal with LarsonAllen. For more information, contact him at 781-986-3242.

Published: 4/14/2008

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