Medicare Skilled Care Criteria

Unusual Weather We Are Having:
The Medicare Audit Climate
HARMONY UNIVERSITY
The Provider Unit of
Harmony Healthcare International, Inc. (HHI)
Presented by:
Carrie Mullin
Director of Denial Management
Elisa Bovee, MS OTR/L,
Vice President of Operations

Housekeeping
Sign In
Contact Hours Certificate
A Little About Me
Handouts
Contact Information for Questions
Copyright © 2013 All Rights Reserved Harmony Healthcare International, Inc. 2

Speaker Bio (Elisa Bovee)
Vice President of Operations for Harmony Healthcare International (HHI), an industry
leader in Long-Term Care consulting on a national level
Over 20 years of experience in the long-term care industry, practicing and providing
consulting services related to therapy services and Medicare Regulations and Guidelines
Manager of a diversified team of consultants who have extensive knowledge in the areas of
MDS 3.0, RUG-IV, Documentation, Therapy Program development and state-specific
Medicaid Case mix
Appeals Coordinator for a National nursing home company
Proficient in Medicare Denials
Professional in Reimbursement guidelines for Medicare and Medicaid in the skilled nursing
facility
Former Director of Education and Training and Regional Consultant for Harmony
Healthcare International
Author of many articles featured in select long-term care industry trade magazines
Provider of public and private education on a national level focused on a multitude of
topics including Medicare regulations, and therapy solutions for case management in the
SNF
Provider of extensive training for MDS Coordinators, Therapy Directors and Rehabilitation
Staff on MDS coding, RUG-IV Intimacy, Skilled Nursing Therapy Documentation in the
SNF and Denials Management for the SNF

Harmony Healthcare International, Inc. 4
Speaker Bio (Carrie Mullin)
Director of Denial Services for Harmony Healthcare
International, Inc. and Corporate Consultant for HHI since 2008
MS OTR/L, RAC-CT
Education:
Masters of Science in Occupational Therapy from Spalding
University in Louisville, KY
Continuing Education in Contracture and Geriatric
Therapeutic Exercise Courses
Experience:
Senior Occupational Therapist and Director of Rehabilitation
Services at Episcopal Senior Life Communities in Rochester,
NY
Expert in Denials, Appeal letters, and prepping facilities for
ALJ hearings
Copyright © 2013 All Rights Reserved

Disclosure: The planners and presenters of this educational activity have no
relationship with commercial entities or conflicts of interest to disclose:
Planners:
Elisa Bovee, MS, OTR/L
Diane Buckley, BSN, RN, RAC-CT
Beckie Dow, RN, RAC-MT
Keri Hart, MS CCC, SLP, RAC-CT,
Kristen Mastrangelo, OTR/L, MBA, MHA
Christine Twombly, RNC, RAC-MT, LHRM
Presenters:
Carrie Mullin

Harmony Healthcare International, Inc.
Disclosure
Speakers:
Carrie Mullin
The speakers have no relevant financial relationships to
disclose
The speakers have no relevant nonfinancial relationships to
disclose
Copyright © 2013 All Rights Reserved 6

Objectives
The learner will be able to summarize the
multiple types of Medicare Contractor Audits
and associated Compliance themes.
The learner will be able to summarize Trends
and Triggers in Compliance Audits and
Common Provider Pitfalls.
The learner will be able to summarize
strategies for appealing Medicare Claim
Denials.
Harmony Healthcare International, Inc. 8Copyright © 2013 All Rights Reserved

Section I
What is Skilled Care?

Why is this material important?
Which team members should be aware
of the Medicare Skilled Care criteria?
How often will this criteria be relevant
to current beneficiaries and applicable
for denied claims?

Requires the skills of qualified technical or
professional health personnel such as RN, LPN, PT,
OT or SLP
Must be provided directly by or under the general
supervision of a licensed nurse or skilled rehab
personnel to assure the safety of the resident and to
achieve the medically desired result
“General supervision” requires initial direction and periodic
inspection of activity
Ordered by a physician
Services are needed and provided on a daily basis

The need for skilled care must be
justified and documented in the
medical record
Conditions may have prompted the
initial hospitalization, but also include
the conditions that arose during
recovery in the SNF

What is Skilled Care ?
Direct Skilled Nursing Services
Management and Evaluation of a Care
Plan
Observation and Assessment
Teaching and Training
Skilled Rehabilitation

Skilled Services Categories:
Inherent Complexity
Inherent Complexity – Direct skilled
nursing services including:
IV feeding
IV meds
Suctioning
Tracheostomy Care
Ventilator support
Ulcers

Inherent Complexity
Inherent Complexity
Tube feedings
Respiratory Therapy 7 days per week
Surgical wound or open lesions with treatments
Unstable clinically with diabetes with injections
Transfusions
Chemotherapy
Colostomy Care, early post op care

Skilled Observation and Assessment
Reasonable probability or possibility for
complication
Potential for further acute episodes
Identify and Evaluate the need for
modification of treatment
Evaluate initiation of additional medical
procedures
Skilled observation can be required until the
treatment regimen is essentially stabilized

Fever
Dehydration
Septicemia
Pneumonia
Nutritional Risk
Chemotherapy
Weight loss
Blood sugar control
Impaired cognition
Severe Mood and
Behavior conditions
18Copyright © 2013 All Rights Reserved

Identify and outline daily skilled
nursing observations and assessments
Record DAILY each itemized area listed
on your outline

Neurological
Respiratory
Cardiac
Circulatory
Pain/Sensation
Nutritional
Gastrointestinal
Genitourinary
Musculoskeletal
Skin

A patient with arteriosclerotic heart disease
with congestive heart failure requires close
observation by skilled nursing personnel for
signs of decompensation, abnormal fluid
balance, or adverse effects resulting from
prescribed medication
Skilled observation is needed to determine when the
digitalis dosage should be reviewed or whether other
therapeutic measures should be considered, until the
patient’s treatment regimen is essentially stabilized

A patient has been hospitalized following a
heart attack. Following treatment but before
mobilization, he is transferred to the SNF.
Because it is unknown whether exertion will
exacerbate the heart disease, skilled observation is
reasonable and necessary as mobilization is initiated
and continued until the patient’s treatment regimen
is essentially stabilized

A frail 85-year-old man was hospitalized for
pneumonia. The infection resolved, but the
patient, who had previously maintained
adequate nutrition, will not eat or eats poorly.
The patient is transferred to a SNF for monitoring of fluid
and nutrient intake and the assessment of the need for tube
feeding and assisted feeding if required. Observation and
monitoring by skilled nursing personnel of the patient’s
oral intake is required to prevent dehydration.

A patient left the acute hospital on a high
dosage of Coumadin with daily clotting
time studies
Assessment and observation is needed until a
maintenance dosage is attained and the
patient/resident shows no adverse symptoms.
Regulation is an integral part of this
patient/resident’s coverage. Ongoing observation
and assessment, notifying the physician and
multiple changes in the plan of care, are also
skilled in nature.

If a patient was admitted for skilled
observation but did not develop a further
acute episode or complication, the skilled
observation services still are covered so long
as there was reasonable probability for such a
complication or further acute episode
“Reasonable probability” means that a potential
complication or further acute episode is a likely
possibility

Management and Evaluation of a Care Plan
Based on the Physician’s orders, these
services require the involvement of
skilled nursing to meet the resident’s
Medical needs
Promote recovery
Ensure medical safety

This area includes
The sum total of unskilled services
Potential for serious complications
High probability of relapse
Recovery and safety
Meet medical needs
Includes resident’s overall condition

Topic Areas to include:
Surgical sites
Circulatory status
Status of fractures
Maintenance of weight-bearing status
Skin Care
Labs
Consultant Recommendations

Although any of the required services could be
performed by a properly instructed person, that person
would not have the capability to understand the
relationship among the services and their effect on each
other. Since the nature of the patient’s condition, his
age and his immobility create a high potential for
serious complications, such an understanding is
essential to assure the patient’s recovery and safety. The
management of this plan of care requires skilled nursing
personnel until the patient’s treatment regimen is
essentially stabilized, even though the individual services
involved are supportive in nature and not require skilled
nursing personnel.

Example: An aged patient is recovering from
pneumonia, is lethargic, is disoriented, has residual
chest congestion, is confined to bed as a result of his
debilitated condition, and requires restraints at times
To decrease the chest congestion, the physician has
prescribed frequent changes in position, coughing
and deep breathing. While the residual chest
congestion alone would not represent a high risk
factor, the patient’s immobility and confusion
represent complicating factors when coupled with
the chest congestion, could create high probability
of a relapse.

Teaching and Training: Activities
which require skilled nursing or skilled
rehabilitation personnel to teach a
patient and/or family member how to
manage the patient’s treatment regimen

Colostomy care
Insulin administration
Prosthesis management
Catheter care
G-tube feedings
IV access sites
Braces, splints and
orthotics
Wound dressings and
skin treatments
Medication Management
Orthopedic Precautions

33
Skilled Rehabilitation
Transmittal 262
On a daily basis
Services rendered are reasonable and
necessary
MD ordered
Practical matter
An appropriately licensed or certified
individual must provide or directly supervise
the therapeutic service and coordinate the
intervention with nursing services

34
Skilled Rehabilitation/
MD Involvement
The service must be ordered by a physician.
The therapy intervention must relate directly
and specifically to an active written treatment
regimen established by the physician after
any needed consultation with the qualified
rehabilitation therapy professional and must
be reasonable and necessary to the treatment
of the beneficiary’s illness or injury necessary
to the treatment of the beneficiary’s illness or
injury

35
Skilled Rehabilitation/
MD Involvement
MD involvement to prevent injuries
Medicare allows the professional
therapist to develop a suggested plan of
treatment and to begin providing
services based on the plan prior to MD
signature
MD signature required before facility
bills Medicare.
MD Faxed signatures acceptable

36
Skilled Rehabilitation Overview
Directly related to a written plan of
treatment
Requires knowledge/skills/judgment of
qualified professional
Services must be considered under
acceptable standards clinical practice
Expectation of improvement of restorative
potential in a reasonable and predictable
period of time….or….
Establishment of a safe and effective
maintenance program

37
Basic Criteria for Rehabilitation
Services
Must be specifically related to the Physician’s
Treatment Plan
Skill of a qualified therapist must be needed
Treatment plan must expect the patient to
improve
Services must fall within accepted standards
of medical practice and be specific to the
patient
The services must be reasonable and
necessary

Harmony Healthcare International
Section II
Improvement Standard

CMS Settlement
What does this mean for the SNF?
How do you proceed?
What can I do tomorrow to implement
change in my facility?

CMS Settlement
Attorneys from the Center for Medicare
Advocacy, Vermont Legal Aid and the
Centers for Medicare & Medicaid Services
(CMS) have agreed to settle the
"Improvement Standard" case, Jimmo v.
Sebelius
A proposed settlement agreement was filed
in federal District Court on October 16, 2012

CMS Settlement
The lawsuit, Jimmo v. Sebelius, was
brought on behalf of a nationwide class
of Medicare beneficiaries by six
individual beneficiaries and seven
national organizations
Representing people with chronic
conditions, to challenge the use of the
Improvement Standard

CMS Settlement
CMS will revise the Medicare Benefit
Policy Manual and other Medicare
Manuals to correct suggestions that
Medicare coverage is dependent on a
beneficiary "improving"
New policy provisions will state that
skilled nursing and therapy services
necessary to maintain a person's
condition can be covered by Medicare

CMS Settlement
CMS will undertake a comprehensive
nationwide Educational Campaign to
inform health care providers, Medicare
contractors, and Medicare adjudicators
they should not limit Medicare coverage
to beneficiaries who have the potential
for improvement

CMS Settlement
Instead, providers, contractors, and
adjudicators must recognize
"maintenance" coverage and a
beneficiary's need for skilled care that is
performed or supervised by professional
nurses and therapists

CMS Settlement
Providers should apply the maintenance
standard and provide medically
necessary nursing services or therapy
services, or both, to patients who need
them to maintain their function, or
prevent or slow their decline

CMS Settlement
Under the maintenance standard
articulated in the settlement,
the important issue is whether the
skilled services of a health care
professional are needed, not whether
the Medicare beneficiary will
"improve"

CMS Settlement
The CMS clarification will state:
Skilled therapy services are covered when
an individualized assessment of the patient’s
clinical condition demonstrates that the
specialized judgment, knowledge, and
skills of a qualified therapist (“skilled care”)
are necessary for the performance of a safe
and effective maintenance program

CMS Settlement
The CMS clarification will state:
Such a maintenance program to maintain the
patient’s current condition or to prevent or
slow further deterioration is covered so long
as the beneficiary requires skilled care for
the safe and effective performance of the
program

CMS Settlement
The settlement also establishes a process
of "re-review" for Medicare beneficiaries
who received a denial of skilled nursing
facility care, home health care, or out-
patient therapy services (physical
therapy, occupational therapy, or speech
therapy)

CMS Settlement
Re-review only covers individuals who seek
Medicare on their own behalf, and
“specifically excludes providers or suppliers
of Medicare services or a Medicaid State
Agency.”
The settlement agreement would specifically
preclude providers, suppliers, and a
Medicaid State Agency from receiving a re-
review of claims on behalf of, or under
assignment from, a beneficiary class member

CMS Settlement
BUT - the “revised” standard should be
applied to future claims and/or those that
are currently in the denial or appeal
process
Embrace the OBRA 87 regulations which
require facilities to provide services to
meet “the highest practicable physical,
medical and psychological well-being”
of every resident

Section III
Auditing Agencies and
Contractors

OIG Investigation

Copyright © 2013 All Rights Reserved Harmony Healthcare International, Inc. 55Harmony Healthcare International, Inc. 55
OIG Report: Part A
OIG REPORT
Questionable Billing by
Skilled Nursing Facilities
Medicare Part A

Background
An OIG report found that 26 percent of
claims submitted by SNFs were not
supported by the medical record,
representing over $500 million in
potential overpayments

Copyright © 2013 All Rights Reserved Harmony Healthcare International, Inc. 57Copyright © 2012 All Rights Reserved Harmony Healthcare International, Inc. 57
Background
This study based on an analysis of
Medicare Part A claims from 2006 and
2008 and on data from the Online
Survey, Certification and Reporting
system

Findings
From 2006 to 2008, SNFs increasingly billed for
higher paying RUGs, even though beneficiary
characteristics remained largely unchanged
Percentage of RUGs for ultra high therapy increased
from 17 to 28 percent
Percentage of RUGs with high ADL scores increased
from 30 percent in 2006 to 34 percent in 2008
Even though SNFs significantly increased their
billing for these higher paying RUGs, beneficiaries’
ages and diagnoses at admission were largely
unchanged from 2006 to 2008

Findings
For-profit SNFs were far more likely than
nonprofit or government SNFs to bill for
higher paying RUGs
32 percent of RUGs from for-profit SNFs
were for ultra high therapy, compared to 18
percent from nonprofit SNFs and 13 percent
from government SNFs. In addition, for-
profit SNFs had a higher use of RUGs with
high ADL scores than both for profit and
government SNFs. For-profit SNFs also had
longer lengths of stay, on average, compared
to those of the other types of SNFs.

Findings
A number of SNFs had questionable billing
in 2008
Some SNFs billed much more frequently for
higher paying RUGs than other SNFs. Some
SNFs also had unusually long average
lengths of stay compared to those of other
SNFs
They identified 348 SNFs that were in the top
1 percent for the use of ultra high therapy,
RUGs with high ADL scores, or long average
lengths of stay

Recommendations
1. Monitor overall payments to SNFs
and adjust rates, if necessary
Adjust RUG rates annually, if necessary, to
ensure that the changes do not significantly
increase overall payments

Recommendations
2. Change the current method for determining
how much therapy is needed to ensure
appropriate payments
CMS should consider requiring each SNF to use
the beneficiary’s hospital diagnosis and other
information from the hospital stay to better
predict the beneficiary’s therapy needs
In addition, CMS should consider requiring that
therapists with no financial relationship to the
SNF determine the amount of therapy needed
throughout a beneficiary’s stay

Recommendations
3. Strengthen monitoring of SNFs that are
billing for higher paying RUGs
CMS should instruct it’s contractors to monitor
SNFs’ use of higher paying RUGs using the
indicators discussed in this report. CMS should
develop thresholds for the indicators and instruct
its contractors to conduct additional reviews of
SNFs that exceed them. If SNFs from a particular
chain frequently exceed the thresholds, then
additional reviews should be conducted of the
other SNFs in that chain.

Agency Comments and Office
of Inspector General Response
CMS concurred with three of the four
recommendations
1. Agree: CMS concurred and stated that it would
assess the impact of the recent changes on overall
SNF payments as data became available and
would expect to recalibrate RUG rates in future
years, as appropriate
2. Not Agree: CMS noted several concerns with
relying on information from the beneficiary’s
hospital stay to determine the beneficiary’s
therapy needs during a SNF stay

Agency Comments and Office
of Inspector General Response
3. Agree: CMS concurred and stated that it
would determine whether additional
safeguards shall be put in place by the
Medicare contractors to target their efforts
4. Agree: CMS concurred and stated that it
would forward the list of SNFs with
questionable billing to the appropriate
contractors

Objectives
To determine the extent to which billing
by skilled nursing facilities (SNF)
changed from 2006 to 2008
To determine the extent to which billing
varied by type of SNF ownership in
2008
To identify SNFs with questionable
billing in 2008

Background
In recent years, the Office of Inspector
General (OIG) has identified a number of
problems with SNF billing for Medicare Part
A payments
Notably, an OIG report found that 26 percent
of claims submitted by SNFs in fiscal year
(FY) 2002 were not supported by the medical
record, representing $542 million in potential
overpayments*
*Source: OIG, A Review of Nursing Facility Resource Utilization Groups, OE1-02-
02-00830, February 2006.

Background
Additionally, OIG audits of five SNFs found
that 20 to 94 percent of sampled claims from
2002 through 2004 were medically unnecessary,
were submitted at an inappropriate payment
rate, or were insufficiently documented*
OIG estimated that overpayments to these
SNFs totaled nearly $2.5 million
*Source: OIG, Review of Rehabilitation Services at Gulf Health Care, Texas City, TX, A-06-03-00078, July 2007;
Review of Rehabilitation Services at Skilled Nursing Facilities – Avante at Leesburg, A-06-06-00107, May 2007;
Review of Skilled Services at Heartland Health Care Center of Bedford, TX, A-06-07-00045, April 2008; Review of Skilled
Services at Four Seasons Nursing Center of Durant, OK, A-06-07-00046, May 2008;
and Review of Skilled Services at Regent Care Center of Laredo, TX, A-06-06-00047, August 2006.

Harmony Healthcare International, Inc. 69Copyright © 2013 All Rights Reserved Harmony Healthcare International, Inc. 69
Background
Further, the Medicare Payment Advisory
Commission (MedPAC) has raised
concerns about SNFs’ improperly billing
for therapy to obtain additional Medicare
payments
Specifically, MedPAC noted that the
current system “encourages SNFs to
furnish therapy, even when it is of little or
no benefit”*
*Source: MedPAC, Report to Congress: Promoting Greater Efficiency in Medicare, June 2007,
ch. 8, p. 192.
Accessed at http://www.medpac.gov/chapters/Jun07_Ch08.pdf on May 29, 2009.

Background
In addition, staff at the Centers for Medicare
& Medicaid Services (CMS) noted that some
facilities, to increase payments, may be
inappropriately overstating a beneficiary’s
need for assistance with certain activities of
daily living (ADL)
Staff also noted that certain SNFs might be
keeping beneficiaries in Part A stays longer
than necessary

Background
This study is the first of a three-
part series that focuses on
Medicaid Part A payments to SNFs
The other two studies will be based
on medical record reviews
Source: OIG, Medicare Part A Payments to Skilled Nursing Facilities, OEI-02-09-00200,
and Medicare
Requirements for Quality of Care in Skilled Nursing Facilities, OEI-02-09-00201,
forthcoming.

Identification of SNFs With Questionable
Billing
Analysis based on the 12,286 SNFs that had at
least 50 Part A stays in 2008*
For each SNF, they determined:
The percentage of RUGs for ultra high therapy,
The percentage of RUGs with high ADL scores and
The average length of stay
They considered a SNF to have questionable
billing if it was in the top 1 percent for any of the
three measures
*We established a minimum of 50 Part A stays per SNF to ensure the reliability of the measures. For SNFs with
fewer Part A stays, changes in the characteristics of a small number of Part A stays could have a large effect on the
measures, making the measures loss reliable.

Identification of SNFs With Questionable
Billing
They determined whether these SNFs
had beneficiary populations that
indicated a need for a particularly high
use of higher paying RUGs or for longer
lengths of stay

Limitations
This study assesses SNF billing based
on an analysis of Medicare Part A
claims. It does not, however, determine
whether the claims were appropriate. A
companion study, based on a medical
review, will address this question and
determine whether Part A SNF claims
met Medicare coverage requirements.

Findings
Billing for ultra high therapy increased
substantially from 2006 to 2008. In 2006, 17
percent of all RUGs were for ultra high therapy.
In 2008, this share increased to 28 percent. Over
the same period, SNFs’ use of the other levels of
therapy – very high, high, medium and low –
decreased or stayed about the same. For
example, SNFs’ use of high therapy decreased
from 16 percent in 2006 to 11 percent in 2008.
Similarly, the percentage of RUGs in the
nontherapy categories decreased from 16 percent
in 2006 to 12 percent in 2008.

Findings
Changes in SNF Billing From 2006 to
2008
25%
17% 16%
26%
<1%
16%
28%
25%
11%
24%
<1%
12%
0%
5%
10%
15%
20%
25%
30%
Ultra High
Therapy
Very High
Therapy
High
Therapy
M edium
Therapy
Low Therapy Nontherapy
PercentageofRUGs
2006
2008

Findings
Overall, payments increased by $4.3 billion, or 18
percent from 2006 to 2008. As shown in the below
table, payments to SNFs for ultra high therapy
rose from $5.7 billion in 2006 to $10.7 billion in
2008, an increase of nearly 90 percent.
Changes in Medicare Payments From 2006 to 2008
RUGs
Total Medicare
Payments 2006
Total Medicare
Payments 2008
Difference in
Payments
Ultra high therapy RUGs $5.7 billion $10.7 billion $5.04 billion
Other therapy RUGs $15.6 billion $15.3 billion -$0.25 billion
Nontherapy RUGs $2.5 billion $2.0 billion $-0.46 billion
Total* $23.8 billion $28.1 billion $4.32 billion
*Medicare payments in 2008 do not sum to total because of rounding.
Source: OIG analysis of Part A SNF claims, 2010.

Findings
The shift to ultra high therapy RUGs
was also associated with an increased
use of grace periods. SNFs’ use of grace
periods increased substantially, from 51
percent in 2006 to 61 percent in 2008 for
5 day assessments.

Findings
Billing for high levels of assistance
with daily activities also increased
from 2006 to 2008
In 2006, 30 percent of RUGs had high
ADL scores, compared to 34 percent of
RUGs in 2008

Findings
The shift toward higher paying RUGs did not
appear to be the result of changes in beneficiary
characteristics
Beneficiaries’ ages and diagnoses at admission were
largely unchanged from 2006 to 2008
The average age of beneficiaries changed minimally,
from 79.9 to 79.8 years of age, and the distribution of
beneficiaries’ ages also did not change significantly
during this time
Additionally, the top 20 admitting diagnoses of
beneficiaries were identical and accounted for over
half of all admissions in both years

Findings
Billing for Ultra High Intensity RUGs With High ADL
Scores, by Type of SNF Ownership, 2008
32%
13%
18%
0%
10%
20%
30%
40%
For-Profit SNFs Nonprofit SNFs Government SNFs
PercentageofRUGsforUltraHighTherapy
35%
31%31%
0%
10%
20%
30%
40%
For-Profit SNFs Nonprofit SNFs Government SNFs
PercentageofRUGsWithHighADLScores

Findings
Billing by For-Profit SNFs, 2008
Independently
Owned SNFs
(n = 3,678)
SNFs Owned by
Small Chains
(n = 4,579)
SNFs Owned by
Large Chains
(n = 2,048)
Percentage of RUGs for
ultra high therapy
28% 29% 43%
Percentage of RUGs with
high ADL scores
33% 34% 38%
Average length of stay 28 days 29 days 31 days

OIG Report: Part B
OIG REPORT
Questionable Billing for Medicare
Outpatient Therapy Services
Medicare Part B

Background
Medicare expenditures for outpatient
therapy increased 133 percent between
2000 and 2009, from $2.1 billion to $4.9
billion, while the number of Medicare
beneficiaries receiving outpatient
therapy increased only 26 percent from
3.6 million to 4.5 million

Background
Medicare limits (i.e., caps) its annual
per beneficiary outpatient therapy
expenditures
Providers may exceed a beneficiary’s
cap if the services are medically
necessary and are supported by medical
record documentation
If services are expected to exceed an
annual cap, providers must indicate this
when submitting the claim to Medicare

Background
Identified 20 counties that had in 2009:
The highest average Medicare payment per
beneficiary and
More than $1 million in total Medicare payments
for outpatient therapy (i.e., high utilization
counties)
Analyzed Miami-Dade County, Florida, separately
because it had the highest average Medicare
payments per beneficiary among the high
utilization counties and the highest total Medicare
payments for outpatient therapy in 2009

Background
Six questionable billing characteristics
that may indicate fraud:
(1) Services for which providers indicated
that an annual cap would be exceeded
(2) Beneficiaries whose providers indicated
that an annual therapy cap would be
exceeded on the beneficiaries first date of
service
(3) Payments for beneficiaries who received
outpatient therapy from multiple
providers

Background
(4) Payments for therapy services provided
throughout the year
(5) Payments for services that exceeded an
annual cap
(6) Providers who were paid for more than
8 hours of outpatient therapy provided in a
single day

Findings
Medicare per-beneficiary spending on
outpatient therapy services in Miami-Dade
County was three times the national average in
2009
Medicare paid an average of $3,459 per Miami-
Dade beneficiary for outpatient therapy,
compared to an average of $1,078 nationally
Each therapy beneficiary in Miami-Dade County
received an average of 158 services during 2009,
while the national average was 49 services per
beneficiary

Recommendations
Target outpatient therapy claims in high
utilization areas for further review
Target outpatient therapy claims with
questionable billing characteristics for further
review
Review geographic areas and providers with
questionable billing and take appropriate
action based on results
Revise the current therapy cap exception
process

Background
Outpatient therapy is designed to
improve, restore, and/or compensate for
loss of functioning following illness or
injury
Medicare beneficiaries are eligible to
receive outpatient therapy under
Medicare Part B. Medicare covers three
types of outpatient therapy.

Background
Physical Therapy (PT): Diagnosis and treatment of
impairments, functional limitations, disabilities, or
changes in physical function and health status*
Occupational Therapy (OT): Treatment to improve or
restore functions that have been impaired (or
permanently lost or reduced) because of illness or
injury, to improve the individual’s ability to perform
tasks required for independent functioning**; and
Speech Therapy (SLP): Diagnosis and treatment of
speech and language disorders, that result in
communication disabilities or swallowing disorders***
*CMS, Medicare Benefits Policy Manual, Pub. No. 100-02, ch. 15, § 230.1. **Ibid., § 230.2. ***Ibid., § 230.3.

Counties With Highest Utilization

Findings
Medicare Outpatient Therapy Services in Miami-Dade County
Compared to National Levels, 2009
Outpatient Therapy Utilization
Miami-Dade
County Average
National
Average*
Ratio of Miami-Dade
County Average to
National Average
Medicare payments per beneficiary $3,459 $1,078 3:1
Number of services per beneficiary 158 49 3:1
Medicare payments per provider
serving beneficiaries in a county
$83,867 $10,131 8:1
Number of services per provider
serving beneficiaries in a county
3,828 458 8:1
*Beneficiaries who received services in more than one county and providers that served beneficiaries in more than one county
during 2009 are included in multiple counties in the national averages. In 2009, 4,531,609 beneficiaries received outpatient
therapy from 81,170 providers. Less than 1 percent of these beneficiaries lived in more than one county. Providers served
outpatient therapy beneficiaries in an average of six counties.
Note: All figures have been rounded to nearest whole number.
Source: OIG analysis of 2009 Medicare outpatient therapy claims, 2010.

Findings
Questionable Outpatient Therapy Billing in Miami-Dade County
Compared to National Levels, 2009
Characteristic
Miami-Dade
County National
Ratio of Miami-Date
County to National
Average number of outpatient therapy
services per beneficiary that providers
indicated would exceed an annual cap
60 14 4:1
Percentage of outpatient therapy
beneficiaries whose providers indicated that
an annual cap would be exceeded on the
beneficiaries’ first date of service in 2009
20% 5% 4:1
Average Medicare payment per beneficiary
who received outpatient therapy from
multiple providers
$5,664 $1,670 3:1
beneficiaries whose providers were paid for
services provided throughout the year
10% 3% 3:1
services that exceeded an annual cap
63% 22% 3:1
more than 8 hours of outpatient therapy
provided in a single day
0.3% 0.7% <1:1
Note: All figures have been rounded to nearest whole number.
Source: OIG analysis of 2009 Medicare outpatient therapy claims, 2010.

Findings
As a result of the OIG investigations CMS
launched multiple Medical Review Initiatives

Common Auditors
Significant increase in frequency of
Medical Review
Office of Inspector General (OIG) Reports
Department of Justice (DOJ) Review
Zone Program Integrity Contractor (ZPIC)
Recovery Audit Contractor (RAC)
Budget cuts
Expect to be Reviewed

What is PEPPER?

PEPPER
Program for Evaluating
Payment Patterns Electronic
Report

PEPPER
CMS has announced that they have
mailed all SNFs a “Program for
Evaluating Payment Patterns Electronic
Report” (PEPPER). This report details
Medicare claims data in certain targeted
areas and compare your facility to other
SNFs nationally.

PEPPER
This report will the SNFs detailed Medicare
claims data in certain targeted areas and
compare he SNF to other SNFs nationally.
Skilled Nursing Facilities (SNFs) should have
received via mail on or about August 30, 2013
Envelope with red print on the outside
containing your facility specific PEPPER

Where is My PEPPER

Where is My Pepper?
From TMF Health Quality Institute
These reports are only distributed to Skilled
Nursing Facilities via traditional mail delivery.
Many facilities did not identify the document
mailed as important and may have even
discarded the report as junk mail.
PEPPERResources.org from the PEPPER HELP
Desk
(http://pepperresources.org/HelpContactUs.aspx).

PEPPER
PEPPER gives provider-specific Medicare
data statistics for services vulnerable to
improper payments
Allows providers to see how their facility
compares to all other SNFs across the state,
nation or Medicare Audit Contractors(MAC)
jurisdiction. PEPPER data is also shared with
both Medicare Audit Contractors (MACs) and
the Medicare Recovery Auditor Contractors
(RACs).

PEPPER
Targeted areas were derived from two
recent Office of Inspector General (OIG)
Reports:
“Inappropriate Payments to skilled
Nursing Facilities Cost Medicare than a
Billion Dollars in 2009” (November 2012)
“Questionable Billing by Skilled Nursing
Facilities” (December 2010).

Claims Data
The SNF PEPPER provides SNFs with their
jurisdiction, state and national percentile
values for each target area with reportable
data for the most recent three fiscal years
FY 2012 (October 1 2011 through
September 30th )is displayed on the first
table
When the target (numerator) count is less
than 11 for a target area for a time period,
statistics are not displayed

Compare Target Report
Skilled Nursing Facility PEPPER
Compare Targets Report, Four Quarters Ending Q4 FY 2012
Target Description
Target
Count Percent
SNF
National
%ile
SNF
State
%ile
SNF
Jursidict.
%ile
Therapy High
ADL
Proportion of days billed w ithin episodes of care ending in the
report period w ith RUG equal to RUX, RVX, RHX, RMX, RUC,
RVC, RHC, RMC, RLB, to days billed w ithin episodes of care
ending in the report period for all therapy RUGs
2,730 51.6% 85.3 83.1 82.7
Nontherapy
High ADL
report period w ith RUG equal to SSC, CC2, CC1, BB2, BB1, PE2,
PE1, IB2, IB1 in RUG III; HE2, HE1, LE2, LE1, CE2, CE1, BB2,
BB1, PE2, PE1 in RUG IV, to days billed w ithin episodes of care
ending in the report period for all nontherapy RUGs
528 26.7% 58.3 40.0 46.1
Change of
Therapy
Assessment
Proportion of assessments w ith AI second digit equal to D
w ithin episodes of care ending in the report period, to all
assessments w ithin episodes of care ending in the report
period
60 6.9% 21.8 40.0 34.0
Ultrahigh
Therapy RUGs
report period w ith RUG equal to RUX, RUL, RUC, RUB, RUA, to
days billed w ithin episodes of care ending in the report period
for all therapy RUGs
3,097 58.5% 64.6 69.3 71.4
Therapy RUGs Proportion of days billed w ithin episodes of care ending in the
report period for therapy RUGs, to days billed w ithin episodes
of care ending in the report period for all therapy and
nontherapy RUGs
5,292 72.8% 8.8 15.0 13.7
90+ Day
Episodes of
Care
Proportion of episodes of care ending in the report period at the
SNF w ith a length of stay of 90+ days, to all episodes of care
ending in the report period at the SNF
19 9.0% 25.9 32.9 36.9
Harmony Healthcare International (HHI)
The Compare Targets Report displays statistics for target areas that have reportable data (11+ target numerator count) in the
most recent time period. Percentiles indicate how a Skilled Nursing Facility's (SNFs) target area percent compares to the
target area percents for all SNFs in the respective comparison group. For example, if a SNF's national percentile (see below)
is 80.0, 80% of the SNFs in the nation have a lower percent value than that SNF. The SNF's state percentile (if displayed) and
the Medicare Administrative Contractor (MAC) jurisdiction percentile values should be interpreted in the same manner.
Percentiles at or above the 80th percentile for any target areas, or at or below the 20th percentile for areas at risk for
undercoding, indicate that the SNF may be at a higher risk for improper Medicare payments. The greater (or smaller, for areas
at risk for undercoding) the percentile value, in particular the national and/or jurisdiction percentile, the greater consideration
should be given to that target area.
Target Areas

Target Description
Target
Count Percent
SNF
National
%ile
SNF
State
%ile
SNF
Jursidict.
%ile
Therapy High
ADL
2,730 51.6% 85.3 83.1 82.7
Nontherapy
High ADL
528 26.7% 58.3 40.0 46.1
Change of
Therapy
Assessment
period
60 6.9% 21.8 40.0 34.0
Ultrahigh
Therapy RUGs
3,097 58.5% 64.6 69.3 71.4
nontherapy RUGs
5,292 72.8% 8.8 15.0 13.7
90+ Day
Episodes of
Care
19 9.0% 25.9 32.9 36.9
Target Count and Percent

Percentiles
Target Description
Target
Count Percent
SNF
National
%ile
SNF
State
%ile
SNF
Jursidict.
%ile
Therapy High
ADL
2,730 51.6% 85.3 83.1 82.7
Nontherapy
High ADL
528 26.7% 58.3 40.0 46.1
Change of
Therapy
Assessment
period
60 6.9% 21.8 40.0 34.0
Ultrahigh
Therapy RUGs
3,097 58.5% 64.6 69.3 71.4
nontherapy RUGs
5,292 72.8% 8.8 15.0 13.7
90+ Day
Episodes of
Care
19 9.0% 25.9 32.9 36.9

A Closer Look at Target Areas

HHI Analysis

HHI Comparative Data

HHI State and Jurisdiction Data

PEPPER
Skilled Nursing Facilities (SNFs)
received via mail on or about August
30, 2013
Envelope with red print on the outside
containing your facility specific
PEPPER

PEPPER
PEPPER gives provider-specific Medicare
data statistics for services vulnerable to
improper payments
Allows providers to see how their facility
compares to all other SNFs across the state,
nation or Medicare Audit Contractors(MAC)
jurisdiction. PEPPER data is also shared with
both Medicare Audit Contractors (MACs) and
the Medicare Recovery Auditor Contractors
(RACs).

PEPPER
Targeted areas were derived from two
recent Office of Inspector General (OIG)
Reports:
“Inappropriate Payments to skilled
Nursing Facilities Cost Medicare than a
Billion Dollars in 2009” (November 2012)
“Questionable Billing by Skilled Nursing
Facilities” (December 2010).

ZPIC Audit

Frequency of Medical of Review
Significant increase in frequency of
Medical Review
Office of Inspector General (OIG) Reports
Department of Justice (DOJ) Review
Zone Program Integrity Contractor (ZPIC)
Recovery Audit Contractor (RAC)
Budget cuts
Expect to be Reviewed

Insulate, Insulate, Insulate!!
Zone Program Integrity Contractor
(ZPIC)
CMS launched another major initiative to target
providers other than the hospital setting as the
RAC auditors have been focusing on hospital
audits
Southeast, south central, midwest, northeast
and west coast regions of the U.S. are seeing
the most ZPIC audits at this time

Zone Program Integrity Contractor
(ZPIC)
ZPICs
SafeGuard Services
AdvanceMed
Health Integrity
Integriguard
Surprise on-site visits
Targeted data analysis
Random audits
100% pre-payment holds

On-site Medical Record
Review Audits
AdvanceMed
Request for 160-170 Medical Records
14 Days to Submit
Requesting ONLY Therapy
Documentation
Therapy Staffing levels were requested
AdvanceMed interviews with Staff

Review Audits
Rehab and MDS Questions
Sample therapy staff interview
questions:
1. Do you feel pressure to meet your RUG
levels?
2. Who has the say on discharge from
therapy?

Review Audits
Sample MDS staff interview questions:
1. Who decides the ARD?
2. Do they provide group and concurrent
treatments?

Appeal Determinations

Technical Denial Reasons
Response to Additional Documentation Request
(ADR) did contain documentation requested
Documentation not received within requested time
frame
Physician Certification not signed or missing
Therapy Billing logs do not support billing
Part A – MDS Assessment
Part B - 8 Minute Rule
Illegible documentation
Hospital documentation was not submitted

Clinical Denial Reasons
Documentation did not support medical
necessity
Documentation does not support daily
skilled intervention by a qualified therapist
Documentation in the medical records must
support continued progress

Denial Reasons
Reasonable and Necessary
The amount, frequency and duration of
services were not reasonable, given the
patient’s current status
ST documentation demonstrates that
the therapist worked long enough with
the beneficiary to develop a restorative
program

Denial Reasons
Skills of A Therapist
ST minutes were reduced based on clinical
judgment because documentation did not
support the billed minutes were reasonable and
necessary. The beneficiary could not participate
in self feeding during this period and required
the speech therapist to assist with 100% of the
feeding.
Documentation did not support medical
necessity and need for continued skilled therapy.
Patient needs assistance and supervision.

Denial Reasons
Deconditioning
Skills of a therapist are not required to maintain
function or improve strength and endurance
Services related to activities for the general good
and welfare of patients (e.g., general exercises to
promote overall fitness and flexibility, and
activities to provide diversion or general
motivation), do not constitute physical therapy
services for Medicare purposes
Practicing of previously taught exercises does
not require the skills of a therapist

Denial Reasons
Restorative Level of Care
Skilled therapy was provided when
non-skilled maintenance services
would have been more appropriate
Restorative level of care provided
Documentation supports that
restorative nursing could have helped
the beneficiary progress versus skilled
rehabilitation services
131Harmony Healthcare International, Inc.Copyright © 2013 All Rights Reserved

Denial Reasons
Custodial Level of Care
Skilled rehabilitation and nursing services
were custodial in nature and could have
been met with restorative nursing, family
member, or nursing provision of
intermittent skilled rehabilitation and
nursing services and that needs were
custodial in nature and could have been
met with restorative nursing, family
member, or nursing assistant

Denial Reasons
Prior Level of Function
The therapist ignored the patient’s prior level of
function and set unrealistic goals
Prior level of function was illegible. Prior level of
function was blank.
Patient's functional level had not changed when
compared to his prior level of functioning
documented in the medical record
Weekly nursing progress notes demonstrate that
the beneficiary required the same amount of
assistance (extensive assistance) prior to and after
the hospital stay

Denial Reasons
Rehab Potential
The medical record did not support that
the condition of the patient would
improve materially in a reasonable and
generally predictable period of time
Poor Rehab potential

Denial Reasons
Goals
Goals are not functional (i.e., patient
will perform 10 repetitions of upper
extremity exercises with the yellow
theraband)
Duplication of services between
disciplines

Denial Reasons
Lack of Functional Progress
Gains were not significant and there was no
indication of carryover of the functional task
Lack of documentation relating to the patient
having the potential to show significant
progress
No significant improvement with functional
ability
The outcome of therapy treatment was not
documented
Failure to document a complete treatment plan
as outlined in Documentation Required section

Denial Reasons
Modalities
Electrical Stimulation used to treat motor function
disorders, such as multiple sclerosis, is considered
investigational and therefore, non-covered
Electrical Stimulation used in the treatment of
facial nerve paralysis, commonly known as Bell’s
Palsy, is considered investigational and therefore,
non-covered
Diathermy and Ultrasound heat treatments for the
treatment of asthma, bronchitis, or any other
pulmonary condition are considered not
reasonable and necessary, and therefore, non-
covered

Denial Reasons
Cognitive Therapy
The record documented a diagnosis of
Alzheimer’s disease. SLP documentation
does not support further significant
practical improvement could be expected.
Medical justification for ST services is not
established
Speech treatment cognition for dementia
Poor progress with cognition

Denial Reasons
Inpatient Level of Care
Documentation did not support the
need for inpatient level of care
No daily skilled care requiring a
stay in the SNF
Supervised level of care

Denial Reasons
Medical Record Conflicts
Nursing notes mostly dependent
ADLs/functional tasks throughout the SNF
stay. Nursing note indicated there was no
improvement and fluctuation of progress
with self-care tasks.
MDS assessments indicate that the
beneficiary's ability to perform functional
tasks/ADLs did not improve from the 5-day to
the 90-day assessment

Denial Reasons
Services provided were likely clinically
appropriate but the documentation did
not support:
Technical requirements
Medical necessity
The skills of a therapist were required
Functional outcome
Need to receive an inpatient level of care

Section IV
Appealing Medicare Denied
Claims

Proactive Management of the
Appeal Process
Raise Facility Awareness
Function as a TEAM
Communication
Organization

Appeal Process
Common practice to receive
communications from Medicare review
agencies requesting proof of skilled
services
Understand the process to manage the
inquiry in a timely and detailed
manner in order to minimize lost
Revenue

CMS Overview
Section 521 of the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection
Act of 2000 (BIPA) included provision aimed
at improving the Medicare fee-for-service
appeals process
Part of the provisions mandate that all
second-level appeals (for both Part A and Part
B), also known as reconsiderations, be
conducted by Qualified Independent
Contractors (QICs)

CMS Overview
Centers for Medicare & Medicaid
Services (CMS) contracts with Medicare
Administrative Contractors (MACs) to
assist with local claims processing and
the first level appeals adjudication
function

Medical Review
Many times the process starts with an
Additional Development Request
(ADR)
These can be triggered by items specific
to the patient, such as:
RUG score
ICD-9 code billed
Wide spread probe

Probe Reviews
Under probe reviews, contractors may
examine 20-40 claims per provider for
provider-specific problems
Contractors also conduct widespread
probe reviews (involving approx. 100
claims) when a larger problem, such as
a spike in billing for a specific
procedure, is identified

Medical Review
It is not uncommon for an ADR to
result in the denial of part or all of
a claim
Once an initial claim determination
is made providers have the right to
appeal

Section V
The Appeal

The Appeal
Assign a team leader to oversee the
preparation of the denial package
Work as a team to gather pertinent
information for the Medicare Appeal
Review the medical record to ensure
completeness

The Appeal
It is important to read the ADR or denial
letter thoroughly as the letters will assist
the facility in gathering the appropriate
information
Review the list of items provided in the
decision statement to include in the
medical record
Consider additional info not listed that will
support the services provided

Monitor the Appeal
Internal tracking system to monitor
When ADR or denial was received
When package was sent out
Final results of the review

Conclusion
Educate, Discuss and Prepare
Don’t Wait for Medicare Medical Review
Communicate to all Staff Medicare Skilled
Care Criteria
Refine Interdisciplinary Management of
Medicare Appeals
Establish and Maintain Peer Review and
External Review of Records to Assure
Insulation of Claims

Keys to Success
Provide clinically appropriate care
Document
Medical necessity
Deficits
Outcomes
Meet technical requirements
Review entire medical record
Respond to ADRs timely

Questions/Answers
1 (800) 530 – 4413
Cmullin@harmony-healthcare.com
Ebovee@Harmony-Healthcare.com

Have you Considered a Customized Complimentary
HARMONY(HHI) MEDICARE PROGRAM
EVALUATION
or
CASE MIX ANALYSIS
for your Facility?
Perhaps your facility has potential for additional revenue
Assess your facility against key indicators and national norms
Email us at for more information
RUGS@harmony-healthcare.com
Analysis is cost & obligation free
Copyright © 2012 All Rights Reserved Harmony Healthcare International, Inc.

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