Department  of  Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
PART  B SERVICES  IN  NURSING  HOMES 
- An  Overview  -
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OEI-06-92-O0865  OFFICE  OF  INSPECTOR  GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,  as 
amended,  is to protect the integrity of the Department of Health and Human Services (HHS) 
programs  as well as the health and welfare of beneficiaries  served by those programs.  This 
statutory mission is carried out through a nationwide network of audits,  investigations,  and 
inspections conducted by three OIG operating components:  the OffIce of Audit Services,  the 
OffIce of Investigations,  and the Oftlce of Evaluation and Inspections.  The OIG also informs the 
Secretary of HHS of program  and management problems  and recommends  courses to correct them. 
OFFICE  OF  AUDIT  SERVICES 
The OIGS Office of Audit Services (OAS) provides all auditing services for HHS,  either by 
conducting audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance  of HHS programs  and/or  its grantees and contractors  in carrying  out 
their respective  responsibilities  and are intend~  to provide independent assessments of HHS 
programs  and operations  in order to reduce waste, abuse, and mismanagement  and to promote 
economy and efficiency throughout  the Department. 
OFFICE  OF  INVESTIGATIONS 
The OIGS OffIce of Investigations  (01) conducts criminal,  civil, and administrative  investigations

of allegations of wrongdoing  in HHS programs  or to HHS beneficiaries  and of unjust enrichment

by providers.  The investigative efforts of 01 lead to criminal convictions,  administrative

sanctions,  or civil money penalties.  The 01 also oversees State Medicaid fraud control units which

investigate and prosecute fraud and patient abuse in the Medicaid program.

OFFICE  OF  EVALUATION  AND  INSPECTIONS 
The OIGS OffIce of Evaluation  and Inspections (OEI) conducts short-term  management and 
program  evaluations  (called inspections) that focus on issues of concern to the Department,  the 
Congress,  and the public.  The findings and recommendations  contained in these inspection reports 
generate rapid,  accurate,  and up-to-date information on the efficiency,  vulnerability,  and 
effectiveness of departmental  programs. 
Dallas Staff  Central OffIce 
Leah Bostick  Jennifer  Antico 
Kevin Golladay  Brian Ritchie 
Sarah Taylor  Barbara Tedesco 
Clark Thomas 
For further information  contact:  Kevin GoIladay at 214/767-3310  or 1/800-848-8%0.  Department  of  Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
PART  B SERVICES  IN  NURSING  HOMES 
- An  Overview  
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JUNE  GIBBS  BROWN
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OEI-06-92-O0865
 EXECUTIVE  SUMMARY 
PURPOSE 
To describe  the Medicare  Part  B services  provided  to nursing  home  residents  and  to identify 
and discuss known or potential program  vulnerabilities. 
BACKGROUND 
Medicare Part B covers a wide range of medical services and supplies for the programs 
beneficiaries,  including those in nursing homes.  These services include physician services 
and outpatient hospital services, diagnostic laboratory tests, imaging, ambulance  services, and 
a wide range of medical equipment and supplies. 
We obtained information about Part B expenditures from a 1992 nationally protectable  sample 
of nursing home residents from 10 States and 150 nursing homes.  This includes residents 
receiving Medicare extended care benefits in a skilled nursing facility (SNF), residents paying 
for their stay with private insurance or personal fi.mds,residents on Medicaid, or a 
combination  of the above. 
This inspection was conducted as a part of Operation Restore Trust.  The initiative, focused in 
five States, involves multi-disciplinary  teams of Federal and State personnel seeking to reduce 
fraud, waste, and abuse in nursing homes and home health agencies, and by durable medical 
equipment  suppliers. 
FINDINGS 
Medicare  was charged  $4.1 billion  and Medicare  payments  of $2.7 billion  were made  in 
1992 for  Part  B services  provided  to nursing  home  residents. 
	 The most money was spent on physician evaluation services ($894 million),  followed 
by medical equipment,  supplies, prosthetics, and orthotics ($772 million). 
	 More nursing home residents received a physician evaluation service (82 percent of 
residents) than any other service, followed by laboratory tests (66 percent of residents) 
and x-rays (47 percent of residents). 
The Part  B average  daily  charge  varies  signl~cantly  among  both States  and nursing  homes. 
	 The State average daily charge ranged from an estimated high of $10.88 in Louisiana 
to a low of $4.42 in Maine.  (The estimated national average was $8.75 per day.) 
Differences between nursing home average daily charges ranged from a low of $1.16 
to a high of $49.67.  These are sometimes, but not always, explained by differences  in 
the acuity level of the residents treated in the facility. 
i  The accessibili~  and  vulnerability  of nursing  home  residents  provide  a unique  opportunity 
forfraud,  waste,  and abuse. 
The Medicare Part B program is particularly vulnerable because payment rules and safeguards 
largely ignore the unique character of the nursing home environment and the varied services 
and supplies which can be provided.  Program Vulnerabilities identified include: 
	 Dudicate  Payments:  Considered the payer of last resort, it is appropriate for Medicaid 
agencies to require that providers bill Medicare first for Part B covered services 
provided to dually eligible nursing home residents.  Medicaid pays only for services 
not covered by Medicare.  This overlapping responsibility  creates a vulnerability 
whereby both Medicare and Medicaid could mistakenly pay for the same service or 
supply when each is unaware the other has paid.  To determine the consequences  of 
this vulnerability  the OIG is currently conducting an evaluation of duplicate payments. 
Additionally,  the shilling of payment responsibility  from one program to another can 
increase overall costs to the taxpayer when the program paying for the service allows 
reimbursement  at a greater rate than would ordinarily be paid by the other program. 
	 Lack of Oversight:  Medicare Part B contractors (carriers and intermediaries)  often 
lack enough information to adequately ensure appropriate payments for residents of 
nursing homes.  For example, carriers generally do not have information that a resident 
is in a nursing home unless the claim specifically notes the place of service was a 
nursing home. 
	 Ouestionable Sumiier  or Phvsician Practices:  We have previously documented 
questionable  billing and marketing practices in the provision of incontinence  supplies, 
wound care, and orthotic body jackets to patients in nursing homes.  In addition to 
suppliers, physicians and other practitioners  warrant fiuther review for such practices 
as billing for questionably high numbers of residents on the same day. 
CONCLUSION 
This review of the utilization  of Part B services by nursing home residents  suggests the need 
for further  work in many areas such as:  1) examining the appropriateness  of consolidated 
billing of Part B nursing home expenses and the daily rate,  2) monitoring  trends  in Part B 
payment utilization  over time,  3) evaluating  issues of poor quality care resulting  from such 
practices  as physicians  treating  too many patients  in one day, exposure to excessive  or 
inappropriate  medical  services,  provision  of supplies not medically  necessary,  etc.,  and 4) 
developing  and applying various fraud detection methods to identi~  abusive practices  and 
fraud involving  residents  of nursing homes. 
To support the development  of fraud detection methods,  iiwt.her information  is currently 
being gathered  on the mture  and magnitude  of abusive provider  practices  or program 
ii  vulnerabilities  involving nursing home residents.  This information  will be used to identify 
the most efficient  fraud detection methods. 
COMMENTS 
We thank the Health Care Financing Administration  (HCFA) and the Assistant  Secretary  for

Planning  and Evaluation  (ASPE) for their comments on the draft report.  Changes were

made based on their suggestions.  In addition to suggestions,  the HCFA pointed  out several

actions it has taken to address vulnerabilities  such as:  1) requiring  carriers  and

intermediaries  to selectively  initiate pre-pay reviews on high dollar payment  areas and

aberrant  trends,  and 2) development  of enhanced duplicate payment detection  methodologies

for the Medicare  Transaction  System.  The full text of HCFA and ASPE comments  are

provided  in Appendix B.

... 
111  TABLE  OF  CONTENTS 
Page 
EXECUTIVE  SUMMARY 
INTRODUCTION  . .. . . . . . . . .. . .. .. . . .. . . . . . . . . .. . .. .. . . . . . . . . . . . . . . . . . . . . ..1

UTILIZATION OF PART B BY NURSING HOME RESIDENTS  . . . . . . . . . . . . . . . . . . . 7

PROGRAM VULNERABILITIES  . . . . . . . . . . .. . . . .. . . . . .. . . .. . . . . . . . . . . . . . . . ..14

Duplicate Payments  . . . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . ...14

Nursing Home Differences  . . . . . . . . . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . ...16

LackofOversight  . . . . . . . . .. . .. . . . . .. . .. .. . . . . . . . . . . . . . . . . . . . . . . . . ...17

Abusive Supplier and Physician Practices  . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . .  18

CONCLUSIONS  . . . . . . . . . .. .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .22

ENDNOTES  . . . . . . . . . .. .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...25

APPENDICES 
ProcedureCode  ClassificationandBed  Day Cost . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Agency Comments.  . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..B-1

GLOSSARY OF TERMS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Glossary-1 
iv  INTRODUCTION 
PURPOSE 
To describe  the Medicare  Supplementary  Medical Insurance program  (Part B) services 
provided  to nursing home residents and to identi~  and discuss known or potential  program 
vulnerabilities. 
BACKGROUND 
With the aging of the American population, long-term care is becoming an increasingly 
important component of the U.S. health care system.  Since 1966, the proportion  of those over 
age 65 residing in nursing homes has risen from 2.5/0to over 5/01. Both the Medicare md the 
Medicaid programs contribute significantly to this populations cost of care. 
Medicare  Program 
Medicare is a Federal health insurance program, authorized by Title XVIII of the Social 
Security Act, that covers most people 65 years or older, people with end-stage renal disease, 
and some disabled people.  The program consists of two distinct insurance prograrns.2 
Hospital Insurance Benefits for the Aged and Disabled (Part A) covers services fi.umishedby 
hospitals, home health agencies (HHA), hospices, and skilled nursing-facilities  (SNFS). 
Supplementary  Medical Insurance for the Aged and Disabled (Part B) covers a wide range of 
medical services and supplies, including physician services, outpatient hospital services, and 
home health services (not covered under Part A), as well as diagnostic laboratory tests, X-
rays, ambulance  services, and the purchase and rental of durable medical equipment  (DME). 
While Medicare does not cover the institutional costs for traditional  long-term nursing home 
care, benefits are provided for extended care to qualified beneficiaries  in a Medicare-
participating  SNF.  A certified SNF is a nursing home with the staff and equipment to provide 
skilled nursing care, skilled rehabilitation  services, and other related services, and that meets 
the conditions  of Medicare participation  specified by regulations.3 
Medicaid  Program 
The Medicaid program, enacted by Congress under Title XIX of the Social Security Act, 
provides medical assistance to certain low-income families with dependent children and low-
income persons who are aged, blind, or disabled.  State Medicaid programs must offer certain 
basic services, including inpatient and outpatient hospital, physician, nursing home, and home 
health services. 
Historically,  the Medicaid program recognized two levels of long-term care: 1) that care 
provided at an intermediate  level in an Intermediate  Care Facility (ICF) and 2) that care 
provided at a skilled level in a Skilled Nursing Facility (SNF).  (~edicare  has ahuays recognized 
1
 my me  kvel -SNF kvel  care)  However, the administrative  distinctions between SNFS and ICFS 
do not, in practice, indicate marked differences in the residents serviced.  Further, in many 
cases, the regulatory distinction between SNF and ICF simply reflected differences in nursing 
staff.4 
In recognition  of this,  Congress  enacted  the Omnibus  Budget  Reconciliation  Act of 1987 
(OBRA)  to eliminate  the distinction  by combining  SNF and ICF levels  of service  into a single 
level (called  nursing  facility  services  (NF)).  States  were also required  to recognize  only  the 
nursing  home  level  of care for purposes  of Medicaid  certification.  Additionally,  OBRA  1987 
required  all facilities  to assess  residents  needs  and to provide  those  services  and activities 
necessary  to attain  or maintain the highest practicable level of fimctioning (physical, mental, 
and psychosocial  well-being) for each resident.5 
Although the Federal government finances between 50 and 83 percent of care provided under 
the Medicaid program, individual States administer Medicaid within broad Federal 
requirements  and guidelines.c  Medicaid covers Medicare beneficiaries  who meet the limited 
income and assets standards  set by each States Medicaid program.  These beneficiaries  are 
know as dual eligibles.  For these persons,  State Medicaid programs  usually pay the 
Medicare  premiums  and cost-sharing  (coinsurance)  requirements. 
Many residents enter the nursing home with assets that are utilized to pay for nursing home 
care.  The process of resource depletion to pay for care is called asset spend-down and, once 
impoverished,  the resident typically applies for public assistance through Medicaid.  Even 
after all assets are depleted, a person is likely to pay a portion of nursing home expenses with 
private monthly income, while Medicaid pays the difference. 
Nursing  Home  Capacity  and Resident  Characteristics 
The number of licensed nursing homes in the United States totaled  16,751 in 1992.  Seven 
States (Californi~  Illinois, Montan~  New York, Ohio, Pennsylvania,  and Texas) accounted 
for nearly 39 percent of the total nursing home bed capacity.  By June of 1995, the number of 
facilities had increased to 17,022, with over 1.8 million licensed nursing home beds.  The 
average number of beds per nursing home grew from 93 beds in 1980 to 102 beds in 1992, 
while the total number of licensed nursing home beds per 1,000 persons age 65 and over 
stayed nearly stable at 53. 
In 1987, about three-quarters  of all nursing home residents were women.  Over 90 percent 
were white and over 65 years of age with a median age of 82.  Over half of all nursing home 
residents in 1987 needed assistance with more than three activities of daily living (ADLs), 
such as dressing or bathing.  Many of these residents are likely to also have std%eredsome 
form of cognitive impairment.  Only 11 percent had no ADL limitations. 
Most nursing home stays are relatively short.  Of those residents discharged in 1985, about 52 
percent stayed for less than three months, and 63 percent stayed for less than six months.  Of 
the discharged residents, about 50 percent had additional nursing home stays, with the 
majority of those persons (77 percent) having additional stays in the same nursing home.  Of 
2
 all persons discharged from a nursing home in 1985, 48 percent were discharged to another 
health facility, 30 percent were discharged to the community, and the remainder either died in 
the nursing home or their outcome was unknown. 
Program  Vulnerabilities 
Medicare is the nations largest payer of health care services, with 1992 costs of $128 billion. 
Additionally,  this represents the fourth largest category of Federal expenditures.  Despite 
attempts to constrain costs, Medicare spending and beneficiary out-of-pocket  costs have risen 
at troubling rates according to the Government Accounting Office (GAO).7 The growth of 
these payments increases Medicares potential vulnerability to erroneous and excessive 
payments, either for claims resulting from program weaknesses or for claims resulting from 
provider fraud and abuse. 
The accessibility  and vulnerability  of nursing home residents provide a unique opportunity  for 
fraud, waste, and abuse.  Unless protected by concerned family or friends, the attending 
physician, or by the policy and practices of the nursing home, the extended care resident may 
be subjected to health care practices in which decisions on care can be governed by greed, 
rather than medical need. 
Program vulnerabilities  are circumstances which may lead to excessive costs to the Medicare 
program, the Medicare beneficiary, and, ultimately, the tax payer.  Both fraud and abuse are 
included in our definition of program vulnerabilities. 
METHODOLOGY 
Sources and Limitations  of Data 
Two principle sources of data were analyzed and are presented in this report.  The primary 
data source represents data obtained from a two-stage stratified sample in which 150 nursing 
homes were selected for review from 10 States(15  nursing homes per State).  Those States 
were Californi~  Delaware, Florida, Indiana, Kansas, Louisiana, Maine, Michigan, Montan% 
and Wyoming.  Stratification was based on nursing home size (large, medium, and small). 
Nursing  home  residents  are dejined  as anyone  residing  in a Medicare- or il4edicaid
certi~ed  nursing facility.  This includes residents receiving Medicare  extended care 
benejits  in a skilled nursing fmilily,  residents paying for  their stay wi%hprivate  insurance 
or personal finds,  residents on Medicaid,  or a combination  of the above. 
Each sample nursing home provided us with a list of all Medicare-eligible  residents residing 
in the facility during 1992, along with their corresponding dates of stay.  After verification 
of each beneficiarys  Health Insurance Claim Number (HICN) with the Medicare enrollment 
database, all Medicare services provided during each nursing home stay were extracted from 
the Medicare National Claims History File for calendar year 1992.  The Part B services 
processed by both the carrier and the intermediary were identified. 
3
 Data from the sample were projected to the total nursing home population  (residents in 
Medicare or Medicaid-certified  nursing homes).  The estimates provided in this report are very 
conservative.  This is because many of the sampled nursing homes did not provide us with a 
complete and accurate list of all residents in the nursing home during 1992.  We estimate 
under-reporting  to be as much as 20 percent.  (This percentage was determined by veri&ing 
with the Health Care Financing Administration  (HCFA) all SNF admissions to the sample 
nursing homes that were not accurately or completely reported by nursing homes.  Because we 
were unable to determine the degree of under-reporting beyond just the Medicare SNF 
population, we chose not to make adjustments to the projections.  Consequently,  data 
projections  should be viewed within this context. 
The sample consists of 24,654 nursing home stays.  Twenty percent of these stays involved 
payment by Medicare Part A for SNF level care.  The sample projects to nearly one-half 
billion days of care during 2.6 million stays.  The 150 nursing home sample projects to 15,356 
nursing homes. 
TWO TYPES OF PART B DATA USED 
1.	 Carrier-processed  Part B data reflect the allowedchurges unless otherwise noted. 
Allowed charges represent what Medicare considers reasonable for these services.  The 
program pays 80 percent of the allowed charges, with beneficiaries responsible for 
coinsurance and deductibles. 
2.	 Intermediary-processed  outpatient Part B data reflect interimchurges by providers. 
This is because reimbursement is based on the application of reasonable costs, subject to 
certain limits which are reported through cost reports.  Thus, these charges may not 
represent the final, settled cost to the Medicare program. 
Important Note:  In reviewing this report, the reader should recognize that two types of data are 
combined -data for claims processed by carriers and data for claims processed by intermediaries 
(outpatient). The data from carriers refer to those charges which Medicare considers reasonable 
(allowedcharges)andto whichcoinsuranceanddeductiblesare applied.  Incontrast, thedata for 
intermediary claims refer to total charges.  Total charges (include both covered and noncovered 
charges) refer to all services for a billing period before reduction for the deductible and 
coinsuranceamountsandbefore anyadjustmentsfor the costof servicesprovided. 
Total charges for intermediary-processedclaims were used because they were readily available 
and could be broken out in suftlcient detail (e.g., at least at the revenue center level, and often at 
theprocedure codelevel)allowinganalysisofdiscretetypesof services(supply,lab, etc.). 
The second data source presented in this report was obtained from a one percent sample of all 
Medicare beneficiaries  ;eceiving  Medicare-extended  care benefits during 1991, 1992, or 1993. 
After selecting the sample of beneficiaries,  all Part B services received during the covered 
nursing home stay were extracted, similar to the sample above.  Data from the sample were 
projected to the total SNF population by multiplying by 100. The 1991 to 1992  and  1992  to 
1993 percent  change  calculations  made in this report reflect an inflation adjustment  factor 
(7.4 and 5.9 percent, respectively),  which is used to reflect more accurately the true percent 
change due to charge variation rather than to medical care inflation.  Although we are aware 
4
 of other adjustment  (inflation) factors (e.g., HCFASMedicare Economic Index (MEI)), the 
Medical component of the Consumer Price Index for all urban consumers, the U.S. city 
average (CPI-U), appeared adequate for our use in this report in light of MEIs limitations. 
While MEI is specific to certain Medicare categories of services (such as physician services, 
lab tests, etc.), it does not account for all categories of Medicare services. 
The reader should recognize that the medical component of the CPI is not always a true 
representation  of the medical care cost changes in Medicare.  This is because of various 
constraints specific to Medicare (e.g., fee schedules, Congressionally-mandated  reductions or 
controls on the pricing of certain types of services, etc.) which do not exist in the general 
medical community  from which the CPI is derived. 
Data Presentation  Bv Categories 
To facilitate the presentation  of the types of Part B services provided, we classified HCFA 
Common Procedure Coding System (HCPCS) procedure codes and revenue center codes 
(used in outpatient facility  cost reporting.) into one of many Part B categories.  No procedure 
or revenue center code is included in more than one category (except in the case of podiatry 
services which were extracted based on the podiatry specialty code 48). Where possible, we 
tried to classifi  services in terms of the laws reference to coverage of the category. 
Additionally,  we modeled much of the major categorization  afler a developmental 
categorization  system of HCPCS procedure codes prepared by HCFASOffice of Research and 
Development  in coordination with the Urban Im.titute.  (See Appendix A.) 
Vulnerabilities 
Discussions of program vulnerabilities  are drawn from our review of applicable law and 
regulations  and analysis of the services depicted in our sample.  Additionally,  we reviewed 
findings from prior OIG reviews and fraud alerts for evidence illustrating program 
vulnerabilities.  Finally, we conducted a survey of each Medicare carrier to determine types of 
abuses involving nursing homes.  The survey was completed by the Medicare Fraud and 
Abuse coordinator  or director. 
This review was conducted in accordance with the Quality Standards for Inspections  issued 
by the Presidents Council on Integrity and Efficiency. 
5
 PREFACE 
This repofiwas  conducted asapafi  of Operation Restore  Tmst.  The initiative,  focused on 
five States,  involves multi-disciplinary  teams of Federal  and State personnel  seeking to 
reduce fraud,  waste and abuse in nursing homes, home health agencies,  and by durable 
medical equipment  suppliers. 
This report gives the reader a sense of the utilization of Part B services by residents of nursing 
homes certified by Medicare and/or Medicaid.  Also, we point out areas of vulnerability  for 
consideration  as fiture  work by this and other State and Federal oftlces associated with 
Operation Restore Trust. 
Our discussion begins with a section describing Part B utilization statistics, and concludes 
with a general discussion of the known or potential vulnerabilities  suggested by the nursing 
home sample, other work conducted by this ofllce, or based on carrier survey responses. 
It is important for the reader to note that this report discusses the fill  range of Part B services 
provided to residents of nursing homes.  Some of these services are billed only by certain 
providers (e.g. nursing homes can not bill Part B for physician visits).  On the other hand, 
supplies and equipment used by a resident can be billed either by a supplier to Part B or by the 
nursing home under its cost reporting as a Part A or Medicaid expense.  Any discussions in 
this report of inappropriate  Part B payments apply  only to certain categories of service and 
should not be construed as applying to the full range of Part B services. 
Further, this report discusses generally three types of Medicare eligible nursing home 
residents:  1) residents receiving Medicare SNF benefits, 2) dual eligible residents with 
Medicaid coverage, and 3) residents paying for their own stay.  Each of these types of 
residents might be impacted differently due to the application of limitations  on Part B 
payments.  Thus, while billing Medicare Part B maybe  deemed inappropriate  for one group, it 
may be appropriate, and even necess~,  for another group. 
For reference in reviewing this and retied  reports, a 
glossary of terms has been included in the back of this report. 
6
 UTILIZATION  OF  PART  B  BY  NURSING 
HOME  RESIDENTS 
Medicare  was charged  $4.1 billion  and Medicare  payments  of $2.7 billion  were made  in 
1992 for  Part  B services  provided  to nursing  home  residents. 
At the 95?40confidence level, we project Part B charges between $3.6 and $4.7 billion were 
made in 1992 on behalf of residents during nursing home stays.  We estimate payment to be 
$2.7 billion.  As discussed in the methodology, these are very conservative estimates due to 
suspected under-reporting  of the resident population by sampled nursing homes.  Coinsurance 
and deductibles for beneficiaries  (Medicaid for dual eligibles) may exceed $1 billion of the 
estimated Part B charges. 
On a per day basis, Part B daily costs were approximately  $8.75. This charge is composed of 
$5.41 in carrier allowed charges and $3.34 in outpatient total charges.  When considering  only 
charges for residents receiving Medicare extended care benefits in a skilled nursing facility, 
this amount is considerably more at $20. 
Part B represents a substantial (estimated nine percent) cost of the 1992 Federal and State cost 
of care. (See Figure 1.) 
I 
Part  B Provides  an Estimated  Nine Percent  of Federal  and State 
Expenditures  for  Care  to  Nursing Home Residents 
Medicaid  Nursing 
m
:;;)n  ms:yii;:of 
10%  $2.7  Billion) 
Medicare  Part  A 
Extended  Care  Benefits 
In a  Skilled  Nursing  Facility 
($3.1  Bllllon) 
Source  Medicaid  end Part  A SNF  etatktks  based  on 1992  published  HCFA  data. 
Part  B esthiate  based  on the  1992  rrurshg  home  sample  of 150  nurshg  homes. 
Figure  1 
Medicaid is the largest payer of nursing home care with payments of $24 billion in 1992 for 
over 1.6 million users.  Medicare Part A extended care benefits in a skilled nursing facility 
were $3.1 billion for 919,115 stays totaling 25.3 million days of care. (NOTE: Part A also 
paid an estimated  $60 million for hospice and $29 million for home health for nursing home 
residents -based on the nursing home sample.).  Since the Federal government  pays 50 to 80 
percent of Medicaid costs, this brings the total Federal institutional  cost of nursing home care 
to between $12 and $22 billion. 
7
 The most nwney  was spent on physi.chm eviduution services ($894 million), followed  by medkal 
equipment,  suppliks, prosthetics,  and orthotim  ($772 millwn). 
The catego~  of evaluation services (used by 82 percent of residents) accounted for the most 
charges of any categorical grouping, followed by the category of medical equipment, supplies, 
prosthetics, and orthotics (used by only 27 percent of residents). (See Figure 2.)  The top five 
categories of service in the nursing home (adding these two categories with lab, rehabilitatio~ and 
imaging services) accounted for over 75 percent of the total Part B charges provided to nursing 
home residents. 
1992 Part  B Charges  by Category  of  Service 
During a Nursing Home Stay 
MAJOR  PART  B CLASSIFICATION 
CATEGORY 
s!;  It 
Evaluation 
,  L
Medkal  EquiprnanL  SUPplias, 
Prosthetics,  and Orthotks 
Lab  and Other  Tests 
RehabMatbn  Therapy 
Irnaghg  and Echography 
Major  and Minor 
Medical  Procadwes 
L 
Ambuknca  m$2 
Dialysis  Servkes 
and %I@SS  m  ,1 $1o9  g  Carrier  Processed  Part  B 
J  u  Outpatient  Part  B 
) 
*Podiatrk  Sarvkas  s88  95 Percent  CoMdJerrce 
-y  - Interval 
Mental  Health  Servkes  MA 
-~ 
Endoscopy  m  s5j
UI 
Miscellaneous 
~  s4i
Outpatient  Part  B 
Ui 
 
Oncobgy  $3b 
u! 
Other  ] $24  ~ 
-
O  100  200  300  400  500  600  700  800  900  1  lillion 
/SLW7XR@gdbnatiaa&u7v~etykovfrfraa  ) 
PART  B  CHARGES  IN  MILLIONS
wodsbb~il  dlli9son  mstwkaaqlo  rtedaLwh 
Um Wagq  of evakmfkm  and m@Wrw  pncadma  If 
,  hose  pwedras  me  condded  by a PodiWst 
Figure 2 
8  More  nursing  home  residents  received  aphysician  evaluation  service  (82percent  of 
residents)  than  any other  service, followed  by laboratory  tests  (66 percent  of resident@,  and 
x-rays  (47percent  of residents). 
Most residents (89%) had Part B services billed during their nursing home stay.  The most 
likely service provided a nursing home resident was for a physician evaluation service 
(nursing home or office visit) and laboratory tests.  Residents with no Part B billing maybe 
due to a short length of stay (less than one month) or a residents ineligibility  for Medicare 
Part B.  For the residents receiving only Medicare extended care benefits in a skilled nursing 
facility, approximately  18 percent of resident stays had no Part B services.  This is 
considerably  more than the general nursing home population.  This is probably because of the 
short lengths of stay common among Medicare SNF residents (average 28.4 days) and the 
greater services provided under the Medicare extended care benefit.  In contrast to residents 
with no Part B billing, some beneficiaries had extremely high average daily charges (some in 
excess of $1,000 per day).  Figure 3 compares the total nursing home population  with the 
Medicare SNF-only population and is based on the percent of residents with one or more 
services during their nursing home stay. 
During  a Nursing  Home  Stay,  Several  Types  of  Part  B Services 
Are  Typically  Provided 
MAJOR  PART B CLASSIFICATION 
CATEGORY 
Evabatbn 
Lab and Other  Teata 
knaghg  end Echography 
Madcal  E@nan~  Sup@ear 
Prosthatka,  and Orthotks 
D	 Entire Nursing Home Population 
Major  and M~ocM~~el 
Only Stays  Paid For by Medicare 
Arrtniwe 
Rehab9tatbn  Therapy 
Mental  Health  Servkes  5.4+0  i 
3!  ;  : 
other 
<54 
6%:::;:;  ::; 
,  ,  !  ,  I  !  ,  !  I 
gATrm91my8sh  &{  O  10  20  30  40  50  60  70  80  90  100% 
Percent  of  Stays  With  Part  B Charges 
VMm mrdHewhg  S6rvlces 
hbk  &5p91wYoflsM!7rts  ls!l?lwpiwys7kiwd  li&Ju#stsJ! 
Sunx  lvfd?ta  msur@ofmnlR@mrnK  Wditahn 
lw21nr?pm?Jtsalpb  ofhki2Vesw@$?lts 
Figure  3 
9  The average  daily  costfor  Part  B services  d~fers  markedly,  depending  on the category  of 
service  and  whether  the average  is based  on all residents  or only those  who  received  the 
particular  service. 
On average, the daily charge to Part B for a nursing home resident is estimated to be $8.75.

As discussed previously, evaluation services and medical equipment, supplies, prosthetics,

and orthotics have the highest cost.  Correspondingly, these categories have the highest

average daily charge at $1.87 and $1.62, respectively.  While few residents receive dialysis

services and oncology, they represent the most expensive categories of service when the

average cost is computed for only residents actually receiving these services.

(See Figure 4.)

Average  Part  B  Daily  Charge 
$  Charges 
Source:  1992 nursing home sampie  (pOint  estimates) 
Figure  4 
10  
 Average  daily  costs  vary among  States  and,  especially,  among  nursing  homes. 
The average daily Part B cost ranged from an estimated high of $10.88 in Louisiana to a low 
of $4.42 in Maine.  (See Figure 5.) 
Average  Daily  Charges  Vary  By  State 
1992  Estimated 
Average  Dally  Charge 
- iilo.80 
Trust 
I 
Source:  Projections  from  1992  nursing  home  sample. 
F@we  5 
While  we cannot  explain  these differences, we suspect that Medicaid practices regarding 
billing of Part B for dual eligibles may explain some or most State differences.  State 
Medicaid daily reimbursement  rates often differ in the services included in each States base 
rate.  For example, in 1992, only 35 States and the District of Columbia included physical 
therapy, and 32 States and D.C. included occupational therapy.  Only two States included 
prescription  drugs, and 11 States and D.C. included physician services in their daily SNF 
rates. 
One would expect higher Part B utilization  in those States having less comprehensive  base 
rates (as is likely the case in Louisiana which excludes several types of service routinely 
included in other States rates).  However, if the State actively encourages nursing homes to 
bill Medicare, regardless of what is included in the rate, differences should not exist due to 
coverage. 
11
 Significant  State differences were noted in other areas not addressed in Medicaid rates.  For 
example, use of ambulance services during a nursing home stay varied from a high of 44 
percent in Louisiana to a low of 13 percent in Wyoming.  As another example, treatment  by 
podiatrists  is estimated to be as high as 46 percent in Florida (average bed day cost equals 
$0.28) to a low of 7 percent in Wyoming (average bed day cost equals $0.01). 
In addition to State variances, there is considerable variation between nursing homes Part B 
average daily charges.  (See Figure 6.) 
Part  B Daily  Charges  Were  Low  in Most 
Nursing  Homes  and  High in a Few 
-$4.99 
HIGH  LOW 
$10-$14.99 
$5-$9.99 
Average  Daily  Charge 
(sample estimate) 
Source:  1992  nursing  home  sample. 
Figure  6 
Based on regression analysis using SUDAANS Survey Data Analysis Software, we can 
explain some of the variation (58 percent) in bed day costs between nursing homes. 
Factors  increasing  bed day cost include:	
  the extent to which the nursing home treats Medicare SNF residents,

  the degree of illness of the residents as evidenced by the number of hospital

admissions during a stay, and 
  the overall number of Medicaid residents in the nursing home. 
One  factor  decreasing  bed day cost is the average length of stay for residents in the 
nursing home. 
Several other factors were tested in the regression analysis and could not be proven to 
significantly  impact bed day cost.  These included nursing home certification,  profitlnonprofit 
status, total bed size of nursing home, and percent of private pay residents. 
12
 While we do not have trend data for  the general nursing home population,  data based 
solely on residents receiving Medicare extended care benejits  in a skilled nursing facility 
between 1991 and 1993 show that, while the overall cost of Part B has remained nearly 
constant ($19-$20,  in 1991 constant dollars),  use of some services increased significantly. 
Use of Part B by residents receiving Medicare extended care benefits in a SNF (and possibly 
all other nursing home residents, Medicaid and private pay, for which we have no data to 
confirm this trend) has remained relatively constant with little or no average bed day charge 
change between  1991 and 1993, after adjusting for inflation using the CPI-U.  However, this 
finding does not tell the whole story.  Notably, some types of service such as mental health 
and imaging, have greatly increased, while others have decreased.  (See Figure 7.) 
1991 to  1993 Percent  Change  in the  Average  Part  B Daily  Charge  for 
Beneficiaries  Receiving  Extended  Care  Benefits  in a SNF 
ho  adjustment  for inflation included) 
Bed  Day  Charge  117% 
% Change  91-93 
50% -----
40% ---- ..37%................................................................................... 
"""""=%""" ""25%""""lg%'""" `""""""""""""""""""""""""`""'`"""""""""" 
20%-. 
10%.-- -------
o% 
-- -- ------- ---- ----------
------ -------- ------  ------ ---...  --...  ---~~%----?7%--
.  --------
---- -------- .  ------ --------  ---     
-50%- -53% 
n  l-l  n  ..lii- 
&\ P  *OQ  ,e$  *O*  ~e  ~~  &  s.. -a  .&
#
+0 4$* @*  * *+#   +$  gQ& >  .Q$ e*   c#2Qee
+ %  #+  &#  , b
#  t  ~ a  $.O 
+8  e & ~~*  ,&#  &
# 
&aQ +  c) 
+$  + 
Sourotx  Based on a ona percent  sample of residents  receivhg  Medicare  Extended  Care benefits  h a SNF. 
F@.u-e 7 
Within imaging, magnetic resonance imaging (MM) tests exhibited an exceptionally  high 
increase horn  1991 to 1993, with estimated total dollars increasing from one-half million to 
nearly 10 million dollars in just two years.  This may be explained by a shift from use of 
computerized  axial tomography  (CAT) scans to MRI testing. 
13  PROGRAM  VULNERABILITIES 
The accessibility  and vulnerability  of nursing home residents provide a unique opportunity  for 
fraud, waste, and abuse.  The Part B program is particularly vulnerable because payment rules 
and safeguards largely ignore the unique character of the nursing home environment  and the 
varied services and supplies which can be provided.  The following discussion presents some 
of the most blatant program vulnerabilities  suggested by the nursing home dat~  along with 
abusive supplier and physician billing practices involving nursing home residents. 
PROGRAM  PAYMENT  OVERLAP 
Medicaid  and Medicare  Part B 
As  the payer  of last resort,  Medicaid  requires  providers  to bill routine  services  and supplies 
to the Part  Bprogram  This creates  an opportunity  for  duplicate  payments  to occur  when 
Medicare  and Medicaid  mistakenly  pay for  the same  service  or supply. 
  Services Covered by Medicaids Daily Rate 
Services covered under Medicaids nursing home daily rate are routinely billed to the Part B 
program.  In 1992, the cost of Medical Equipment,  Supplies, Prosthetics, and Orthotics alone 
were an estimated $772 million.  Much  of this equipment  and supplies  would  have  been 
paid  by the Medicaidprogrant  as apart  of the nursing  homes  daily payrrumt  rate had  the 
resident  not been  eligible for  Part  B. 
A program vulnerability  exists because of the overlapping payment responsibilities  of 
Medicare and Medicaid when the Part B service is included in the Medicaid per diem rate, but 
the established per diem rate is not adjusted to fully  reflect  Medicare reimbursement.  If the 
Medicaid rate-setting mechanism is based on only those costs the nursing home incurs, or will 
incur, this will not result in duplicate or overlapping payments for the same service or item. 
However, this is only applicable when billing occurs&to  either Part B or Medicaid (as a 
cost in the facilitys cost report with no corresponding credit for Medicare payment), but not 
~.  Billing both programs constitutes fraud and results in duplicate payments,  if not 
detected by either program.  Extensive auditing is typically required to detect billing to both 
Medicare and Medicaid, if the item or service is also included in the rate. 
Medicaid is typically considered the payer of last resort.  Thus, States consider Medicare Part 
B as another third-party payer, expecting payment for the service or a letter of denial before 
Medicaid assumes responsibility  (e.g., Ohios administrative  code 5101:3-1-05 states the 
department will not pay for any service payable by, but not billed to, Medicare).  However, 
some coniision  and blurring of responsibility  exists regarding those items included in the 
daily rate paid nursing homes.  In most States, this includes such items as wheelchairs,  beds, 
bandages, enteral nutrients and infusion pumps, catheters, and sometimes physical therapy. 
14
 States reported conflicting views on whether Medicares contribution to resident care by 
covering Part B was, in fact, taken into account in their daily rate setting process.  As one 
State worker commented,  in theory, it should be; in reality, who knows?  Interestingly, 
nearly half of the States responded that their rate setting process did not consider payments by 
Medicare unless paid directly to the nursing home and included as part of the cost reporting 
mechanism.  Thus, some question exists concerning possible overlap in billing.  For example, 
would the costs of an outside supplier, stocking a nursing home with routine supplies and 
billing Medicare directly, be adequately addressed in setting the facilitys daily payment rate? 
Additional  study is needed to answer this question. 
A few States reported that if a service is included in the nursing home per diem, Medicare 
should ti  be billed (e.g., Florida and Louisiana  (sample states), Hawaii and Minnesota (not 
in our 10 State sample)).  However, we noted no significantly reduced Part B billing in Florida 
or Louisiana versus other States, which could indicate a failure to enforce their own policy. 
(Enforcement  would be evidenced by the State actively denying payment of the Medicare 
coinsurance for Part B services provided to dually-eligible  nursing home residents.)  A 
Minnesota State ofilcial reported that, while the State does consider Medicare billing for items 
covered under the Medicaid daily rate to be inappropriate, no oversight is provided to ensure 
this policy is adhered to. 
Even if the per diem adequately reflects Part B billing as a routine practice of the nursing 
home, the Part B program maybe  paying considerably more than necessary by not capitalizing 
on the nursing homes buying power.  One example of this involves enteral nutrient products. 
Our evaluation of enteral nutrients showed that many nursing homes can, or do, purchase 
enteral nutrient products for their non-Medicare residents, at costs significantly  lower than 
those billed by outside suppliers to the Part B program.  Given that several hundred million 
dollars a year are spent on nutrient products in nursing homes, this represents a substantially 
inflated cost to the taxpayer.  More detail is provided on this subject in our report, Entera2 
Nutrient Payments In Nursing Homes. 
  Services Not Covered by Medicaids Daily Rate 
For services or supplies I@ included in the Medicaid daily rate, it is unlikely that both 
Medicare and Medicaid would mistakenly pay for the same service or item.  This conclusion 
is based upon States assurances that a Medicare denial is required before Medicaid would pay 
for any service or item known to be covered by Medicare.  This inspection did not analyze 
Medicaid data and, consequently, we were unable to determine the extent of any duplicate 
payments.  However, the OIG is beginning an inspection which will combine Medicare and 
Medicaid data to determine if duplicate billing is occurring for residents in nursing homes. 
Medicare  Part A and Part B 
Cost shifting can also occur between Medicare programs.  As discussed in two previously 
published reports, Medicare Services Provided to Residents of Skilled Nursing Facilities  and 
Medicare Payments for Nonprofessional  Services in Skilled Nursing Facilities,  SNFS are not 
required to provide many types of services or supplies as a facility cost.  The impact of this 
15
 policy is that nursing homes which shifl services to the Part B program (ofien called 
unbundling) may avoid Medicares SNF routine cost limits.  If routine cost limits are avoided, 
this increases the cost to Medicare.  By shifting costs above the routine cost limit, SNFS 
increase their profitability,  while the taxpayer and SNF resident assume the cost of the amount 
Medicare allowed for the Part B services billed. 
One reason SNFS are able to shift costs to the Part B program is because section 1861(h) of 
the Social Security Act permits each facilitv to determine whether certain services are 
provided as extended care services.  Consequently, the extended care facility is &!QQ 
determine for itself whether those services are covered by either the Part A program or the 
Part B program. 
SIZEABLE  DIFFERENCES  IN PART  B UTILIZATION 
Sizeable variation exis~ from  nursing home to nursing home  in the average  daily  Part  B 
charge  and the percentage  of residents  receiving  Part  B services. 
Nursing homes vary considerably in Part B use.  Figure 8 shows some of the extremes from 
nursing home to nursing home.  Shown is the nursing home with the highest percentage  of 
resident stays with the indicated service compared to the nursing home with the lowest. 
Figure  8 
Nursing  Homes  Can Vary  Substantially 
In Their  Use of Part B 
California  II  Delaware  II  Florida  II  Indiana  Louisiana  I 
awwE 
Selected  Categories  and 
of Stays
States  /0 
with Service 
ligh  ILow  I 
WE+3E 
Evaluation  :4i- 97%  I  46%  I 
Imaging & Echography  78  I  30 
Lab & Other Tests 
Medical Equipment,  etc. 
Ambulance  36  I  <11!661113191157!<1 
Rehabilitation  Therapy  21  1 
Mental Health  + 11  <1 
Podiatry  59  I  <1 
Source: 1992 Nurshzg home sample (selectedStatesonly) 
16
 The average  daily  bed day charge  also varies  between  nursing  homes. 
As discussed earlier, we can explain some of the variation (58 percent) in Part B utilization 
among nursing homes.  The primary determinant of Part B utilization  is the type of resident 
treated in the nursing home.  The more ill the residents are, the greater their utilization  of Part 
B.  Factors not proven to impact bed day cost are nursing home certification,  profitinonprofit 
status, total bed size of nursing home, and percent of private pay residents. 
However, significant variation exists which is unexplained.  While more knowledge about the 
nursing home and residents treated could explain some of this variation, we suspect some 
variation is the result of abusive or fraudulent billing activity.  As an example, the number of 
residents receiving medical equipment, supplies, orthotics or prosthetics in one Delaware 
nursing home was 67 percent.  In another nursing home, it was only nine percent. 
LACK  OF OVERSIGHT 
Medicare  Part  B contractors  (carriers  and intermediaries)  often  lack enough  information 
to adequately  ensure  appropriate  paymenti  for  residents  of nursing  homes. 
	 Contractors typically do not know if a beneficiary is in a nursing home, unless the 
place of service on the bill is coded correctly. 
Accurate payment for some types of services are dependent upon knowing the place where the 
beneficiary received the service.  This knowledge is especially important for residents of 
nursing homes.  For example, if the person resides in a nursing home (generally, DME is not 
covered in a nursing home) but a claim for a wheelchair is received with the place of service 
incorrectly coded as home, it is likely the claim will be paid in error.  This is because 
contractors rely on the place of service coding by the supplier to alert them where the 
beneficiary resided when the service was provided.  Only in the case of the beneficiary 
receiving Medicare extended care benefits in a skilled nursing facility does the Medicare 
contractor receive notification  of a SNF stay if the claim involves DME.  However, with 
heavy workloads, it is possible that carriers would overlook an alert (only rejects must be 
reviewed by carriers prior to payment). 
The impact of this vulnerability  is to expose Medicare to millions of dollars in overpayments. 
Our report, Durable Medical Equipment Payments in Nursing Homes, discusses our finding 
that as much as $27 million may have been paid by Medicare to suppliers, even though the 
beneficiary  was residing in a nursing home on the date the durable medical equipment  was 
provided. 
17
 	 Some States may restrict nursing homes from billing Part B for services or supplies 
included in the Medicaid per diem rate; however, Medicare contractors are oflen 
unaware of State policies. 
While most States encourage or require providers to bill Medicare for any service covered by 
Medicare (including services or supplies covered in the Medicaid per diem), at least five 
States (Florida, Hawaii, Louisiana, Minnesota, and Nevada) reported to us that services and 
supplies already included in the Medicaid rate, might not be billable to Medicare.  In Florida, 
alone, Part B charges for medical equipment, supplies, prosthetics and orthotics (much of 
which is included in the rate and must be provided to Medicaid residents) maybe  as high as 
$25 million. 
	 Medicare contractors are unable to monitor trends and instances of duplicate payments 
between Medicare and Medicaid, because Medicaid data is not available to carriers. 
Medicare Part B contractors currently lack nursing home stay information (admission and 
discharge dates) for the long term care nursing home resident.  Thus, no analysis can be done 
cma routine basis to look for trends in payments by service which might indicate abusive 
practices, either within facilities or across the nation.  Additionally,  Medicaid data is 
unavailable to contractors to determine if duplicate payments are being made.  Only Medicaid 
is able to monitor duplicate payments based on information from the Part B coinsurance 
payments it made for dually-eligible  residents. 
QUESTIONABLE  SUPPLIER  AND  PHYSICIAN  PRACTICES 
Suppliers 
  Some suppliers may provide excessive volumes of supplies to nursing homes. 
An area of potential  abuse involves excessive volumes of supplies.  As reported previously, 
more money is paid by Medicare for the category of Medical Equipmen& Supplies, 
Prosthetics,  and Orthotics than any other major category of Part B services except Evaluation 
Services.  One example of excess involves incontinence  supplies.  Our recently published 
reports on incontinence  supplies (Questionable Medicare Payments for Incontinence  Supplies 
and Marketing  of Incontinence Supplies) discuss how suppliers have overutilized  and 
misrepresented  these supplies.  For example, 30 percent of beneficiaries  surveyed reported 
that they do not utilize all of the incontinence  supplies that are reimbursed by Medicare. 
Additionally,  many nursing homes do not track Medicare-reimbursed  supplies to the specific 
beneficiary  for which they were billed.  Thus, Medicare and individual beneficiaries  may be 
paying month after month for unnecessary supplies which may be used for other patients.  In 
some cases, supplies were delivered in bulk quantities (thus, not designated for any particular 
resident).  Some nursing homes stated they are turning away suppliers because their supply 
rooms are already overstocked with unused supplies from previous shipments. 
Another example of Medicare paying for supplies that are excessive involves routine billing 
by suppliers each month.  Routine billing becomes a problem when the resident no longer 
18
 needs the supply; however, the supplies keep coming.  The most blatant example of this found 
in our nursing home sample involves billing for ostomy supplies even though the person no 
longer was in the nursing home.  Weeks before the billing, the resident had entered the 
hospital and remained there for nearly a month.  The billing was $1,000.  This case has been 
referred to the carrier for recovery. 
  Some suppliers bill for medically unnecessary supplies. 
The area of wound care presents an example of not only excessive supplies, but of medically 
unnecessary  supplies.  Our investigation of wound care products (e.g., tape, gauze, dressings, 
etc.) used in nursing homes found that a substantial amount of these products provided to 
nursing home residents are not used.  In addition to being delivered in excessive quantities, 
products were found to be medically unnecessary for some residents. 
Another area of abuse involves air-fluidized beds which are not medically necessary when 
used for preventive purposes only. 
  Still other suppliers bill for supplies or services never provided. 
In addition to excessive and medically unnecessary supplies or services, some suppliers bill 
for services or supplies never provided.  One gross example found in our sample involved a 
portable x-ray supplier.  The patient purportedly received x-rays at a SNF during two 
consecutive weeks, although the person was in the hospital during this time.  Allowed charges 
were over $500 for x-ray transport, setup, and service.  This case has been referred for 
investigation. 
After researching the payment vulnerability resulting in this overpayment,  it was found that 
the system of edits in Medicares payment system (CWF) did not include any edits to suspend 
payment of similar types of services and supplies (except for DME) while the person is known 
to be in the hospital or any other inpatient setting. 
Physicians 
	 The nursing home presents an opportunity to provide services to many different 
residents during a visit (sometimes called Gang Visits).  With this opportunity 
comes the potential for abuse and poor quality care. 
While seeing many residents in one day is not inherently bad, the volume of residents seen can 
suggest a physician  or supplier maybe  billing for a level of care not provided.  According to 
HCFA ofllcials,  15 minutes per person is the suggested minimum time to spend reviewing  a 
residents condition and performing the appropriate visual inspection of the resident (we note 
that HCFA has not defined filly  what a visit should entail - length of time actually with the 
resident, time reviewing chart, etc.).  The average physician sees 20 or less patients per day. 
Yet, some physicians billed for large numbers of residents for single day visits in several 
nursing homes. 
19  To illustrate an extreme, one physician billed for more than 80 nursing home visits on the 
same day.  While this is possible, such an extreme suggests the physician did little more than 
a paper review (at most).  If  the physician afforded each resident the desired 15 minutes, it 
would have taken this physician over 20 hours to complete the billed visits (with no breaks). 
Spending even half the time (7 ?4minutes), would require 10 hours, still an unlikely scenario. 
Even under optimistic assumptions (the nursing home is in a remote area where a physician 
must travel a long distance, medical charts are well-documented  and assessments are 
completed by the nursing staff prior to the physicians visit, etc.), it is easily arguable that this 
physician was not providing the expected level of care billed for each patient during his visit. 
Podiatry services present another example of physician services that appear excessive in some 
nursing homes.  As previously shown in Figure 8, there is wide variation between nursing 
homes regarding involvement  of podiatrists.  While nursing homes with little involvement  of 
a podiatrist may reflect a medical physician providing foot care, high podiatrist involvement 
could indicate an abusive pattern of practice (non-covered routine foot care billed as a covered 
service).  It appears unreasonable that a podiatrist could see over 80 percent of a nursing 
homes resident population during a year (as occurred in 3 of 150 sampled nursing homes). 
Further, it appears excessive for a podiatrist to treat high numbers of residents on the same 
day (6 of 150 nursing homes had podiatrists treating 50 or more residents on the same day; 
one podiatrist exceeded 65).  Finally, we question the medical necessity of seeing the same 
residents as frequently as every month. 
  A few primary care physicians provide the majority of routine care visits. 
It appears, from the sampled nursing homes, that either many doctors are caring for very few 
nursing home patients or a few doctors may be caring for too many patients.  This raises 
concerns about the quality and appropriateness of patient care.  (Physicians caring for too few 
nursing home residents may be ill-equipped to deal with the nursing home geriatric 
population.  Physicians seeing too many nursing home residents may not be giving enough 
time to the care of a special needs population.) 
Nursing home care is predicated on a medical model requiring direct physician leadership in 
the overall management  of a patients plan of care.  Thus, the physician plays a pivotal role as 
gatekeeper, determining  and/or providing necessary medical care, equipment,  and supplies 
necessary for the patients well-being.  However, since the beginning of Medicare and 
Medicaid, physicians have been criticized for their perceived lack of involvement  in the care 
of nursing home residents.8 
The OBRA 1987 strengthened the role of the medical director in the nursing home, and the 
Resource-Based  Relative Value Scale (RBRVS) abolished the rule that !owered 
reimbursements  for physicians who see multiple patients during nursing home visits.  It also 
raised reimbursement  for the two most common types of nursing home visits.  The intent was 
to put nursing home visit rates on par with office visit rates (addressing a common complaint 
of nursing home physicians).  Our 1992 nursing home data was not recent enough to 
determine  if these events, coupled with more emphasis on geriatric training by some medical 
schools, may be improving physician participation  in the nursing home. 
20
 A FEW  EXAMPLES  OF PART  B ABUSE  NOTED  BY  CARRIERS 
BASED  ON SURU?3YOF FM  UD ST@F 
Physician and Practitioners 
Eye Exams  - Physicians solicit services at nursing homes with eye exams billed as non-
routine or problem focused exams while also using office visit service codes. 
Waiving beneficiary copayments. 
%5*  :  Physician billed services provided by nursing staff with the physician not 
present. 
Foot Care  - Podiatrists performing  routine foot care (a noncovered item). 
Psychiatric  - Excessive billing for evaluation testing under preadmission  assessment and 
amual  resident review (PASARR) regulations when not reasonable  and

necessary for diagnosis or treatment (e.g.,  annual screening required by for

Medicaid residents as part of certification process and compensated by

Medicaid as part of the daily rate).

Individual or group therapies not medically necessary or being perfomned by

inappropriate &pe;  of providers,  not psychiatrists  or community mental health

clinics.

Outpatient  Rehabilitation  Therapy 
- Excessive charges. 
Therapist billing for services that the nursing home staff performs. 
Using one provider number for services to many different nursing homes 
giving the impression all residents are in the same facility. 
- Providing medically unnecessary services. 
Supplies and Equipment 
Excessiveandmedicallyunnecessarybillingsfor incontinencesupplies,

ostomy, and surgical dressings. Also, noted were billing for air-fluidized

beds used for preventive services (not covered by Medicare) and nebulizers

(includingnebulizerdrugs).

Providing medically unnecessaryorthotics and prosthetics (e.g., body jackets).

Misrepresentingsuppliesand equipment( e.g., Iymphedemapumps have been

offered to nursing home residents free of charge on a trial basis; however, the

supplier bills Medicare).

Billing for items not covered in a nursing home (e.g., wheelchair).

Laboratory  Services 
Billing for placement of glucose monitors, collection of specimens from and 
mileage to the nursing home when not medically necessary or technicians 
providing services for equipment designed for home use by nonprofessionals. 
21
 CONCLUSIONS

Significant  payments are being made for Part B services, in addition to institutional  payments 
to the nursing homes directly paid by Medicaid and the Medicare SNF benefit.  Consequently, 
more closely monitoring  services provided under these benefits and addressing vulnerabilities 
are important, particularly  given Medicares potential exposure to abusive practices. 
This review of utilization of Part B services by nursing home residents suggests the need for 
further work in, at least, the following areas: 
Bundling  Payments 
This includes examining the appropriateness of consolidated billing of Part B nursing home 
expenses and the daily rate paid by Medicare Part A or Medicaid.  The Office of Inspector 
General (OIG) will be doing additional work on both the concept of bundling (consolidated 
billing) and the vulnerability  posed by potential duplicate billings. 
Monitoring  Trends 
This includes monitoring  Part B utilization over time, with focused review of services 
experiencing rapid growth (e.g., mental health, magnetic resonance imaging) without any 
known reason (e.g., coverage change).  We plan additional work on a number of such areas. 
Quality  of Care 
This includes detecting poor quality care resulting from such practices as physicians treating 
too many patients in one day (e.g., podiatrists), exposure to excessive or inappropriate  medical 
services, provision of supplies not medically necessary, etc.  Under Operation Restore Trust, 
the HCFA is now experimenting  with methods to involve State surveyors in such efforts, 
which might prove fruitfi.d; the involvement of nursing home volunteer ombudsmen  in such 
efforts will also be tested as part of ORT. 
Fraud  Detection  Measures 
This includes developing and applying various fraud detection methods to identifi  abusive 
practices and fraud involving nursing homes.  We plan to employ such methods in future work 
under ORT. 
For example, the nursing home bed day cost could be a valuable tool in identifying  nursing 
homes or providers with aberrant and, possibly, abusive practices.  Although use of bed day 
cost is a post review process, it requires a minimum of effort to identi~  and flag potentially 
abusive providers or nursing homes.  Depending on the likelihood of abuse underlying the 
high average daily charge, the information could be provided to survey and certification  staff 
to be used during their next scheduled visit, to contractor fraud and abuse staff for 
22
 investigation,  or to others (long term care ombudsmen, OIG, State Health Departments, 
Medicaid Fraud Control Units, etc.) for consideration and action. 
Linking resident assessment data to billing history on services provided to residents maybe 
used, both to identifj  medically unnecessary services and to identify quality of care issues 
(e.g., patient care needed but not provided).  Facilities must conduct, initially and periodically, 
a comprehensive,  accurate, standardized, and reproducible assessment of each residents 
functional capacity.  The assessment must include the residents medical history, current 
medical status, functional status, sensory and physical impairments, nutritional  status and 
requirements,  special treatments and procedures, psychosocial  status, discharge potential, 
dental condition, activities potential, rehabilitation  potential, cognitive status, and drug 
therapy.  The assessment must be performed within 14 days of admission.  It must be repeated 
yearly, as well as promptly afier any significant change in the residents condition. 
In order to meet the requirement for a comprehensive  assessment, the Minimum Data Set 
(MDS) must be used.  The information captured by MDS is available, or will be available in 
the fbture, as an automated database.  Thus, this information could be linked to billing history 
data maintained  in the National Claims History File or Common Working File (CWF).  By 
linking this data, one could test the appropriateness of service billing patterns against factual 
assessment data about individual resident needs.  For example, an analysis could be completed 
of residents billed for enteral nutrients, despite the fact that current resident assessment data 
shows no indication of any eating disorder, difficulty swallowing, etc. that would warrant tube 
feedings.  The reverse situation may also be reviewed (e.g., the assessment data indicates a 
need for services that were not rendered). 
Resident assessment data could be used to summarize a nursing homes population based on 
various medical indicators, allowing one to account for case mix differences between nursing 
homes when assessing the significance of differences in bed day costs from one nursing home 
to another. 
The HCFA could also monitor the number of beneficiaries treated by particular providers on 
the same day.  As discussed previously, the potential exists for a provider to bill for an 
unrealistically  high number of residents on the same day.  Determining the total number of 
beneficiaries  seen by a provider and comparing it to an average or specified standard can alert 
the carrier to providers requiring closer scrutiny. 
To support the development  of fraud detection methods,  further  information  is currently 
being gathered  on the nature and magnitude  of abusive provider  practices  or program 
vulnerabilities  involving nursing home residents.  This information  will be used to identi~ 
the most efllcient  fraud detections methods. 
23
 AGENCY  COMMENTS 
We thank the Health Care Financing  Administration  (HCFA) and the Assistant Secretary  for 
Planning  and Evaluation  (ASPE) for their comments to the draft report.  Changes were 
made based on their suggestions.  In addition to suggestions,  the HCFA points out several 
actions it has taken to address vulnerabilities  such as: 1) requiring  carriers  and 
intermediaries  to selectively  initiate pre-pay reviews on high dollar payment areas and 
aberrant  trends,  and 2) development  of enhanced duplicate payment detection  methodologies 
for the Medicare  Transaction  System.  The full text of HCFA and ASPE comments  are 
provided  in Appendix B. 
24
 ENDNOTES

1.	 Girwitz,  J.,  Sanchez-Cross,  M, and Eckler,  M. The Epidemiology  of Adverse  and 
Unexpected Events in the Long-Term  Care Setting.  Journal of the American 
Geriatrics  Society,  1994, (42) pages 33-38. 
2.	 The Health Care Financing  Administration  (HCFA),  within the Department  of 
Health and Human Services (DHHS),  administers  Medicare  and contracts  with 
private  insurance companies  (e.g.,  Blue Cross or Blue Shield plans) to process  and 
pay Hospital Insurance  (Part A) and/or Part B claims.  Contractors,  called 
intermediaries,  process claims from institutions  such as hospitals  and nursing homes; 
other contractors,  called carriers,  process claims from noninstitutional  providers, 
such as physicians  and suppliers.  The HCFA provides direction  to contractors  on 
payment matters  and is, ultimately,  responsible  for assuring a contractors  adherence 
to applicable  program  policies  and procedures. 
3.	 Section 1819(a) of the Social Security Act defines a SNF as an institution  (or 
distinct part of an institution)  which is primarily  engaged in providing  to residents  1) 
skilled nursing care and related  services for residents who require  medical  or nursing 
care,  or 2) rehabilitative  services for the rehabilitation  of injured,  disabled,  or sick 
persons.   Also, a SNF is not providing  care primarily  for the care and treatment  of 
mental diseases.  This definition  was formerly  found in section  1861(j)(l)  and is 
often referred  to as the j1 provision. 
Medicare-participating  SNFS are paid their costs and receive  interim  amounts to pay 
estimated  costs.  Actual costs are settled later,  with adjustments  made if interim 
payments  were too high or too low.  Any costs determined  to be in excess of those 
necessary  for the eftlcient  delivery  of needed health services are excluded.  The SNF 
services are divided between routine  and ancillary  services.  Routine services  include 
room,  dietary,  nursing  services,  medical social services,  items which are reusable 
and expected to be available  in a SNF (e.g.,  wheelchairs),  and items which are 
finmished routinely  to all patients.  In contrast,  ancillary  services  include laboratory, 
radiology,  drugs,  therapy,  and other items and services for which charges  are 
customarily  made in addition to a routine per diem charge. 
4.	 Institute  of Medicine.  Improving  the Quality in Nursing Homes.  Washington,  DC. 
National  Academy Press,  1986. 
5.	 This assessment  is completed using a comprehensive  resident  assessment  instrument 
developed  by HCFA called the Minimum  Data Set (MDS).  The MDS was 
implemented  nationally  in October of 1990 and serves as a basis for the development 
of major,  uniform  data collection  systems for resident characteristics.  A slightly 
modified  version  of the MDS, the Minimum  Data Set Plus or MDX +,  is seen as the 
cornerstone  for the development  and implementation  of a Medicare  Part A case mix 
system for setting reimbursement  to nursing homes. 
25
 6.	 Federal  guidelines  allow States discretion  in establishing  income and resource 
criteria  for program  eligibility;  determining  the amount,  duration,  and scope of 
covered  services;  and determining  provider  reimbursement  methodologies.  As a 
consequence,  characteristics  of State Medicaid programs  vary considerably  from 
State to State. 
7.	 General  Accounting  OfIce.  Improper Handling  of Beneficiary  Complaints of 
Provider Fraud and Abuse.  GAOIHRD-92-1,  released  October  1991. 
8	 Mitchell,  JB.  Physician  Visits to Nursing Homes.  Gerontologist,  1982, (22) 
pgs. 45-8. 
26
 APPENDIX  A 
PROJECTED  PARTB  CTL4RGES  FOR  NURSING  HOME  RESIDENTS 
Stays  Bed day Charge 
Stays  Also With  ---------------------
Estimated 1992  VWth  Medicare  With  Based on 
Type of Service  Q.@ul!x  Service  XF  Service AJl$jw 
ALL  SERl?7CES  $4,173,S84,532  89%  25%  $9.13  $8.75 
EVALUATION  $893,831,089  82%  23%  $2.00  $1.87 
Office  Visits  $72,074,385  22%  21%  $0.50  $0.15 
Hospital  Visits  $161,848,927  15%  30%  $1.98  $0.34 
Emergency  Room  Visits  $55,554,187  16%  23%  $0.54  $0.12 
Home  Visits  $2,098,658  1%  14%  $0.22  $0.00 
Specialist  Evaluation  $41,359,353  15%  17%  $0.38  $0.09 
  Pathology  $15,471,756  6%  20%  $0.37  $0.03 
  Optharnolo@  $18,302,744  10%  14%  $0.25  $0.04 
Other  $7,584,853  1%  49%  $2.48  $0.02 
Consultations  $99,912,011  22%  24%  $0.73  $0.21 
Nursing  Home  Visits  $460,983,284  75%  23%  $1.10  $0.97 
ANESTHESL4  $33,584,865  5%  26%  $1.01  $0.07 
M4JORAiW  MUVORMWIOIL  $320,949,774  30%  21%  $1.59  $0.67 
PRWW~ 
Major  Procedures  $92,050,701  4%  34%  $3.85  $0.19 
Eye Procedures  $81,313,693  2%  11%  $6.37  $0.17 
  Comeal Transplant  $2,174,759  o%  15%  $8.75  $0.00 
  ca@mctRmWWZemMWldOn  $56,565,162  1%  13%  $7.72  $0.12 
  RetinalDetachment  $496,023  o%  o%  $3.95  $0.00 
TreatmentofRetinalLesions  $1,824,844  o%  13%  $2.48  $0.00 
Ambulatory  Procedures  $70,622,822  5%  28%  $1.97  $0.15 
Minor  Procedures  $76,962,558  25%  19%  $0.45  $0.16 
ONCOLOGY  $35,899,068  1%  45%  $13.15  $0.08 
ENDOSCOPY  $51,065,945  4%  25%  $1.99  $0.11 
DIALYSIS  SERVKES  $108,757,165  1%  40%  $21.82  $0.23 
A-1
 Stays  Bed day Charge 
Stays  Also With  ---------------------
Estimated 1992  With  Medicare  With  Based on 
Type of Service  ChiuzeS  - =F  ~ervice AllStavs 
IiM4GINGAND  ECHOGRAPHY  $408,111,812  49%  25%  $1.47  $0.86 
Standard  Imaging  $302,404,985  47%  25%  $1.12  $0.63 
  Chest  $48,543,6.54  32%  24%  $0.27  $0.10 
  llusculoskeletal  $51,972,672  19%  26%  $0.44  $0.11 
  Breast  $2,442,160  1%  8%  $0.32  $0.01 
  ContrastGastrohttesdnal  $94,095,987  9%  26%  $1.55  $0.20 
(G.I.) 
  NuclearMedicine  $9,737,123  2%  25%  $0.91  $0.02 
  Other  $12,229,717  7%  27%  $0.28  $0.03 
  TransportandSetupofX-ray  $83,383,672  20%  21%  $0.69  $0.17 
Equipment 
Advanced  Imaging  (Cat Scan  or NIRI)  $71,223,773  6%  27%  $1.91  $0.15 
Echography  $27,389,120  6%  22%  $0.69  $0.06 
  Abdomen&elvis  $7,206,888  2%  20%  $0.44  $0.02 
  Heart  $11,545,122  2%  21%  $0.93  $0.02 
  CarotidArterh?s  $2,504,886  1%  20%  $0.52  $0.01 
  Prostate, Transrectal  $97,668  o%  o%  $0.50  $0.00 
  Other  $4,163,416  1%  36%  $0.73  $0.01 
Imaging  Procedures  $7,093,934  1%  29%  $1.83  $0.01 
  Heart(cardiaccatheritization)
 $1,597,956  o%  34%  $8.35  $0.00 
  Other
 $5,495,977  1%  28%  $1.48  $0.01 
LAB	 AND  OTHER  TESTS
 $617,138,509  66%  22%  $1.59  $1.29 
Lab  Tests  $561,483,308  65%  22%  $1.46  $1.18 
  Routine Venipuneture
 $224,122,353  44%  19%  $0.81  $0.47 
  AutomatedGeneralProfties
 $69,550,382  44%  22%  $0.26  $0.15 
  Urinalysis
 $11,457,955  29%  21%  $0.06  $0.02 
  Blood Counts
 $50,714,881  44%  22%  $0.19  $0.11 
  Glucose
 $7,038,917  6%  16%  $0.17  $0.01 
  Bacterial Cultures
 $37,912,428  27%  24%  $0.23  $0.08 
Other
 $160,686,392  51%  23%  $0.53  $0.34 
Other  ;ests  $39,190,232  14%  23%  $0.43  $0.08 
  Electrocardiogram
 $14,201,057  9%  21%  $0.23  $0.03 
  CardwvascularStress Test
 $386,827  o%  11%  $0.46  $0.00 
  EKG Monitoring
 $3,528,040  1%  16%  $0.72  $0.01 
Other
 $21,074,307  7%  25%  $0.51  $0.04 
Speci;en  Collection  $16,464,970  29%  18%  $0.09  $0.03 
A-2
 Stays  Bed day Charge 
Stays  Also With  ---------------------
Estimated 1992  With  Medicare  With  Based on 
Type of Service  G!l@@=  - =F  Service AllStaH 
ikUWC4L  EQUi?P!,  SUl?P~,  $772,228,643  27%  29%  $5.29  $1.62 
PROSIHEITC$  AND 0R7HOZKS 
Durable  ikledical  Equipment  $35,428,504  6?4  41%  $2.08  $0.07 
  HospitalBeds and Accessories  $5,134,812  1%  47%  $2.08  $0.01 
  (2xy@T@l @nerltand&pphi3  $14,249,157  1%  37%  $6.72  $0.03 
  Wheelchairs and Accessories  $9,353,138  3%  38%  $0.92  $0,02 
  Other DME  $3,194,710  1%  45%  $1.18  $0.01 
  Walkers  $1,357,581  1%  57%  $0.85  $0.00 
  Canes and Crutches  $63,412  o%  70%  $0.43  $0.00 
  Commodes  $1,092,060  1%  57%  $0.74  $0.00 
  SeaiZPatient LIjis  $348,261  o%  26%  $1.26  $0.00 
  Pressure Pads, Cushions, and  $2, 635)374  O%  28%  $0.68  $0.01 
Mattresses 
Braces,  Trusses,  Artl>cial  Limbs  $62,389,553  3%  20%  $2.73  $0.13 
  Bracesand Trusses  $44,900,809  3%  18%  $2.13  $0.09 
  ArtificialLhnbs  $17,488,744  o%  37%  $8.46  $0.04 
Co@, Splintk, and Fracture Reduction  $8,774,695  1%  33%  $1.79  $0.02 
Devices 
Surgical  Dressings  $22,268,560  1%  18%  $3.28  $0.05 
  PrhnarySurgicalDressings  $129,032  o%  2.2%  $0.95  $0.00 
  Gauze,Bandages,and Tape  $8,104,184  1%  24%  $1.73  $0.02 
  AdhesiveandRemover  $14,035,343  1%  18%  $2.27  $0.03 
Prosthetic  Devices  and Related  $643,367,331  20%  27%  $5.41  $1.35 
Supplies 
  EnteralNutritwnEquipment  $367,573,163  5%  34%  $15.57  $0.77 
andSupplies 
  ParenteralNutrition  $8,451,450  o%  37%  $63.30  $0.02 
EquipmentandSupplies 
  MedicalandSurgicalSupplies  $198,465,794  14%  26%  $2.25  $0.42 
  CathetersandRelatedItems  $55,626,395  7%  27%  $1.28  $0.12 
  T~Dev&mand&ns  $350,453  o%  37%  $0.26  $0.00 
  OstomyandRelatedItems  $7,888,119  1%  18%  $1.65  $0.02 
A-3
 Stays  Bed day Charge 
Stays  Also With  ---------------------
Estimatad 1992  With  Medicare  With  Based on 
Type of Service  Chuw  &z@Q  XF  Service ~Stavg 
AMBVZANCE  $2509046,021  19%  24%  $2.10  $0.52 
Basic  L@e Support  Transport  $105,045,057  15%  25%  $1.11  $0.22 
Advanced  Ll~e Support  $97,274,119  10%  23%  $1.60  $0.20 
6%  32% 
Non-emergency  Transport  $40,065,844  $0.99  $0.08 
Oxygen  and Medical  Supplies  $7,661,001  6%  22%  $0.19  $0.02 
CHIROPRACTIC  SERVICES  $155,033  o%  15%  $0.35  $0.00 
DRUGS/4ND  BIOLOGICAL  $17,879,871  5%  30%  $0.60  $0.04 
KKIO!N&HE41WGSERKKESAWSU#?LY  $4,449,496  1%  15%  $0.44  $0.01 
REXL4BILITATION  THERAPY  $513,823,746  10%  29%  $8.99  $1.08 
Physical  $225,980,972  7%  30%  $6.51  $0.47 
Occupational  $163,025,951  4%  27%  $7.39  $0.34 
Speech  Therapy  $124,816,823  3%  35%  $7.98  $0.26 
RESPIRA  TORY  THERAPY  $535,266  o%  21%  $1.28  $0.00 
MENTAL  HEAL  THSERWCES  $55,919,308  5%  22%  $1.71  $0.12 
PODL4T~C  SERVICES  $99,051,759  35%  18%  $0.42  $0.21 
Routine  Foot  Care  $15,622,802  9%  17%  $0.23  $0.03 
DENTM  SERVICES  $19,968  o%  o%  $2.34  $0.00 
MISCELLANEOUS  (OUTPATIENT)  $45,077,461  8%  28%  $0.92  $0.09 
CARRIER  SPECIFIC  CODES  $24,290,380  4%  28%  $1.01  $0.05 
OTHER  $4,198,310  3%  20%  $0.25  $0.01 
A-4
 APPENDIX  B 
ASSISTANT  SECRETARY  FOR  PLANNING  AND  EVALUATION 
COMMENTS 
JNl1615sfj 
w]:  Claudia Cooky 
Executive secrctsuy 
FR031.  .Acting As&ant  Secretaryfor 
Planning  ad  Evaluation 
SliBJECT:	 hnd  Comments Rcgardiig 010 Drafi ~eporu On Medicare Paytn@s  f~ 
ServicesProvidedto Nursing Honw y 
III our  ~wIIcr  response  to  tbs  thma  OIG  rapom  on  Medicare  pSyaWIS&S  fir mmiag home 
rcsidcms. hd c~prcssedconccmIhatthempollscouldhekmeml  yleadtothedueivnthat 
Mtxliuv  Pm  B paytncats should not  be  made  ou  bcblfof _  homercskkmawlUmw 
uwukldiscussthisCOncu~n  *  k  duri~a_  *  QICeton  ~  12, 
1995.A>aIcsuhofthis&UX&O~CAIspE  ~  OIG~~  _  f- ME 
conummsarco@cd regardinrgitethree01c3reportesadtfedPartB&mica inNmaiag 
I[otncs-,\n (Nerview.DurablMe edicalEFI@MM  Paymentsin NuminsHome4a 
htcrd MatrAm Pqnnants ie Nweiag Fkmes. 
Eatcml XuII*ts  Pqmeats ia Nttrsiug Ilomes 
- .-
B-1
 ,n a musing home priymentrate. ASa rewdt,we are ~~e  to id~ti$  whichMedieam Part B 
DME  poyrncnts arc mde  for routine  nu~ing h~c  -S  (i.e., ~ices  that should be included 
in a nursing home paymerurate) and which are not- Further, while we understand currerrt law 
limils Part 13DME to persons who are residing in their homc~ it is not clear when a nursing 
home resident (i.e., in non-h-t  A covered stay) is permanenfly residingin such a facility, and, 
thus, is at home in the fkility,  v~us  a ~idmt  tit  is -VJng  sho~-~  UC and intends tO 
rt-t~  home.  ~0 e~~c  ~~  ~nefici~i~  ~  ~~t ~~pfi~ly  de~ed  nded  cov~c,  a 
mdicy prohibiting  Part B llh.fE payments to all nursing home resid~~  wotdd have to ~c 
hat Pan B DME payments ~  for ro~ne  or core n-h- ~iccs  md that t~  ~  no 
.ong-term, permanent  nursing home residents for whom tbe nursing home has, in fiiet, bemme 
their home.  We do not biieve  that thCSCarc accurate  ~qio~  Further, we are eoncernd 
that denying Medicare Part B DMF?payments to nursing home ~id~ts  could have a negalivc 
[fWt on their quality of care. Therefore, we bei.ieve,at Ieast in the interim  the Department 
shouldpre.wnncthat nursinghomeresidentsinanon-PartAcoveredSNFstayarercsidmgin 
thekhomeandpermitPat  BDME pnyrmmtson behalfof such residents inneed ofthese 
suppfies.  We recommend the (33G study this issue and recommend a ea&gtxizition  of 
equiprncmroutinely covered in wwsinghome payment ratesand Dlbfj3not routinely inchxied in 
such rates.  A review of State Medicaid nursing My  payment methods may provide some 
insight into this issue. 
Finally, we recommend  that the conclusion of this reportclearly indicate that Part B DME 
payments made within a week of discharge for ~  nursiog home resident (regad~s  of PYer) 
who is c]igibic for Part B are appropriateto f~ili~  disehargaplanning. 
1  1 
Part  B Sewices  in Nursing  Homes 
I 
We recommend inchding  in the FJxund  secti?a ad~   n of  rhechmmstances under 
which Medicare Part B payments on behalf of nursing home residents are approprh%  k 
ditlicuhies  in idcnrifykg when such payments are ~-priatq  and the variable impact that 
proposalsto iimitMedhre  PartBpaymemswill@vcondifFcrentnursinghome residents (i.e.. 
those in a Part A covered SNF stay, those tio  arem% d  ~  who ~  *  eWblc  for 
Me&caid) and on State and Federal govemrnen@  I 
We undermnd  that the OIG intends to underkke ~ study of State Medi~d  n- -V 
payment rates and methods.  Wc agree that such a study k -in  Q*  to ~dcm~  *M 
dup!icate payments have been made (Lc, Medka.re and Me&aid  both have paid) and when 
Medicaid cost sharing is inappropriate. 
B-2
 HEALTH  CARE  FINANCING  ADMINISTRATION 
cohmImrrs 
*
,Swct, 
.+++  *,+ 
:  DEPARTMENTOFHEALTH&HUMANSERVICES 
: Health Care Financing  Administration 
1 
3  ~ 
%+ 
%>,m
The Admlntstrator 
Washington,  D.C.  20201 
DATE  OEC151995 
TO  June Gibbs Brown 
Inspector General 
FROM  Bruce C. Vladeck 
Administrator 
SUBJECT  Office of Inspector General Draft Report  Part B Services in Nursing 
Homes, An Overview:  (OEI-06-92-O0865) 
We reviewed the above-referenced report that describes the Medicare Part B services 
provided to nursing home residents and identifies known or potential program 
vul.nerabiiities.  The report contains no recommendations. 
Various Health Care Financing Administration (HCFA) work groups have identified 
these same vulnerabilities  and are working to correct them.  HCFA is currently 
investigating payment alternatives,suchasbundlingnursinghome payments,to prevent 
program fhtud and abuse.  Since the inception of the Durable Medical Equipment 
Regional Carriers in 1993, our efforts to monitor trends and take fkaud detection measures 
have increased and become more efficient.  We are also building enhanced duplicate 
payment detection methodologies  into the Medicare Transaction System. 
HCFA is requi.@  that carriersand intermediaries selectively initiate pre-pay reviews on 
high dollar payment areas and aberrant trends such as respiratory therapy and surgical 
dressings.  This should identi@ abuses before claims are paid. 
There k one technical issue that should be noted.  On page 5, pamgraph 2, the last 
sentenceimplies that the Consumer Price Index (CPI) is derived solely fbm  the general 
medical community.  In&t  the CPI is based on many factors, of which the medical 
mmmmity  is but one. 
Thank you for the opportunity  to review and comment on this report.  Please contact us if 
you would like to discuss our comments further. 
B-3  GLOSSARY

Artificial  Limb - Replacement  for a natural  limb (jxothesis). 
Bundling  - This term refers to the payment  policy of requiring  institutions  to bill for services 
provided  residents,  rather than some services provided  by the institution  and some provided  by 
outside  suppliers  and other providers  (who bill Medicare  separately). 
Brace - An orthopedic  appliance  or apparatus  (orthosis),  usually made of metal or leather,  applied 
to the body, particularly  the trunk and lower extremities,  to support the weight  of the body, to 
correct deformities,  to prevent  deformities,  or to control  involuntary  movements,  such as occur in 
spastic conditions.  In some cases bracing  is needed afler remedial  surgery. 
Cardiac  Catheterization  - The insertion  of a catheter  into a vein or artery and guiding  it into the 
interior  of the heart for purposes  of measuring  cardiac output,  determining  the oxygen  content  of 
blood  in the heart chambers,  and evaluating  the structural  components  of the heart. 
Carriers  -Part B contractors that provide administrative services, for given geographic territory, 
to all beneficiaries, physicians, and various suppliers of service, e.g., lab, ambulance, and durable 
medical equipment in that area that are not connected with an institutional provider; process only 
claims which are paid from Medicare Part B trust finds. 
Casts -A stiff dressing  or casing, usually  made of plaster of Paris, used to immobilize  body parts. 
CAT Scan -A revolutionary  radiologic  imaging  modality  that uses computer  processing  to 
generate  an image of the tissue density  in a slice about  1 centimeter  thick through  the patients 
body. 
Catheter  -A tubular,  flexible  instrument  passed through  body channels  for withdrawal  of fluids 
from (or introduction  of fluids into) a body cavity. 
Cholecystectomy  -Excision  of the gallbladder. 
Coinsurance  - The percentage  of the balance  of covered medical  expenses  that a beneficiary  must 
pay after payment  of the deductible.  Under Medicare  Part B, the beneficiary  pays coinsurance  of 
20 percent  of allowed  charges.  See Copayment,  Deductible. 
Colonoscopy  -Endoscopic examination of the colon, either transabdominally through  laparotomy, 
or transanally  by means of a colonoscope. 
Common  Working  File (CWF)  -A pre-payment claims validation and Medicare Part AlPart B 
benefit coordination system which uses localized data bases maintained by a host contractor; the 
host contractor provides Medicare contractors within a geographic area (referred to as sector) with 
beneficiary entitlement and eligibility data. 
Contractor  - Private health insurers, State, and public or private organizations which process 
Medicare claims and make payments to providers of services and to beneficiaries. 
Copayment  - The sum of coinsurance and deductibles.  Alternatively, a fixed dollar amount per 
service that is the responsibility of the beneficiary.  See Coinsurance,  Deductible. 
Current  Procedural  Terminology  (CPT) -The coding system for physicians  services  developed 
by the American  Medical  Association;  basis of the HCPCS  coding  system for physicians  services. 
See Coding,  HCFA  Common  Procedures  Coding  System. 
Glossary  -1  Customary  Charge  - The amount physicians or suppliers usually bill patients for furnishing 
particular services or supplies. 
Customary,  Prevailing,  and Reasonable  (CPR) - One method  used for reimbursement  of 
services  which typically  limit reimbursements  for services to the lowest of the providers  actual 
charge, the providers customary  charge for comparable  services,  or the prevailing  charge  in the 
area. 
Cystoscopy  -Examination  of the bladder by means of a cystoscope,  a hollow  metal tube that is 
introduced  into the urinary meatus and passed through the urethra and into the bladder.  At the end 
of the cystoscope  is an electric  bulb that illuminates  the bladder interior.  By means of special  lens 
and mirrors  the bladder mucosa  is examined  for inflammation,  calculi,  or tumors. 
Deductible  -A specified  amount  of covered medical  expenses that a beneficiary  must pay before 
receiving  benefits.  In 1992, Medicare  Part B had an annual deductible  of $100. 
DMERCS (Durable  Medical  Equipment  Regional  Carriers)  -In June  1992, HCFA  issued a 
final rule designating  four DMERCS to process all claims for DME, prosthetics,  orthotics,  and 
supplies.  Effective  October  1993, DMERCS replaced nearly 40 area carriers which had previously 
processed  DME claims. 
Diagnosis-Related  Group  (DRG) -The prospective  payment  system established  using one price 
for each DRG based on diagnosis  and other characteristics.  System  used to classi&  patients  into 
clinically  coherent  and homogeneous  groups that use similar resources.  Prices are established  in 
advance  for the coming  year, and hospitals  are paid these prices regardless  of the costs they 
actually  incur. 
Discharge  -The termination  of a period  of inpatient  SNF or the formal release  of the inpatient  by 
the hospital. 
Dressing  -Any of various materials used for covering and protecting a wound.  A pressure 
dressing is used for maintaining constant pressure, as in the control of bleeding.  A protective 
dressing is applied to shield a part from injury or from septic infection. 
Durable  Medical  Equipment  (DME) -Medicare-covered  items such as oxygen  equipment, 
wheelchairs,  and other medically  necessary  equipment  prescribed  by a doctor for a patients in-
home use. 
Electrocardiogram  - The record produced  by Electrocardiography,  a tracing  representing  the 
hearts electrical  action derived  by amplification  of the minutely  small electrical  impulses  normally 
generated  by the heart. 
End Stage Renal Disease  @SRD)  - Individuals  who have chronic  kidney disease  requiring  renal 
dialysis  or a kidney transplant  are considered  to have end stage renal disease.  To qualifJ  for 
Medicare  coverage,  such individuals  must be filly  or currently  insured under social security  or the 
railroad  retirement  system or be the dependent  of an insured person.  Eligibility  for Medicare 
coverage  begins the third month  after the month  in which a course of renal dialysis  begins. 
Echography  -Ultrasonography,  the use of ultrasound  as a diagnostic  aid.  Ultrasound  waves  are 
directed  at the tissues  and a record is made, as on an oscilloscope,  of the waves reflected  back 
through  the tissues,  which  indicate  interfaces  of different  acoustic  densities  and thus, differentiate 
between  solid and cystic  structures. 
Endoscopy  -Visual  examination  of interior  structures  of the body with an endoscope. 
Enteral  - Within,  by way of, or pertaining  to the small intestine. 
Glossa?y  -2  Evaluation  and Management  Service  -A nontechnical  service provided  by most physicians  for 
the purpose  of diagnosing  and treating  diseases and counseling  and evaluating  patients. 
Fee for Service  - A system of paying physicians  for individual  medical  services  rendered,  as 
opposed  to paying  them salaries or cavitation  payments.  The CPR payment  system and the 
Medicare  Fee Schedule  are examples  of fee for service payment  methods.  See Customary, 
Prevailing,  and Reasonable;  Fee Schedules. 
Fee Schedules  - A predetermined flat maximum payment amount for individual  procedure  codes 
within  a type of service.  States may develop  Medicaid  fee schedules  or adopt Medicare  fee 
schedules. 
Global  Service  -A package  of clinically  related services treated as a unit for purposes  of billing, 
coding,  or payment. 
HCFA  Common  Procedure  Coding  System  (HCPCS)  - A coding  system based on CPT, but 
supplemented  with additional  codes; required  for coding by Medicare  carriers.  See Current 
Procedural  Terminology. 
HCFA Data Center (HDC) -A large, centralized,  and complex  data processing  environment 
where state-of-the-art  technology  is being used, including  computer  hardware,  operating  systems, 
and data communications  networks;  maintains  databases  on the various  contractor  report  items and 
uses that information  to generate  subsequent  reports for HCFA and DHHS managers use. 
Home Health  Agency  (HHA)  -A public or private agency that specializes  in giving  skilled 
nursing  services  and other therapeutic  services,  such as physical  therapy,  in your home;  Medicare 
will pay for such services provided  certain conditions  are met. 
Home Health  Services  -Home health services are services and items furnished in patients homes 
under the care of physicians.  These services are firnished by home health agencies or by others 
under arrangements made by home health agencies.  Services are furnished under a plan 
established and periodically reviewed by a physician.  The services include part-time or 
intermittent skilled nursing care; physical, occupational, or speech therapy; medical social services; 
medical supplies and appliances (other than drugs and biological);  home health aid services; and 
services of interns and residents. 
Hospice  -A program operated by a public agency or private organization which engages primarily 
in providing pain relief, symptom management, and supportive services for terminally ill people 
and their families. 
ICD-9-CM  - International Classification of Diseases, 9th Revision, Clinical Modification.  A 
statistical coding classification system used to measure the incidence  of disease,  injury,  arid illness. 
Imaging  -The production of diagnostic images. 
Intermediaries  - Contractors that perform Medicare administrative services for institutional 
providers, i.e., hospitals, SNFS,HI-Ms, and hospices.  See Home Health Agency, Hospice, Skilled 
Nursing Facility. 
Laryngoscopy  -The direct visual examination of the larynx with a laryngoscope. 
Limiting  Charge  -The maximum  amount that a nonparticipating  physician  is permitted  to charge 
for a service;  a limit on balance  billing.  Starting  in 1993, the limiting  charge will be a flat 
percentage  of the Medicare  Fee Schedule  amount  paid to nonparticipating  physicians. 
Glossay  -3  Major Diagnostic  Categories  (MDCS) -A classification  system which groups the 467 DRGs  into

23 categories  based on body systems  (e.g., nervous system, respiratory  system,  etc.) and disease

origin.  See Diagnostic-Related  Group.

Medicaid  -A health care program  cooperatively  administered  by Federal and State governments  to

provide  medical  assistance  to eligible  needy individuals.

Medical  Review  (MR) -A contractor  activity performed  as part of the claims processing  function

to determine  the medical  necessity  of services provided  to beneficiaries.

Medicare  Economic  Index (MEI) -An  index that tracks changes  over time in physician  practice

costs and general  earnings  levels.  From  1975 through  1991, increases  in prevailing  charge screens

were limited to increases  in the MEI.

Medicare  Fee Schedule  - The resource-based  fee schedule  currently  used by Medicare  to pay for

physicians  services.

Occupational  Therapy  - Services designed  to restore self-care, work, and leisure skills to

patients/clients  who have specific performance  incapacities  or deficits that reduce their abilities  to

cope with the tasks of everyday  living.

Oncology  -The sum of knowledge  regarding  tumors;  the study of tumors  and cancer.

Ostomy  - General term for an operation  in which an artificial  opening  is formed,  as in colostomy,

ureterostomy,  etc.

Other Practitioners  Services  -Health care services of licensed practitioners  other than

physicians  and dentists.

Orthopedic  -Pertaining  to the correction  of deformities  of the musculoskeletal  system;  pertaining

to orthopedics.

Outpatient  Hospital  Services  - Outpatient  hospital  services are preventive,  diagnostic,

therapeutic,  rehabilitative,  or palliative  services that are fhrnished  to outpatients  under the direction

of a physician  or dentist  by an institution  that is licensed  or formally  approved  as a hospital  by an

officially  designated  authority  for State standard-setting  and meets the requirements  for

participation  in Medicare  as a hospital.

Paid Amount  - The portion of a submitted charge that is actually paid by both third-party payers 
and the insured, including copayments and balance bills.  See Submitted Charge. 
Parenteral  -Not through  the alimentary  canal, e.g., by subcutaneous,  intramuscular,  intrasternal, 
or intravenous  injection. 
Part A of Medicare  - The hospital  insurance  portion  of Medicare;  established  by section  1811 of 
title XVIII of the Social Security  Act of 1965, as amended;  covers inpatient  hospital  care, skilled 
nursing  facility  care, some home health agency  services, and hospice  care. 
Part B of Medicare  -The supplementary  or doctors insurance  portion  of Medicare;  established 
by section  1831 of title XVIII of the Social Security Act of 1965, as amended;  covers  services  of 
physicians/other  suppliers,  outpatient  care, medical  equipment  and supplies,  and other medical 
services  not covered  by the hospital  insurance  part of Medicare. 
Periodic  Interim  Payment  (PIP) System -A system used by intermediaries  to pay providers,  in 
which estimated  Medicare  reimbursement  for the year is divided  into equal, regularly  spaced 
payment  amounts;  enables  a provider  to manage  its cash flow more easily. 
Glossary  -4  Physical  Therapy  -The examination,  treatment,  and instruction  of persons  in order to detect, 
assess, prevent,  correct,  alleviate,  and limit physical  disability,  bodily malfunction,  and pain from 
injury, disease,  and any other bodily and mental conditions. 
Physician  Services  - Services furnished  by, or under the direction  of a licensed  doctor of medicine 
or osteopathy  in the State where the services are performed.  Physician  services  may be provided 
in the physicians  office, the recipients home, a hospital,  or a nursing  facility. 
Podiatry  - The specialized  field dealing with the study and care of the foot, including  its anatomy, 
pathology,  medical  and surgical treatment,  etc. 
Premium  -An amount  paid periodically  to purchase  medical  insurance  benefits;  for Medicare  Part 
B services  in 1992, beneficiaries  paid a premium  of $31.80 per month. 
Principal  Diagnosis  -The condition  established  after study to be chiefly responsible  for 
occasioning  the admission  of the patient  to the hospital  for care. 
Professional  Component  - The part of a relative value or fee that presents  the cost of a physicians 
interpretation  of a diagnostic  test or treatment  planning  for a therapeutic  procedure.  See Technical 
Component. 
Qualified  Medicare  Beneficiaries  (QMBs)  - QMBs are elderly  or disabled  persons  whose 
incomes  are at or below specified  percentages  of the Federal poverty  level. 
Radiation  Therapy  -The treatment  of disease by ionizing  radiation.  The purpose  of radiation 
therapy  is to deliver  an optimal  dose of either particulate  or electromagnetic  radiation  to a 
particular  area of the body with minimal  damage to normal tissues. 
Recipient  - An individual  who has been determined  to be eligible  for Medicaid  and who has used 
medical  services  covered  under Medicaid. 
Relative  Value  Scale (RVS) -An  index that assigns weights to each medical service; the weights 
represent the relative amount to be paid for each service.  The RVS used in the development of the 
Medicare Fee Schedule consists of three cost components:  Malpractice Expense, Medicare Fee 
Schedule, and Physician Work/Practice Expense. 
Relative  Work Value (RWlo  -An  assigned  value that reflects the average work of a physician  of 
average efficiency  relative to an arbitrary  standard.  See Relative  Value Scale. 
Retrospective  Cost-Based Reimbursement -A method  of payment  for hospitals/SNFs  based on 
the reasonable  costs incurred  for providing  covered services  to beneficiaries  in the preceding 
year(s). 
Severity  of Illness  Index -A measure  to reflect the relative  level of loss of fi.mction and mortality 
normally  caused  by a particular  illness. 
Sigmoidoscopy  -Direct examination  of the interior of the sigmoid  colon. 
Speech  Therapy  -Therapy by a professional trained to identi~,  assess, and rehabilitate persons 
with speech or language disorders such as articulation, language, voice, or stuttering problems. 
Splints  - A rigid or flexible  appliance  for fixation  of displaced  or movable  parts. 
State Buy-In  -This is the term given to the process by which a State provides supplementary 
medical insurance and/or hospital insurance coverage for its needy, eligible persons by paying their 
Medicare premiums through an agreement with the Federal Government. 
Glossary-5 
.  Stress Test -A technique  for evaluating  circulatory  response to physical  stress produced  by 
exercise.  The procedure  involves  continuous  electrocardiographic  monitoring  during physical 
exercise,  the objective  being to increase the intensity  of physical  exertion  until a target heart rate is 
reached  or signs and symptoms  of cardiac ischemia  appear. 
Submitted  Charge  - The actual charge submitted  to the patient  or a payer.  See Paid Amount. 
Supplementary  Medical  Insurance  Program  (SMI) - See Part B (of Medicare). 
Supplier  -A provider  of health care services,  other than a practitioner,  that is permitted  to bill 
under Medicare  Part B.  Suppliers  include  independent  laboratories,  durable  medical  equipment 
providers,  ambulance  services,  orthotists,  prosthetists,  and portable  x-ray providers. 
Technical  Component  - The part of a relative value or fee for a diagnostic  test or therapeutic 
procedure  that represents  the costs of performing  the service, excluding  the physicians 
interpretation  or treatment  planning.  See Professional  Component. 
Title XVIII of Social  Security  Act -Passed by Congress  in 1965, and subsequently  amended; 
provides  statutory  authority  for the Medicare  program.  Both section  1816 (Part A) and section 
1842 (Part B), provide  for the use of public agencies  or private  organizations  for the 
administration  of benefits  on behalf of the Secretary. 
Title XIX -The Medicaid  program. 
Tracheotomy  - Creation  of an opening  into the trachea through  the neck, with insertion  of an 
indwelling  tube to facilitate  passage  of air or evacuation  of secretions. 
Transcutaneous/Neuromuscular  Electrical  Nerve Stimulation  (TENS)  -A procedure  in which 
mild electrical  stimulation  is applied  by electrodes  in contact with the skin over a painful  area.  The 
stimulation  interferes  with the transmission  of pain signals and helps to suppress  the sensation  of 
pain in the area. 
Transurethral  Resection  (TURP)  - Resection  of the prostate  by means of an instrument  passed 
through  the urethra. 
Truss  -An elastic, canvas, or metallic device for retaining a reduced hernia within the abdominal 
cavity. 
Upcode  -To  bill for a service that is paid more than the service actually  provided. 
Urinalysis  -Analysis  of the urine as an aid in the diagnosis.  Many types of tests are used in 
analyzing  the urine in order to determine  whether  it contains  abnormal  substances  indicative  of 
disease. 
Glossa~  -6  OPERATION  RESTORE  TRUST 
AND  NURSING  HOMES 
On May 3, 1995, President  Clinton  announced  a new anti-fraud  initiative  undertaken  by the

Department  of Health  and Human  Services.  Led by the Office  of Inspector  General  in

partnership  with the Health  Care Financing  Administration  and the Administration  on Aging,

this project  utilizes  the expertise  of many  Federal,  State,  and private  sector

personnel.  They  will direct  their combined  energies  to crack down  on Medicare  and Medicaid

fraud,  waste,  and abuse  initially  associated  with home  health  agencies,  nursing  homes,

hospices,  and durable  medical  equipment  suppliers.  They will work  closely  with  the

Department  of Justice  and an intergovernmental  team  comprised  of other  Federal  and State

personnel.

In addition  to identifying  and penalizing  those  who defraud  the government,  the project  is

designed  to alert the public  and industry  to the fraud  schemes  or vulnerable  areas  in policy.

To aid in this  endeavor,  the Offke  of Evaluation  and Inspections  will work  within  the Office

of the Inspector  General  to perform  its primary  mission  of conducting  evaluations  that provide

timely,  usefi.d, and reliable  information  and advice  to the pertinent  decision  makers  involved

in the demonstration.  To this  end, the following  reports  on nursing  homes  have  been

completed:

Medicare  Services  Provided  to Residents  of Skilled  Nursing  Facilities  (OEI-06-02-00863) 
Medicare  Payments  for  Nonprofessional  Services  in Skilled  Nursing  Facilities  (OEI-06-92-00864) 
Payment for  Durable  Medical  Equipment  Billed  During  Skilled  Nursing  Facility  Stays  (OEI-06-92-
00860) 
Part B Services  in Nursing  Homes  -An  Overview  (OEI-06-92-O0865) 
Enteral  Nutrient  Payments  in Nursing  Homes  (OEI-06-92-00861) 
Durable  Medical  Equipment  Payments  in Nursing  Homes  (OEI-06-92-00862) 
Ongoing evaluations  are being conducted related to Medicare payments for residents of 
nursing homes for such services as mental health therapy, wound care, imaging, hospice, 
ambulance transportation,  and nail debridement.  Also under review are duplicate payments 
between Medicare and Medicaid for nursing home services.