Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

SKILLED NURSING FACILITY 

BILLING FOR CHANGES IN 

THERAPY: IMPROVEMENTS 

ARE NEEDED 

Suzanne Murrin 

Deputy Inspector General for 

Evaluation and Inspections 

June 2015 

OEI-02-13-00611 
 

EXECUTIVE SUMMARY: SKILLED NURSING FACILITY BILLING FOR 

CHANGES IN THERAPY: IMPROVEMENTS ARE NEEDED 

OEI-02-13-00611 

WHY WE DID THIS STUDY 

In fiscal years 2011 and 2012, the Centers for Medicare & Medicaid Services (CMS) 

implemented new policies to address concerns that billing by skilled nursing facilities 

(SNFs) did not adequately reflect changes in the amount of therapy that a beneficiary 

receives during a SNF stay. Specifically, CMS introduced new types of assessments that 

capture changes in a beneficiary’s therapy more quickly. This report provides 

information about SNF billing for changes in therapy under these new policies. 

HOW WE DID THIS STUDY 

We used SNF claims to analyze billing for changes in therapy from fiscal years 2010 

through 2013. We also determined whether, under the new policies, SNFs used 

assessments differently when decreasing therapy than when increasing it. Lastly, we 

determined the extent to which SNFs used the new assessments incorrectly. 

WHAT WE FOUND 

CMS introduced three types of therapy assessments to more quickly capture when 

beneficiaries start therapy, end therapy, and decrease or increase therapy. However, we 

found that SNF billing for changes in therapy increased only slightly. In addition, SNFs 

used assessments very differently when decreasing therapy than when increasing it, 

costing Medicare $143 million over 2 years. Further, SNFs frequently used the new 

start-of-therapy assessment incorrectly. For example, SNFs often used a start-of-therapy 

assessment but billed for no therapy during the stay. 

WHAT WE RECOMMEND 

CMS’s new policies are complex and create challenges for effective oversight. To better 

ensure that beneficiaries are receiving the amount of therapy they need, and that 

Medicare is paying appropriately, CMS should accelerate its efforts to implement a new 

method for paying for therapy. A new payment method may eliminate the need for the 

new assessments by basing payments on beneficiary characteristics rather than on the 

amount of therapy provided. In the meantime, CMS should mitigate the problems with 

the new therapy assessments by (1) reducing the financial incentive for SNFs to use 

assessments differently when decreasing and increasing therapy and (2) strengthening the 

oversight of SNF billing for changes in therapy. CMS concurred with both of our 

recommendations. 
 

TABLE OF CONTENTS 

Objective......................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................3 

Findings........................................................................................................6 

Under CMS’s new policies, SNFs slightly increased their billing 

for changes in therapy......................................................................6 

SNFs used assessments very differently when decreasing therapy 

than when increasing it, costing Medicare $143 million over 

2 years ..............................................................................................7 

SNFs frequently used the start-of-therapy assessments 

incorrectly ........................................................................................9 

Conclusion and Recommendations ............................................................10 

Agency Comments and OIG Response..........................................11
 

Appendix....................................................................................................12 

Agency Comments.........................................................................12 

Acknowledgments......................................................................................14 
 

 

 

 

 

 

OBJECTIVE 

To describe billing by skilled nursing facilities (SNFs) for changes in 

therapy under new Medicare policies. 

BACKGROUND 

SNFs provide skilled nursing care, therapy, and other services to Medicare 

beneficiaries who meet certain conditions. In 2012, Medicare spent 

$27.6 billion for nearly 2 million Medicare beneficiaries to receive these 

services.1 

In fiscal years (FYs) 2011 and 2012, the Centers for Medicare & Medicaid 

Services (CMS) implemented new policies to address concerns that SNF 

billing did not adequately reflect changes in therapy that occurred during a 

beneficiary’s stay. In particular, CMS introduced three types of 

assessments to capture when beneficiaries start therapy, end therapy, and 

decrease or increase therapy. CMS made these changes to help ensure that 

SNFs are paid appropriately both when they increase therapy and when 

they decrease therapy. 

This technical report is a companion to another report that examines the 

extent to which SNF billing and beneficiary characteristics changed from 

FYs 2011 to 2013.2 

The SNF Payment System 

During a beneficiary’s Part A stay, the SNF periodically assesses the 

beneficiary to classify him or her into a resource utilization group (RUG). 

The particular RUG determines how much Medicare pays each day for the 

beneficiary’s care.3 

CMS divides the 66 RUGs into nontherapy RUGs and therapy RUGs. 

Therapy RUGs are for beneficiaries who need physical therapy, speech 

therapy, or occupational therapy—typically, to recover from an event such 

as a hip fracture or a stroke. 

____________________________________________________________ 

1

 The Centers for Medicare & Medicaid Services (CMS), The Medicare and Medicaid 

Statistical Supplement, 2013 Edition, Tables 6.1 and 6.4. Accessed at 

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/MedicareMedicaidStatSupp/2013.html on March 19, 2014. 2 Office of Inspector General (OIG), The Medicare Payment System for Skilled Nursing
 

Facilities Needs To Be Reevaluated, OEI-02-13-00610, forthcoming.
 3

 CMS, Long-Term Care Facility Resident Assessment Instrument User’s Manual, 

ver. 3.0 (RAI), May 2013, § 1.3. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 1 
 

 

 

 

 

The therapy RUGs are divided into five levels of therapy: ultra high, 

very high, high, medium, and low. A SNF categorizes a beneficiary into 

one of these levels primarily based on the amount of therapy that the 

beneficiary receives during a 7-day assessment period.4 For example, if a 

beneficiary received 45 minutes of therapy during the assessment period, 

he or she is typically categorized into a low-therapy RUG, whereas if a 

beneficiary received 720 minutes, he or she is typically categorized into an 

ultra-high-therapy RUG. SNFs are typically paid more for higher levels of 

therapy. 

SNFs must conduct scheduled assessments by the 5th, 14th, 30th, 60th and 

90th day of a beneficiary’s stay.5 They have some flexibility in 

determining when to conduct each of these assessments—for example, in 

FY 2012, the beneficiary’s second scheduled assessment period could 

begin anytime between Days 7 and 12 of the stay.6 However, SNFs 

typically do not have flexibility in determining when to bill for the RUG. 

For example, the first scheduled assessment typically determines the RUG 

for Days 1 through 14 and the second scheduled assessment determines 

the RUG for Days 15 through 30. 

New Policies Regarding SNF Billing for Changes in Therapy 

In FYs 2011 and 2012, CMS also introduced three types of beneficiary 

assessments that capture changes in a beneficiary’s therapy more timely 

than scheduled assessments. The new assessments are designed to better 

align SNF billing—and Medicare payments—with changes in therapy 

during a beneficiary’s stay. 

Start-of-Therapy Assessments. In FY 2011, CMS introduced the 

start-of-therapy assessment.7 Prior to FY 2011, SNFs were allowed to bill 

for a therapy RUG—starting on the first day of the stay—on the basis of 

therapy that had been scheduled but not yet provided. Since FY 2011, this 

has not been allowed. Instead, if the beneficiary begins receiving therapy 

after the first scheduled assessment, SNFs may use a start-of-therapy 

assessment to begin billing for a therapy RUG, rather than waiting for the 

next scheduled assessment. 

End-of-Therapy Assessments. In FY 2011, CMS also created a stricter 

policy for billing when a beneficiary’s therapy is discontinued.8

 ____________________________________________________________ 

4

 CMS, RAI, § 6.6. 5

 42 CFR § 413.343(b) and CMS, RAI, § 2.8.
 6

 Throughout this report, we refer to the assessment periods that SNFs use to determine a 

beneficiary’s therapy level. These assessment periods are 7 days long. 7

 74 Fed. Reg. 40288, 40346–40349 (Aug. 11, 2009), 74 Fed. Reg. 22208, 22244–22246
 

(May 12, 2009), and CMS, RAI, § 2.8.
 8

 74 Fed. Reg.Reg. 40347–40348 (Aug. 11, 2009) and CMS, RAI, § 2.8.
 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 2 
 

Previously, SNFs could wait 8 to 10 days after therapy was discontinued 

to conduct an end-of-therapy assessment. Since FY 2011, however, SNFs 

have been required to conduct this assessment within 3 days of the end of 

therapy and to begin billing for the nontherapy RUG on the first day after 

therapy has been discontinued. 

Change-of-Therapy Assessments. Since FY 2012, when a beneficiary is 

receiving therapy, the SNF has been required to review the beneficiary’s 

therapy level every 7 days throughout the stay.9 If the therapy level 

changes, the SNF must conduct a change-of-therapy assessment to begin 

billing for the new RUG. This billing goes into effect on the first day of 

the 7-day assessment period. 

When a change-of-therapy assessment overlaps with a scheduled 

assessment, SNFs conduct what is called a “combined change-of-therapy 

assessment.”10 For example, a SNF conducts such an assessment when the 

change-of-therapy assessment period begins any day between Day 7 and 

Day 12, because the scheduled assessment period could also begin on 

these days. 

In addition, a SNF can sometimes choose between a scheduled assessment 

and a combined change-of-therapy assessment by carefully timing the 

beneficiary’s assessments.11 Using a scheduled assessment delays when a 

SNF can begin billing for the therapy change. In contrast, using a 

combined change-of-therapy assessment allows the SNF to bill more 

timely for the therapy change. Because the choice between the two types 

of assessments determines when the SNF begins billing for the new 

therapy RUG, it affects how much Medicare pays the SNF for the 

beneficiary’s stay. CMS currently does not specify which assessment 

SNFs should use in these circumstances. 

METHODOLOGY 

We based this study on an analysis of paid Part A SNF claims from the 

National Claims History file with dates of service in FYs 2010 through 

2013. 

Analysis of SNF billing for changes in therapy. We analyzed all billing 

for changes in therapy, regardless of the type of assessment used. We

 ____________________________________________________________ 

9

 74 Fed. Reg. 48486, 48518, and 48526 (Aug. 8, 2011). 

10 CMS, RAI, § 2.10. When the assessment periods do not overlap, SNFs conduct a 

stand-alone change-of-therapy assessment. 11 CMS, RAI, §§ 2.8 and 2.10.
 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 3 
 

 

 

 

 

conducted this analysis by looking at the RUGs on SNF claims for 

beneficiaries’ stays. 

For each FY, we grouped the claims by stays, using SNF and beneficiary 

identifiers and SNF admission dates.12 Each stay was associated with one 

or more line items in a claim, and each line item indicated the RUG.13 We 

calculated the percentage of stays during which: 

 the SNF billed for no therapy; 

 the SNF billed for the same level of therapy; or 

 the SNF billed for changes in therapy. 

Next, for each FY, we determined the percentage of stays in which the 

SNF billed for the following types of therapy changes: 

 a change in the level of therapy, 

 a therapy RUG followed by a nontherapy RUG, or 

 a nontherapy RUG followed by a therapy RUG.14 

Analysis of SNFs’ use of assessments for decreases and increases in 

therapy. Beginning in FY 2012, SNFs could change therapy levels using 

either scheduled assessments or change-of-therapy assessments. We 

determined whether SNFs’ use of these assessments differed when they 

decreased the therapy level compared to when they increased it. In this 

analysis, we included scheduled assessments and combined 

change-of-therapy assessments because a SNF can sometimes choose one 

or the other by carefully timing the beneficiary’s assessments; this 

decision determines when the SNF begins billing for the new therapy 

RUG.15 

We also determined how much SNFs’ use of scheduled assessments—as 

opposed to combined change-of-therapy assessments—cost Medicare. 

Using a scheduled assessment delays when a SNF begins billing for the 

therapy change. In contrast, using a combined change-of-therapy 

____________________________________________________________ 

12 The number of stays per year ranged from 2.40 million in FY 2013 to 2.46 million in 

FY 2011. 

13 We extracted the RUG from the first three characters of the Health Insurance 

Prospective Payment System (HIPPS) code on the claim line item. The remaining two 

characters in the HIPPS code indicate the type of assessment that the SNF used to 

determine the beneficiary’s RUG. 

14 SNFs may bill for more than one type of therapy change during a stay.
 15 We excluded stand-alone change-of-therapy assessments from this analysis because 

SNFs have no flexibility as to whether or when to conduct these assessments. After 

change-of-therapy assessments were introduced in FY 2012, SNFs changed beneficiaries’ 

therapy levels approximately 900,000 times a year and used scheduled assessments and 

combined change-of-therapy assessments for 57 percent of these changes.
 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 4 
 

 

 

assessment results in more timely billing. We calculated the cost to 

Medicare of using scheduled assessments as the difference between what 

Medicare actually paid when SNFs used scheduled assessments to change 

therapy levels and what Medicare would have paid if SNFs had used 

combined change-of-therapy assessments. We did these analyses 

separately for FYs 2012 and 2013. 

Analysis of how often SNFs used the new therapy assessments incorrectly. 

We determined how often SNFs used each of the three types of therapy 

assessments incorrectly. We considered a SNF’s use of an assessment to 

be incorrect if the assessment type reported on the claim clearly 

contradicted the RUGs on the SNF’s claim. 

Specifically, we considered the use of a start-of-therapy assessment to be 

incorrect if the SNF did not bill for a nontherapy RUG immediately 

followed by a therapy RUG. We considered the use of an end-of-therapy 

assessment to be incorrect if the SNF did not bill for a therapy RUG 

immediately followed by a nontherapy RUG. Lastly, we considered the 

use of a change-of-therapy assessment to be incorrect if the SNF billed for 

the same level of therapy throughout the stay. We did this analysis 

separately for each FY. 

Standards 

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 5 
 

 

 

 

 

 

 

 

FINDINGS 

Under CMS’s new policies, SNFs slightly increased 

their billing for changes in therapy 

In FYs 2011 and 2012, CMS implemented new policies requiring SNFs to 

bill for changes in therapy more quickly. In particular, CMS introduced 

three types of therapy assessments to capture when beneficiaries start 

therapy, end therapy, and decrease or increase therapy. However, SNF 

billing for changes in therapy increased only slightly under CMS’s new 

policies, from 27 percent of SNF stays in FY 2010 to 31 percent in 

FY 2013.16 Table 1 shows this slight increase in billing for changes in 

therapy, as well as the percentage of stays in which SNFs billed for the 

same level of therapy or for no therapy at all during the beneficiary’s stay. 

Table 1: Percentage of SNF Stays by Type of Billing, by Fiscal Year 

Type of Billing During SNF Stay Percentage of SNF Stays 

FY 2010 FY 2011 FY 2012 FY 2013 

Billed for changes in therapy 27% 29% 31% 31% 

Billed for same level of therapy 64% 59% 58% 59% 

Billed for no therapy 9% 12% 11% 10% 

Totals* 100% 100% 100% 100% 

* Columns do not sum to totals due to rounding. 

Source: OIG analysis of SNF claims, 2015.
 

When SNFs billed for changes in therapy, they most commonly billed for 

a change in the level of therapy. As shown in Table 2, in FY 2013, SNFs 

billed for a change in the level of therapy during approximately 

one-quarter of stays. This represents a total increase of 2 percentage 

points from FY 2010; this increase occurred in FY 2012 when CMS 

introduced the change-of-therapy assessment. 

In contrast, SNFs billed for a therapy RUG followed by a nontherapy 

RUG far less often than they billed for a change in the level of therapy. 

Further, billing for this change increased by only 1 percentage point from 

FYs 2010 to FY 2013; this increase occurred in FY 2011, when CMS 

introduced the end-of-therapy assessment. 

SNFs were least likely to bill for a nontherapy RUG followed by a therapy 

RUG. However, billing for this change increased from 1 percent of stays 

in FY 2010 to 5 percent in FY 2013. Most of this increase occurred in 

FY 2011, when CMS introduced the start-of-therapy assessment. 

____________________________________________________________ 

16 This analysis was based on the RUGs billed and included billing for all changes in 

therapy, regardless of the type of assessment used. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 6 
 

 

 

Table 2: Percentage of SNF Stays by Type of Billing for Change in Therapy, 

by Fiscal Year 

Type of Billing for Change in Therapy Percentage of SNF Stays 

FY 2010 FY 2011 FY 2012 FY 2013 

A change in the level of therapy 23% 23% 25% 25% 

A therapy RUG followed by a nontherapy RUG 6% 7% 8% 7% 

A nontherapy RUG followed by a therapy RUG 1% 4% 5% 5% 

Totals* 27% 29% 31% 31% 

* Columns do not sum to totals because SNFs may bill for more than one type of therapy change during a stay. 

Source: OIG analysis of SNF claims, 2015. 

SNFs used assessments very differently when 

decreasing therapy than when increasing it, costing 

Medicare $143 million over 2 years 

As of FY 2012, SNFs can sometimes choose between conducting a 

scheduled assessment or a combined change-of-therapy assessment when 

a beneficiary’s level of therapy changes. This decision determines when 

the SNF begins billing for the new therapy RUG. Using a combined 

change-of-therapy assessment results in more timely billing, whereas 

using a scheduled assessment delays when SNFs begin billing for the 

therapy change. For example, as shown in Box 1, when a SNF chose a 

scheduled assessment when decreasing therapy, this choice delayed billing 

by 6 days and cost Medicare $315 more for the stay. 

Box 1: Example of a Stay that Cost Medicare More Because a SNF 

Chose a Scheduled Assessment When Decreasing Therapy
 

	 The SNF began first assessment period on Day 2 and placed 

beneficiary into a very-high-therapy RUG. 

	 The SNF began second assessment period on Day 8 and 

decreased therapy level to high. 

	 The SNF chose a scheduled assessment by beginning the second 

assessment period 6 days (rather than 7 days) after the first, so 

billing for the lower paying RUG did not begin until Day 15. 

	 If the SNF had chosen a combined change-of-therapy 

assessment by beginning the second assessment period 7 days 

after the first, billing would have started on Day 9. 

	 Medicare paid $315 more for this stay because the SNF chose a 

scheduled assessment instead of a combined change-of-therapy 

assessment. 

Source: OIG analysis of SNF claims, 2015. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 7 
 

 

SNFs used scheduled assessments and combined change-of-therapy 

assessments very differently when decreasing and increasing therapy, 

which resulted in increased costs to Medicare. In particular, SNFs were 

far more likely to use scheduled assessments when they decreased therapy 

than when they increased it. The choice of a scheduled assessment— 

rather than a combined change-of-therapy assessment—when a SNF 

decreases therapy allows it to delay billing for the lower paying therapy 

RUG. This practice increased from FY 2012 to FY 2013. See Table 3. 

Table 3: Type of Assessment Used When SNFs Decreased and 

Increased Therapy, by Fiscal Year 

Type of Assessment Used to Decrease and 

Increase Therapy 

Percentage of Therapy Level 

Changes 

FY 2012 FY 2013 

Decreased therapy using: 

Scheduled assessment 86% 89% 

Combined change-of-therapy assessment 14% 11% 

Totals 100% 100% 

Increased therapy using: 

Scheduled assessment 51% 32% 

Combined change-of-therapy assessment 49% 68% 

Totals 100% 100% 

Source: OIG analysis of SNF claims, 2015. 

As a result of these billing practices, SNFs’ use of scheduled assessments 

to change therapy levels in FYs 2012 and 2013 cost Medicare 

$143 million more than if SNFs had used combined change-of-therapy 

assessments. See Table 4. 

Table 4: Cost to Medicare Associated With Using Scheduled Assessments, 

Rather Than Combined Change-of-Therapy Assessments, to Change 

Therapy Levels 

Type of Therapy Change Billed by SNFs 

Cost to Medicare 

(millions) 

FY 2012 FY 2013 Total 

Decrease in therapy $90.1 $108.4 $198.5 

Increase in therapy* -$35.2 -$20.5 -$55.8 

Totals $55.9 $87.8 $142.8 

* Medicare saves money when SNFs delay billing for increasing therapy, but this is far less common than 

delayed billing for decreasing therapy. 

Source: OIG analysis of SNF claims, 2015. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 8 
 

 

SNFs frequently used the start-of-therapy assessments 

incorrectly 

In FY 2013, SNFs used the new therapy assessments in just over 

one-quarter of SNF stays. As shown in Table 5, SNFs were most likely to 

use change-of-therapy assessments and least likely to use start-of-therapy 

assessments. 

Table 5: SNFs’ Use of the New Therapy Assessments, By Type of 

Assessment 

Type of Assessment Used During Stay Percentage of SNF Stays 

FY 2011 FY 2012 FY 2013 

Start-of-therapy assessment 5% 4% 3% 

End-of-therapy assessment 6% 7% 6% 

Change-of-therapy assessment N/A 17% 19% 

Totals* 11% 25% 26% 

* Columns do not sum to totals because a SNF may have used more than one type of therapy 

assessment during a stay. 

Source: OIG analysis of SNF claims, 2015.
 

However, SNFs were most likely to use the start-of-therapy assessments 

incorrectly.17 In FY 2011, for 61 percent of the stays in which SNFs used 

a start-of-therapy assessment, they did not bill for a nontherapy RUG 

immediately followed by a therapy RUG. For example, SNFs sometimes 

billed for no therapy RUGs throughout the stay when they used a 

start-of-therapy assessment. This incorrect use decreased in FY 2013, but 

remained high at 27 percent. SNFs also used the end-of-therapy and 

change-of-therapy assessments incorrectly, but to a lesser extent. See 

Table 6. 

Table 6: Incorrect Use of Therapy Assessments, by Assessment 

Type and Fiscal Year 

Type of Therapy Assessment Percentage of Stays with Incorrect Use 

FY 2011 FY 2012 FY 2013 

Start-of-therapy assessment 61% 35% 27% 

End-of-therapy assessment 14% 10% 8% 

Change-of-therapy assessment N/A 4% 4% 

Source: OIG analysis of SNF claims, 2015.

 ____________________________________________________________ 

17 We considered a SNF’s use of an assessment to be incorrect when the assessment types 

reported on the claim clearly contradicted the RUGs billed. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 9 
 

 

 

CONCLUSION AND RECOMMENDATIONS 

CMS introduced three types of therapy assessments to capture when 

beneficiaries start therapy, end therapy, and decrease or increase therapy. 

However, under these new policies, SNF billing for changes in therapy 

increased only slightly. In addition, SNFs used assessments very 

differently when decreasing therapy than when increasing it, costing 

Medicare $143 million in FYs 2012 and 2013. Further, SNFs frequently 

used the start-of-therapy assessments incorrectly. For example, SNFs 

often used a start-of-therapy assessment but billed for no therapy during 

the stay. 

CMS’s new policies are complex and create challenges for effective 

oversight. To better ensure that beneficiaries are receiving the amount of 

therapy they need, and that Medicare is paying appropriately, CMS should 

accelerate its efforts to implement a new method for paying for therapy. A 

new payment method may eliminate the need for the new therapy 

assessments by basing payments on beneficiary characteristics rather than 

on the amount of therapy provided. 

In the meantime, CMS should mitigate the problems with the new 

policies. We recommend that CMS: 

Reduce the financial incentive for SNFs to use assessments 

differently when decreasing therapy than when increasing it 

CMS should modify its policies so that SNFs cannot use assessments 

differently when decreasing and increasing therapy in a manner that 

substantially increases Medicare payments. For example, CMS could 

eliminate SNFs’ ability to choose a scheduled assessment over a combined 

change-of-therapy assessment when changing therapy levels. 

Strengthen the oversight of SNF billing for changes in therapy 

CMS should instruct its contractors to monitor SNF billing for changes in 

therapy. Such analyses should identify SNFs that rarely bill for changes in 

therapy or that frequently use the new therapy assessments incorrectly. The 

contractors should target these SNFs for education and for claims review to 

establish whether these SNFs are billing inappropriately. CMS should also 

instruct its contractors to develop claims processing “edits” (automatic 

systems processes) to reject claims if therapy assessments are used 

incorrectly. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 10 
 

 

 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our two recommendations. 

CMS concurred with our recommendation to reduce the financial 

incentive for SNFs to use assessments differently when decreasing therapy 

than when increasing it. CMS stated that it is working to identify potential 

alternatives to the existing methodology used to pay for therapy services 

under the SNF payment system. We appreciate that CMS is developing 

alternative methods of paying for therapy and CMS should accelerate 

these efforts. In the meantime, however, CMS should develop a shorter 

term solution to this problem with the new policies. For example, CMS 

could eliminate SNFs’ ability to choose a scheduled assessment over a 

combined change-of-therapy assessment when changing therapy levels. 

CMS concurred with our recommendation to strengthen the oversight of 

SNF billing for changes in therapy. CMS stated that it will work to 

monitor SNF billing for changes in therapy and to target for education and 

claims review the SNFs that rarely bill for changes in therapy or that 

frequently use therapy assessments incorrectly. 

For the full text of CMS’s comments, see Appendix A. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 11 
APPENDIX 

Agency Comments 

.l',:f'j;ISYIC."J::.t.~ 

\.~. DEPAR1MENT OF HEALTH & HUMAN__s_E_R_v_r_c_E_s_______c_e_nt_••_s_ro_rM_•_d_ic_••_•_&_M_ed-lc_a_lct_s_erv_lc-es 

~~ 200 Independence Avenue SW 


Washington, DC 20201 


DATE: JUN -5 2015 

TO: 	 Daniel R. Levinson 


Inspector General 


FROM: 	 Andrew M. Slavitt 


Acting Administrator 


SUBJECT: 	 Office ofinspector General (OIG) Draft Report: "Skilled Nursing Facility Billing 

for Changes in Therapy: Improvements are Needed" (OEl-02-13-00611) 

The Centers for Medicare and Medicaid Services (CMS) appreciates the opportunity to review 

and comment on the Office of Inspector General's (OIG) draft report. CMS is committed to 

making sure that the Skilled Nursing Facility (SNF) payment model provides appropriate 

payments for services provided. 

SNFs provide care to beneficiaries who need daily skilled care given by, or under the supervision 

of, skilled nursing or therapy staff. Medicare Part A beneficiaries may qualify for coverage of up 

to I00 days of SNF services in a benefit period if they have a medically necessary inpatient 

hospital stay of three consecutive days or more that occurred within a short time period 

(generally, 30 days) prior to entering the SNF. Currently, Medicare pays for services provided by 

SNFs under the Medicare Part A benefit on a per diem basis through the SNF Prospective 

Payment System (PPS). This payment methodology was designed to prospectively reimburse 

SNFs based on the relative amount ofresources needed to treat beneficiaries. 

The SNF PPS was expected to control the costs of administering the Medicare Prut A SNF 

benefit. However, the number ofMedicare Part A payment days for therapy services in general, 

and more specifically for ultra-high levels oftherapy, continues to rise. A potential cause ofthis 

issue is that the Medicru·e Part A therapy payment under the SNF PPS is based primarily on the 

amount oftherapy provided to the beneficiary regardless ofpatient condition, which implicitly 

provides a financial payment incentive for facilities to provide as much therapy to a resident as 

that resident can tolerate, regardless ofthe impact of providing this level oftherapy on producing 

positive patient outcomes. 

In FY 2011, CMS modified regulations regarding SNFs' use of Start ofTherapy Assessments 

and End ofTherapy Assessments to more accurately report and receive reimbursement for the 

start and end oftherapy services to beneficiaries. Previously, SNFs could only start billing for 

therapy after conducting a scheduled assessment and were required to conduct ru1 end of therapy 

assessment eight to I0 clays after therapy was discontinued. Under the new policies, SNFs may 

use a Start of Therapy Assessment to begin billing for therapy at the outset of a new therapy 

regimen and End ofTherapy Assessments must be conducted within three days from the last day 

therapy services were provided. In FY 2012, CMS began requiring SNFs to use Change of 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 12
 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 13 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Jodi Nudelman, Regional 

Inspector General for Evaluation and Inspections in the New York regional 

office, and Nancy Harrison and Meridith Seife, Deputy Regional 

Inspectors General. 

Judy Bartlett served as the team leader for this study, and Rachel Bryan 

served as lead analyst. We would also like to acknowledge the 

contributions of other Office of Evaluation and Inspections regional office 

staff, including Marissa Baron. Central staff who provided support 

include Clarence Arnold, Heather Barton, Berivan Demir Neubert, 

Evan Godfrey, and Christine Moritz. 

SNF Billing for Changes in Therapy: Improvements Are Needed (OEI-02-13-00611) 14 
 

Office of Inspector General

http://oig.hhs.gov 

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 the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides 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 intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.