Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

 

INAPPROPRIATE PAYMENTS 

TO SKILLED NURSING 

FACILITIES COST MEDICARE 

MORE THAN A BILLION 

DOLLARS IN 2009

Daniel R. Levinson 

Inspector General

November 2012

OEI-02-09-00200
 

EXECUTIVE SUMMARY: INAPPROPRIATE PAYMENTS TO SKILLED 

NURSING FACILITIES COST MEDICARE MORE THAN A BILLION DOLLARS 

IN 2009

OEI-02-09-00200

WHY WE DID THIS STUDY 

In recent years, the Office of Inspector General has identified a number of problems with 

billing by skilled nursing facilities (SNF), including the submission of inaccurate, 

medically unnecessary, and fraudulent claims. Further, the Medicare Payment Advisory 

Commission has raised concerns about SNFs’ improperly billing for therapy to obtain 

additional Medicare payments. In fiscal year (FY) 2012, Medicare paid $32.2 billion for 

SNF services. 

HOW WE DID THIS STUDY

We based this study on a medical record review of a stratified random sample of SNF 

claims from 2009. The reviewers determined whether the information reported by the 

SNFs on the Minimum Data Set (MDS) was supported by and consistent with the 

medical record. The MDS is a standardized tool that SNFs use to assess each 

beneficiary. SNFs use the information on the MDS to classify beneficiaries into resource 

utilization groups (RUG). The RUGs determine how much Medicare pays the SNFs. 

WHAT WE FOUND

SNFs billed one-quarter of all claims in error in 2009, resulting in $1.5 billion in 

inappropriate Medicare payments. The majority of the claims in error were upcoded; 

many of these claims were for ultrahigh therapy. The remaining claims in error were 

downcoded or did not meet Medicare coverage requirements. In addition, SNFs 

misreported information on the MDS for 47 percent of claims. SNFs commonly 

misreported therapy, which largely determines the RUG and the amount that Medicare 

pays the SNF. 

WHAT WE RECOMMEND

We recognize that the Centers for Medicare & Medicaid Services (CMS) has recently 

made several significant changes to SNF payments. However, more needs to be done to 

reduce inappropriate payments to SNFs. We recommend that CMS: (1) increase and

expand reviews of SNF claims, (2) use its Fraud Prevention System to identify SNFs that 

are billing for higher paying RUGs, (3) monitor compliance with new therapy 

assessments, (4) change the current method for determining how much therapy is needed 

to ensure appropriate payments, (5) improve the accuracy of MDS items, and (6) follow 

up on the SNFs that billed in error. CMS concurred with all six recommendations. 
 

TABLE OF CONTENTS

Objectives ....................................................................................................1 

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

Methodology ................................................................................................6 

Findings......................................................................................................10 

SNFs billed one-quarter of claims in error 

in 2009, resulting in $1.5 billion in inappropriate payments .........10 

SNFs misreported information on the MDS for 47 percent of 

claims ............................................................................................. 11 

Conclusion and Recommendations ............................................................14 

Agency Comments and Office of Inspector General Response .................17 

Appendixes ................................................................................................19 

A: Description of the 53 Resource Utilization Groups in Effect 

During Our Review Period ............................................................19 

B: Therapy Minutes Received by Therapy Level .........................21 

C: Sample Design .........................................................................22 

D: Sample Sizes, Point Estimates, and 95-Percent Confidence 

Intervals for Estimates Presented in the Report .............................23 

E: Point Estimates and 95-Percent Confidence Intervals of 

Minimum Data Set Categories With Misreported Information .....24 

F: Agency Comments ....................................................................25 

Acknowledgments......................................................................................29 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 1

OBJECTIVES 

1. To assess the appropriateness of Medicare payments for skilled 

nursing facility (SNF) claims in 2009. 

2. To determine the extent to which SNFs misreported information that 

affects Medicare payments.

BACKGROUND

SNFs provide skilled nursing care, rehabilitation services, and other 

services to Medicare beneficiaries who meet certain conditions. In fiscal 

year (FY) 2012, Medicare paid $32.2 billion for SNF services.1 

The Office of Inspector General (OIG) has identified a number of 

problems with SNF billing. Notably, OIG found that 26 percent of claims 

submitted by SNFs in FY 2002 were not supported by the medical record, 

representing $542 million in potential overpayments.2

 Recent OIG

investigations have also found problems with SNF billing. For example, 

one SNF reached a settlement agreement on allegations of fraudulent 

billing for medically unnecessary therapy.

3

 

Further, the Medicare Payment Advisory Commission (MedPAC) has 

raised concerns about SNFs’ improperly billing for therapy to obtain 

additional Medicare payments. Specifically, MedPAC noted that the 

payment system “encourages SNFs to furnish therapy, even when it is of 

little or no benefit.”4 

This study is part of a larger body of work about SNF payments and 

quality of care. The first study found that from 2006 to 2008, SNFs 

increasingly billed for higher paying categories, even though beneficiary 

1 Centers for Medicare & Medicaid Services (CMS), 2012 CMS Statistics, Table III.6. 

Accessed at https://www.cms.gov/ResearchGenInfo/02_CMSStatistics.asp on September 

14, 2012. 

2 OIG, A Review of Nursing Facility Resource Utilization Groups, OEI-02-02-00830, 

February 2006. 

3 Department of Justice, Council Bluffs Area Nursing Home Reaches Settlement 

Agreement on Allegations of Fraudulent Billing to Medicare for Physical, Occupational, 

and Speech Therapy Services, June 28, 2012. Accessed at 

http://www.justice.gov/usao/ias/news/2012/Bethany%20Lutheran%20Homes%206-28-

2012.html on July 12, 2012. 

4 MedPAC, Report to Congress: Promoting Greater Efficiency in Medicare, ch. 8, p. 

191, June 2007. MedPAC reiterated this concern in response to the planned payment 

changes in FY 2011. See Report to Congress: Medicare Payment Policy, ch. 7, p. 151, 

March 2011.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 2

characteristics remained largely unchanged.5 Another study will assess the 

extent to which SNFs met certain Federal requirements regarding the 

quality of care provided to beneficiaries.6 

Medicare Coverage Requirements for Part A SNF Stays 

The Part A SNF benefit covers skilled nursing care, rehabilitation services, 

and other services. These services commonly include physical, 

occupational, and speech therapy; skin treatments; and assistance with 

eating, bathing, and toileting. Medicare covers these services for up to 

100 days during any spell of illness.7 

To qualify for the SNF benefit, the beneficiary must have been in the 

hospital for at least 3 consecutive days and the hospital stay must have 

occurred within 30 days of admission to the SNF. 8 The beneficiary must 

need skilled services daily in an inpatient setting and must require the 

skills of technical or professional personnel to provide these services.9 In 

addition, these services must be ordered by a physician and be for the 

same condition that the beneficiary was treated for in the hospital.

10 

Medicare Payments to SNFs 

Medicare pays SNFs under a prospective payment system. SNFs use a 

standardized tool known as the Minimum Data Set (MDS) to assess each 

beneficiary’s clinical condition, functional status, and expected and actual 

use of services.11 SNFs use certain items on the MDS to classify

beneficiaries into resource utilization groups (RUG).12 The RUGs 

determine how much Medicare pays the SNF. 

5 OIG, Questionable Billing in Skilled Nursing Facilities, OEI-02-09-00202, 

December 2010.

6 OIG, Medicare Requirements for Quality of Care in Skilled Nursing Facilities, 

OEI-02-09-00201, forthcoming.

7 Social Security Act, § 1812(a)(2)(A), 42 U.S.C. § 1395d(a)(2)(A).

8 42 CFR §§ 409.30(a).

9 42 CFR §§ 409.31(b)(1) and (3) and 409.31(a)(2). 

10 42 CFR § 409.31. Medicare also covers SNF services if the condition requiring such 

services arose when the beneficiary was receiving care in a SNF for a condition treated 

during the prior hospital stay.

11 The MDS is part of CMS’s Resident Assessment Instrument (RAI). CMS, Revised 

Long-Term Care Facility Resident Assessment Instrument User’s Manual Version 2.0 

(RAI Manual 2.0), Dec. 2002, rev. Dec. 2005, § 1.2. SNFs must conduct a 

comprehensive assessment of each beneficiary’s needs using the RAI. 

42 CFR § 483.20(b). 

12 RAI Manual 2.0, § 1.3. At the time of our review, 108 MDS items were used to 

determine the RUG.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 3

For many of the MDS items, SNFs assess the beneficiary during what is 

called the look-back period.13 SNFs report this information on the MDS, 

which in addition to determining the RUG, is used to develop a care plan

for the beneficiary. Several of the MDS items are also reported on CMS’s 

Nursing Home Compare Web site, which provides information about each 

nursing home to the public. 

SNFs must conduct assessments on or about the 5th, 14th, 30th, 60th, and 

90th days of a Part A stay, as well as on certain other occasions, to account 

for changes in the beneficiary’s care needs.14 Accordingly, if a beneficiary 

has a 100-day Part A stay, he or she will have at least five assessments. 

For each assessment, the beneficiary may be categorized into a different 

RUG. 

Types of RUGs. Each RUG has a different Medicare per diem payment 

rate. Medicare groups the RUGs into eight distinct categories.15 Two 

categories—Rehabilitation and Rehabilitation Plus Extensive Services—

are for beneficiaries who need physical therapy, speech therapy, or 

occupational therapy, typically after a hip fracture or a stroke. In this 

report, we refer to the RUGs in the two therapy categories as therapy 

RUGs. The remaining six categories are for beneficiaries who require 

little to no therapy. We refer to the RUGs in these categories as 

nontherapy RUGs. At the time of our review, there were 53 RUGs. See 

Appendix A for a description of the 53 RUGs.

Medicare Payments for Therapy RUGs. Medicare payment rates for 

therapy RUGs are typically higher than the rates for nontherapy RUGs. In 

addition, Medicare typically pays more for higher levels of therapy. The 

therapy RUGs are divided into five levels: ultrahigh, very high, high, 

medium, or low. The SNF categorizes each beneficiary into one of the 

five therapy levels based primarily on the number of minutes of therapy 

provided during the look-back period.16 For example, if the beneficiary 

received 45 minutes of therapy during the look-back period, he or she is 

categorized into a low-therapy RUG, whereas if the beneficiary received 

720 minutes, he or she is categorized into an ultrahigh therapy RUG. 

13 The length of the look-back period varies depending upon the MDS item. For 

example, a 7-day look-back period is used to determine the amount of therapy that was 

provided, while a 14-day look-back period is used to determine whether dialysis was 

provided. See CMS, RAI Manual 2.0, § 3.3 (the discussion of the look-back period 

begins on page 3-29). 14 42 CFR § 413.343(b) and CMS, RAI Manual 2.0, § 2.5.

15 CMS, RAI Manual 2.0, §§ 6.3, 6.4, and 6.6. In FY 2011, CMS revised the eight 

categories.

16 CMS, RAI Manual 2.0, § 6.6. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 4

Medicare generally pays the most for ultrahigh therapy. See Appendix B 

for further information on the therapy levels. 

Changes to Medicare Payments to SNFs. For FYs 2011 and 2012, CMS 

made a number of changes to SNF payments. Notably, for FY 2011, CMS 

increased the number of RUGs from 53 to 66 to allocate payments more 

accurately.17 CMS also changed how SNFs account for therapy provided 

to multiple beneficiaries concurrently or in group settings.18 Further, SNFs 

must complete a “change of therapy” assessment when the amount of 

therapy provided no longer reflects the RUG and an “end of therapy” 

assessment when therapy has been discontinued for 3 consecutive days.

19 

Lastly, in FY 2012, CMS reduced payments to SNFs by approximately 

$3.9 billion to correct for unintended excessive payments made in 

FY 2011.20 

Despite these changes, the payment issues we highlight in this report, 

which are based on 2009 data, are still relevant to the current system. 

Notably, CMS still bases SNF payments for therapy RUGs on the amount 

of therapy SNFs provided during the look-back period. 

Documentation for Part A SNF Stays 

CMS expects SNFs to document in the medical record the care that a 

beneficiary needs and receives, as well as how he or she responds to the 

care received.21 CMS states, in particular, that good clinical practice 

requires SNFs to document the number of minutes of therapy provided to 

a beneficiary.22 In addition, the medical record should support and be 

consistent with the MDS.

17 74 Fed. Reg. 40288, 40338 (Aug. 11, 2009). 

18 In concurrent therapy, the therapist works with two beneficiaries at the same time using 

different treatments. For this type of therapy, SNFs are now required to allocate half the 

total therapy minutes to each beneficiary when determining the RUG. See 74 Fed. Reg. 

at 40315–40319; and CMS, RAI Manual 3.0, § 6.6. In group therapy, the therapist works 

with four beneficiaries at the same time using the same or similar treatments. For this

type of therapy, SNFs are now required to allocate a quarter of the total therapy minutes 

to each beneficiary when determining the RUG. See 76 Fed. Reg. 48486, 48514 (Aug. 8, 

2011). 

19 76 Fed. Reg. at 48517-48526. 

20 76 Fed. Reg. at 48500. 

21 CMS, RAI Manual 2.0, § 1.14. See also RAI Manual 3.0, § 1.3. 

22 CMS, RAI Manual 2.0, § 1.14. See also RAI Manual 3.0, § 1.3, and ch. 3, § O.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 5

CMS Oversight of SNFs

CMS contracts with State Survey and Certification agencies to determine 

whether SNFs are in compliance with Federal requirements.23 One of the 

requirements that surveyors verify is the accuracy of the MDS. Surveyors cite 

facilities for deficiencies if they do not comply with requirements, which may 

affect their participation in Medicare.

24 

In addition, CMS relies on various contractors to identify, prevent, and reduce 

fraud, waste, and abuse for Medicare Part A payments, including SNF 

payments. Medicare Administrative Contractors (MAC) are responsible for 

processing and paying Part A claims. At their discretion, these contractors may 

conduct targeted medical reviews of SNF claims to prevent improper 

payments.25 Other contractors overseeing SNFs include Recovery Audit 

Contractors (RAC), which identify and recoup any overpayments made to 

SNFs, and Zone Program Integrity Contractors and Program Safeguard 

Contractors, which identify fraud and abuse and refer cases to law 

enforcement, when appropriate. 

Lastly, CMS monitors the accuracy of payments made to providers through the 

Comprehensive Error Rate Testing (CERT) program. The CERT contractor 

reviews a sample of claims to determine an error rate. CMS defines the error 

rate as the percentage of total dollars that Medicare erroneously paid or 

denied. For FY 2010, the error rate for inpatient SNF services was 

3.3 percent.26

Related Reports

The first study in this series found that from 2006 to 2008, SNFs 

increasingly billed for higher paying RUGs, even though beneficiary 

characteristics remained largely unchanged.

27 Additionally, for-profit 

SNFs were far more likely to bill for higher paying RUGs. Furthermore, 

348 SNFs had questionable billing, indicating that certain SNFs may be 

routinely placing beneficiaries into higher paying RUGs regardless of the 

23 CMS, State Operations Manual, Pub. No. 100-07, ch. 1, § 1010, rev. 1, issued 

May 21, 2004.

24 42 CFR § 488.330.

25 CMS provides guidance to MACs on how to conduct medical reviews of SNF claims. 

See Medicare Program Integrity Manual, Pub. No. 100-08, ch. 6, § 6.1.3, rev. 196, 

issued March 30, 2007.

26 CMS, The Supplementary Appendices for the Medicare Fee-for-Service 2010 Improper 

Payment Report, p.10. Accessed at https://www.cms.gov/Research-Statistics-Data-andSystems/Monitoring-Programs/CERT/Downloads/Supplementary-Appendices-for-theMedicare-Fee-for-Service-2010-Improper-Payment-Report.pdf on June 28, 2012. 

27 OIG, Questionable Billing in Skilled Nursing Facilities, OEI-02-09-00202, December 

2010.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 6

beneficiaries’ care and resource needs. OIG recommended that CMS 

(1) monitor overall payments to SNFs and adjust rates, if necessary; 

(2) change the current method for determining how much therapy is 

needed to ensure appropriate payments; (3) strengthen monitoring of SNFs 

that are billing for higher paying RUGs; and (4) follow up on the SNFs 

identified as having questionable billing. CMS concurred with all of the 

recommendations but the second one, noting concerns about relying on 

information from the beneficiary’s hospital stay to determine the 

beneficiary’s therapy needs. 

Another OIG study found that despite changes to the SNF payment system 

in FY 2011 that were meant to be budget neutral, Medicare payments 

increased by $2.1 billion, or 16 percent, from the last half of FY 2010 to 

the first half of FY 2011.28 Contrary to CMS’s expectations, in the first 

half of FY 2011, SNFs billed for higher levels of therapy, which 

contributed to the overall increase in payments. The data indicated that 

CMS should adjust payment rates to address the significant increases in 

payments to SNFs. As noted earlier, in FY 2012, CMS reduced payments 

to SNFs by approximately $3.9 billion. 

METHODOLOGY

We based this study on a medical record review of a random sample of 

Part A SNF claims from calendar year 2009. 

Selection of Sample for Medical Review 

Using CMS’s National Claims History File, we first identified all Part A 

SNF claims with a service date in 2009.29 We grouped these claims by 

stay using the admission date and identified the stays that ended in 2009. 

We then grouped these stays into three strata defined by the length of the 

stay and the number of claims. We selected a stratified simple random 

sample of 245 stays and then selected 499 claims from these stays.30 

These claims project to the 6,445,273 claims in the population. See

Appendix C for more information about how we selected the stays and the 

claims. 

28 OIG, Changes in Skilled Nursing Facilities Billing in Fiscal Year 2011, 

OEI-02-09-00204, July 2011.

29 In this report, we refer to claim line items as claims.

30 We stratified the sample in this way to meet the objectives of this study and our 

companion study, Medicare Requirements for Quality of Care in Skilled Nursing 

Facilities, OEI-02-09-00201, forthcoming.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 7

Medical Record Review

We used a contractor to collect and review the medical records for each 

sampled claim. The contractor made up to five attempts to obtain the 

medical records. We had a 100-percent response rate. 

We also contracted with medical record reviewers. The reviewers 

consisted of three registered nurses, each of whom had at least 12 years of 

SNF experience, and a physical therapist, an occupational therapist, and a 

speech therapist. The nurses reviewed the records and consulted with the 

therapists as needed. The reviewers used a standardized data collection 

instrument that was based on Medicare coverage requirements, CMS 

guidance for completing the MDS, and CMS guidance to MACs for 

reviewing SNF claims. The instrument was developed in collaboration 

with the reviewers and tested on a separate sample of claims.31 The 

reviewers conducted the medical review between April and September 

2011. 

The reviewers determined whether each claim met Medicare coverage 

requirements that (1) the SNF stay be related to a condition that was 

treated in the prior hospital stay, (2) the beneficiary needs and receives 

daily skilled nursing or therapy, and (3) the beneficiary has a physician 

order for skilled nursing or therapy. If the beneficiary became ineligible 

for SNF care at some point during the stay, the reviewers indicated 

approximately when the stay should have ended. In this report, we refer to 

this group of claims as not meeting Medicare coverage requirements.

If a claim met the requirements above, the reviewers then focused on the 

MDS items used to determine the RUGs. For each MDS item, the 

reviewers determined whether the information reported by the SNFs for 

the item was supported and consistent with the medical record. If an MDS 

item was inaccurate, the reviewers recoded the item on the basis of their 

review of the medical record. 

For the MDS items related to therapy, the reviewers looked in the medical 

record for the number of days and minutes of therapy provided to the 

beneficiary during the look-back period and compared them to those 

recorded on the MDS. The reviewers noted any inconsistencies and 

recoded the MDS on the basis of their review of the medical record. They

also determined whether the therapy provided during the look-back period 

31 We conducted a preliminary review of 25 claims to test the instrument and to ensure 

consistency among the reviewers.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 8

was reasonable and necessary.

32 For those claims in which they 

determined that a portion of the therapy was not reasonable and necessary, 

they estimated the amount of therapy that was reasonable and necessary

and recoded the MDS items. In addition, the reviewers noted any 

inconsistencies between the amount of therapy provided during and after 

the look-back period.33 

Analysis 

We analyzed the information from the medical review to determine the 

percentage of claims SNFs billed in error and the amount Medicare 

inappropriately paid for them. To do this, we first determined the number 

and percentage of claims that did not meet Medicare coverage 

requirements. We projected this percentage to the population of Part A 

SNF claims for stays that ended in 2009. 

For the remaining claims, we generated a revised RUG for each claim on 

the basis of the recoded MDS data from the medical reviewers. We used

CMS’s SAS program to generate the revised RUG.

34 If the original RUG 

was a higher paying RUG than the revised RUG, we considered the claim 

to be upcoded. Conversely, if the original RUG was a lower paying RUG 

than the revised RUG, we considered the claim to be downcoded. We 

calculated the overall percentage of claims that were inaccurate (i.e., 

upcoded or downcoded) and projected this rate to the population of Part A 

SNF claims for stays that ended in 2009. 

Next, we determined the total amount Medicare inappropriately paid for 

SNF claims. For the claims that did not meet Medicare coverage 

requirements, we calculated the amount that Medicare paid 

inappropriately by multiplying the payment rate by the number of days 

that did not meet Medicare coverage requirements. For the claims with

inaccurate RUGs, we determined the net difference between the amount 

that was paid and the amount that should have been paid. We added this 

to the amount that Medicare inappropriately paid for claims that did not 

32 This is consistent with CMS’s instructions to the MACs for reviewing SNF claims. 

CMS instructs medical reviewers to determine whether the services indicated on the 

MDS were rendered and were reasonable and necessary. If the reviewer determines that 

some services provided were not reasonable and necessary or were not supported in the 

medical record, the reviewer enters the correct data and calculates the RUG. The MAC 

then pays the claim according to the revised RUG. See Medicare Program Integrity 

Manual, ch. 6, § 6.1.3, rev. 196, issued March 30, 2007. 33 The reviewers did not recode the MDS on the basis of this analysis.

34 We generated a RUG for each claim except in two instances. For two claims, the SNF 

billed the default payment rate, which we considered to be appropriate on the basis of 

Medicare policy. SNFs receive the default rate if they do not submit the MDS to 

Medicare in accordance with the assessment schedule. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 9

meet Medicare coverage requirements and projected it to the population of 

all Part A SNF claims for stays that ended in 2009. 

Lastly, we analyzed the extent to which SNFs misreported information on 

the MDS for items that affect SNF payment.

35 For each category of MDS 

items established by CMS, we calculated the percentage of claims

associated with inaccurate MDS information.

36 We also calculated the 

overall percentage of claims associated with one or more inaccurate MDS

items. We projected the results to the population of all Part A SNF claims 

for stays that ended in 2009. 

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.

35 This analysis did not include the 12 claims that did not meet Medicare coverage 

requirements for the entire claim period or that were billed at the default rate.

36 The categories of MDS items are listed in the RAI Manual 2.0, ch. 3. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 10

FINDINGS

SNFs billed one-quarter of claims in error in 2009, 

resulting in $1.5 billion in inappropriate Medicare

payments

On the basis of our medical record review, we found that SNFs billed an 

estimated 25 percent of claims in error in 2009. Medicare inappropriately 

paid $1.5 billion for these claims. This represents 5.6 percent of the 

$26.9 billion paid to SNFs in 2009. See Table 1 for the percentage of SNF 

claims that were in error and Appendix D for the confidence intervals. 

 Table 1: Percentage of SNF Claims That Were in Error, 2009 

Type of Error Percentage of 

SNF Claims

Inaccurate RUGs 22.8%

 Upcoded 20.3%

 Downcoded 2.5%

Did Not Meet Coverage Requirements 2.1%

 

 Total error rate 24.9%

Source: OIG analysis of medical record review results, 2012.

SNFs billed inaccurate RUGs in 23 percent of claims

As noted earlier, SNFs use the MDS to assess beneficiaries and classify 

them into RUGs. Each RUG is associated with a different payment rate. 

SNFs billed inaccurate RUGs in 23 percent of claims. Most of these 

claims were upcoded; far fewer were downcoded. Claims with inaccurate 

RUGs amounted to a net $1.2 billion in inappropriate Medicare payments. 

Notably, 20 percent of claims billed by SNFs had higher paying RUGs 

than were appropriate. In these cases, the SNFs upcoded the RUGs on the 

claims. For approximately half of these claims, SNFs billed for ultrahigh 

therapy RUGs when they should have billed for lower levels of therapy or 

nontherapy RUGs.

37 

For 57 percent of the upcoded claims, SNFs reported providing more 

therapy on the MDS than was indicated in the medical record. For a 

quarter of the upcoded claims, reviewers determined that the amount of 

therapy indicated in the beneficiaries’ medical records was not reasonable 

37 The point estimate is 48 percent with a 95-percent confidence interval of 35 to 

62 percent. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 11

and necessary. For example, in one case, the SNF provided the highest 

level of therapy to the beneficiary even though the medical record 

indicated that the physician refused to sign the order for therapy. In 

another example, the SNF provided an excessive amount of therapy to the 

beneficiary given her condition. In another example, the SNF reported on 

the MDS that speech therapy was provided even though the record 

contained an evaluation of the beneficiary concluding that no speech 

therapy was needed and that speech therapy had not been provided. 

For the upcoded claims, the difference in payments between the RUGs 

billed by the SNFs and the RUGs supported by the medical records was 

often quite large. In many instances, it amounted to over $100 per day, 

and in one case, the difference was $414 per day. 

The remaining 3 percent of claims had lower paying RUGs than were 

appropriate. In these cases, the SNFs downcoded the RUGs on the claims. 

The difference in payments between the RUGs billed by the SNFs and the 

RUGs supported by the medical records was typically less than $100 per 

day. In the most extreme case, the difference amounted to $166 per day. 

Two percent of SNF claims did not meet Medicare coverage 

requirements 

A smaller percentage of claims did not meet Medicare coverage 

requirements. For some of these claims, beneficiaries were not eligible for 

SNF care, either because they did not need skilled nursing or therapy on a 

daily basis or because there were no physician orders for these services. 

For the remaining claims, the beneficiaries became ineligible for SNF care 

at some point during the claim period because they no longer needed or 

received skilled nursing or therapy on a daily basis. 

SNFs misreported information on the MDS for 

47 percent of claims

SNFs reported inaccurate information, which was not supported or 

consistent with the medical record, on at least one MDS item for 

47 percent of claims. SNFs use the MDS to assess each beneficiary’s 

clinical condition, functional status, and expected and actual use of 

services. Certain items on the MDS are used to determine the RUG; 

therefore, misreporting information for these items can lead to inaccurate 

RUGs and inappropriate payments.38 SNFs also use the MDS to develop 

care plans for each beneficiary, so inaccurate information on the MDS can

affect care. In addition, several MDS items are reported on CMS’s 

38 Inaccuracies in the MDS items do not always result in a change in the RUG. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 12

Nursing Home Compare Web site, which provides information to the 

public about each nursing home. 

For 30 percent of claims, SNFs misreported the amount of therapy that the 

beneficiaries received or needed. As noted earlier, the amount of therapy 

that SNFs report on the MDS largely determines the RUG and Medicare 

payments to SNFs. See Table 2 for MDS categories with misreported 

information and Appendix E for additional categories and the confidence 

intervals.

Table 2: MDS Categories With Misreported Information

MDS Category With Misreported 

Information

Percentage of Claims

Therapy (i.e., physical, 

occupational, speech) 30.3%

Special Care (e.g., intravenous 

medication, tracheostomy care) 16.8%

Activities of Daily Living (e.g., bed 

mobility, eating) 6.5%

Oral/Nutritional Status (e.g., 

parenteral feeding) 4.8%

Skin Conditions and Treatments

(e.g., ulcers, wound dressings) 2.4%

Source: OIG medical record review, 2012. 

Note: The rows do not sum to 47 percent because some claims had 

more than one problem. 

In addition, reviewers found several instances in which SNFs provided 

more therapy during the look-back period than they did during periods that 

did not determine payment rates. In one example, the SNF provided 90 to 

110 minutes of therapy a day to the beneficiary during the look-back 

period; however, after that period, the SNF provided only about half that 

amount of therapy to the beneficiary. In another example, the SNF 

provided 50 to 55 minutes of therapy a day to the beneficiary during the 

look-back period. It lowered the amount to 30 to 40 minutes a day during 

the rest of the coverage period but then raised it back to 50 to 55 minutes 

during the next look-back period. 

For 17 percent of claims, SNFs misreported whether the beneficiaries

received special care. The inaccuracies came primarily from one MDS 

item in this category—intravenous medication. At the time of our review, 

SNFs were allowed to report intravenous medication if the beneficiary 

received it in the hospital prior to or during the SNF stay. For these 

claims, the medical records either did not indicate that intravenous 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 13

medication was provided during the hospital or SNF stay or clearly 

contradicted that these services were provided.

39 

For 7 percent of claims, SNFs misreported the amount of assistance 

beneficiaries needed with activities of daily living (e.g., bed mobility, 

transfers, eating, and toilet use). Beneficiaries who need high levels of 

assistance may be placed into higher paying RUGs. In several cases,

SNFs reported on the MDS that beneficiaries needed more assistance than 

was indicated in the medical record. For example, one SNF reported that 

a beneficiary needed extensive assistance with transferring between two 

locations, such as from a bed to a chair; however, the medical record noted 

that the beneficiary was able to do this independently. 

SNFs also misreported MDS items related to oral and nutritional status 

and items related to skin conditions and treatments. Notably, for the items 

related to skin conditions and treatments, SNFs did not always report the 

correct number or stage of skin ulcers or they reported the presence of 

burns or open lesions inaccurately. They also did not always correctly 

report skin treatments, such as surgical wound care or ulcer care. 

39 In FY 2011, CMS changed the rules about reporting intravenous medication on the 

MDS; it no longer allowed SNFs to report whether it was provided during the prior 

hospital stay. It also revised the RUGs so that reporting this item no longer placed the 

beneficiary into a higher paying RUG.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 14

CONCLUSION AND RECOMMENDATIONS

SNFs billed one-quarter of claims in error in 2009, resulting in $1.5 billion 

in inappropriate Medicare payments. The majority of the claims in error 

were upcoded; many of these were for ultrahigh therapy. The remaining 

claims in error were downcoded or did not meet Medicare coverage 

requirements. In addition, SNFs misreported information on the MDS for 

47 percent of claims. SNFs commonly misreported the amount of therapy

the beneficiary received or needed, which largely determines how much 

Medicare pays the SNF. 

We recognize that CMS has made several significant changes to SNF 

payments for FYs 2011 and 2012. However, more needs to be done to 

reduce inappropriate payments to SNFs. Given the findings of this report 

and our prior report, further actions are needed to deter SNFs from billing 

inappropriately and to prevent Medicare from paying for these claims. 

Considering the high cost of SNF services, substantial savings to the 

Government could result if CMS focused additional attention on these 

payments. 

Therefore, we recommend that CMS:

Increase and Expand Reviews of SNF Claims

CMS should instruct its contractors to conduct more medical reviews of 

SNF claims. CMS should also expand the scope of these medical reviews 

to more closely scrutinize the MDS items that SNFs commonly misreport. 

As part of these efforts, contractors should identify SNFs or SNF chains 

with recurring problems. They should target these SNFs in their reviews 

and possibly refer them for further investigation, depending upon the 

nature of the issues. These efforts will help to ensure that SNF payments 

are accurate and that SNFs are reporting information on the MDS 

correctly. 

Use Its Fraud Prevention System To Identify SNFs That Are 

Billing for Higher Paying RUGs

Our current report provides further evidence that some SNFs are 

incorrectly reporting certain MDS items, such as therapy and activities of 

daily living, to place beneficiaries into higher paying RUGs. CMS should 

use its Fraud Prevention System to identify and target these SNFs. 

Specifically, CMS should target SNFs that have a high percentage of 

claims for ultrahigh therapy and for high levels of assistance with 

activities of daily living. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 15

Monitor Compliance With the New Therapy Assessments

As of October 2011, SNFs must complete a “change of therapy” 

assessment when the amount of therapy provided no longer reflects the 

RUG and an “end of therapy” assessment when therapy is discontinued for 

3 days. Under this new policy, SNFs are paid less when a beneficiary’s 

need for therapy decreases or ends. This policy helps to align payments 

for therapy to beneficiaries’ needs and reduces the incentive to provide 

substantially more therapy during the look-back period than during 

periods that do not determine payment rates. However, the success of this 

policy relies on SNFs’ completing the new assessments appropriately. 

CMS should instruct its MACs and RACs to closely monitor SNFs’ 

utilization of these assessments through analyses of claims data. Such 

analyses will identify SNFs that are using the assessments infrequently or 

not at all. The MACs and RACs should then target these SNFs for review 

to establish whether therapy assessments are being completed, as required. 

Change the Current Method for Determining How Much 

Therapy Is Needed To Ensure Appropriate Payments 

The findings of this report provide further evidence that CMS needs to 

change how it pays for therapy. Currently, the amount of therapy that a 

SNF provides to the beneficiary during the look-back period largely 

determines the amount that Medicare pays the SNF. This method creates 

incentives for SNFs to provide and bill for high levels of therapy when 

these levels may not be needed. 

We are aware that CMS is considering two alternative approaches for 

determining how it pays for therapy. In the first option, CMS is 

considering basing payment for therapy RUGs on patient need, by using 

patient diagnoses and service needs to predict the appropriate level of 

therapy. In the second option, CMS would also predict the appropriate 

level of therapy but would then reconcile payments after the services have 

been provided. While our review does not provide information about 

which method is more appropriate, it does show that CMS needs to change 

how it pays for therapy to reduce the incentives for SNFs to provide more 

therapy than necessary and to better align payments to beneficiaries’ 

needs.

Improve the Accuracy of MDS Items 

CMS should increase its efforts to ensure that SNFs are completing the 

MDS accurately. This is critical to ensuring that SNF payments are 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 16

accurate and that beneficiaries are assessed and cared for appropriately. 

It is also essential because several MDS items are published on CMS’s 

Nursing Home Compare Web site, which provides information to the 

public about each nursing home. 

Specifically, CMS should instruct the nursing home surveyors to more 

closely monitor the accuracy of the MDS. Surveyors should particularly 

focus on the categories of MDS items that we identified as problematic 

and cite facilities for deficiencies when necessary. Additionally, CMS 

should instruct the MACs to provide education to all SNFs, as well as 

specific training to selected SNFs, to improve the accuracy of their MDS

reporting. 

Follow up on the SNFs That Billed in Error 

In a separate memorandum, we will refer to CMS for appropriate action 

the SNFs with claims in our sample that had inaccurate RUGs or that did 

not meet coverage requirements. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 17

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with all six of our recommendations. CMS stated that it 

has taken and continues to take proactive steps to reduce inaccurate, 

medically unnecessary, and fraudulent claims by SNFs. 

CMS concurred with our first recommendation and stated that it will issue 

a Technical Assistance Letter to the MACs with a link to the OIG report. 

If the MACs choose to increase and expand their review of SNFs, CMS 

will ask that they more closely scrutinize the MDS items most commonly 

misreported and identify specific SNFs or SNF chains with reoccurring 

issues and focus their reviews on them. In addition, in August 2012, CMS 

issued a Comparative Billing Report targeted to 5,000 SNFs to help them 

identify potential errors in their billing practices and make changes to 

prevent improper billing and payment in the future. 

CMS concurred with our second recommendation. It stated that it is 

committed to building reliable models in the Fraud Prevention System that 

can detect and generate alerts for suspicious billing behavior and it is 

currently developing a SNF Model that examines claims data.

CMS concurred with our third recommendation and stated that it is 

conducting internal monitoring activities related to SNF utilization and 

provider reaction to the FY 2012 PPS final rule policies. As part of this 

monitoring, it is analyzing the number of ‘change of therapy’ assessments 

that are being completed. In addition, it will conduct further monitoring 

activities, including analyses by provider type and the provision of therapy 

by patient risk scores.

CMS concurred with our fourth recommendation and stated that it plans to 

research alternative SNF payment approaches for therapy and eventually 

develop an implementable model to account for therapy furnished in 

SNFs.

CMS concurred with our fifth recommendation and stated that it will 

convene a meeting with surveyors representing several States and all 

10 regions to discuss the onsite survey process and how to improve its 

effectiveness with investigating MDS items. CMS also noted that it has 

recently clarified guidance related to surveyor citation of MDS 

assessments and continues to review those and related guidance. It also 

plans to conduct additional surveyor training related to the MDS. 

CMS concurred with our sixth recommendation and will review the data 

provided by OIG and take appropriate actions consistent with the agency’s 

policies.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 18

We support CMS’s efforts to address these issues. For the full text of 

CMS’s comments, see Appendix F. 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 19

APPENDIX A

Description of the 53 Resource Utilization Groups* in Effect 

During Our Review Period

RUG Category RUG Therapy 

 Level

Per Diem Rate

FY2009

Per Diem Rate

FY2010

Therapy RUGs

Rehabilitation Plus 

Extensive Services

RUX Ultrahigh $623 $617

RUL Ultrahigh $547 $546

RVX Very high $472 $468

RVL Very high $440 $437

RHX High $400 $396

RHL High $393 $386

RMX Medium $458 $449

RML Medium $420 $413

RLX Low $325 $319

 Rehabilitation

RUC Ultrahigh $529 $529

RUB Ultrahigh $485 $485

RUA Ultrahigh $462 $463

RVC Very high $425 $421

RVB Very high $404 $401

RVA Very high $363 $364

RHC High $370 $365

RHB High $353 $349

RHA High $328 $326

RMC Medium $340 $335

RMB Medium $331 $326

RMA Medium $323 $320

RLB Low $300 $294

RLA Low $256 $252

Nontherapy RUGs

Extensive Services

SE3 $375 $362

SE2 $319 $309

SE1 $284 $276

 Special Care

SSC $279 $272

SSB $264 $258

SSA $259 $253

Clinically Complex

CC2 $278 $270

CC1 $253 $248

CB2 $241 $236

CB1 $231 $225

CA2 $229 $223

CA1 $214 $211

* RUG.

Continued on next page.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 20

APPENDIX A (CONTINUED)

Description of the 53 Resource Utilization Groups* in Effect 

During Our Review Period

RUG Category RUG Therapy 

 Level

Per Diem Rate

FY 2009

Per Diem Rate

FY 2010

Nontherapy RUGs (continued)

Reduced Physical 

Function

PE2 $221 $217

PE1 $217 $214

PD2 $211 $206

PD1 $208 $203

PC2 $200 $197

PC1 $197 $196

PB2 $176 $175

PB1 $174 $172

PA2 $173 $171

PA1 $168 $166

Impaired Cognition

IB2 $205 $202

IB1 $202 $199

IA2 $185 $183

IA1 $177 $177

Behavior Problems

BB2 $203 $200

BB1 $197 $196

BA2 $184 $182

BA1 $171 $169

Source: 73 Fed. Reg. 46424–26 (Aug. 8, 2008); 74 Fed. Reg. 40298–300 (Aug. 11, 2009). 

The amounts are based on unadjusted urban rates. There is an urban and a rural payment 

rate for each RUG. The urban payment rate is lower than the rural rate for the therapy 

RUGs. 

*RUG.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 21

APPENDIX B 

 Therapy Minutes Received by Therapy Level

Therapy Level

Therapy Minutes 

Received During the 

Look-Back Period

Ultrahigh 720 or more

Very High 500–719

High 325–499

Medium 150–324

Low 45–149

Source: Centers for Medicare & Medicaid 

Services, Resident Assessment Instrument 

Manual (RAI) Version 2.0, ch. 6. See also RAI 

Manual Version 3.0, ch. 6.

 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 22

APPENDIX C

Sample Design

Stratum Stratum Description

Number of

Stays in 

the 

Population

Number 

of Stays 

in the 

Sample

Number of 

Claims in

the 

Population

Number 

of Claims 

in the 

Sample

1

Length of stay less than 21 days 

in 2009 and 3 or fewer claims in 

2009

We selected all claims from 

each stay. 1,264,073 55 1,792,685 78

2

Length of stay 21 or more days 

in 2009 and 3 or fewer claims in 

2009

We selected all claims from 

each stay. 435,893 45 1,133,322 117

3

Stays with over 3 claims in 2009

If the stay had 4 to 7 claims, we 

randomly selected 2. If the stay 

had over 7 claims, we randomly 

selected 40 percent of the 

claims. 668,799 145 3,519,266 304

 Total 2,368,765 245 6,445,273 499

Source: Office of Inspector General medical record review, 2012.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 23

APPENDIX D

Sample Sizes, Point Estimates, and 95-Percent Confidence 

Intervals for Estimates Presented in the Report

Characteristic Sample 

Size

Point 

Estimate

95-Percent 

Confidence Interval

SNF claims in error in 2009 499 24.9% 19.9%–30.4%

SNF claims with inaccurate RUGs 499 22.8% 18.0%–28.2%

SNF claims with higher paying RUGs than 

were appropriate (upcoded) 499 20.3% 15.6%–25.6%

Upcoded SNF claims that had an ultrahigh 

RUG 101 48.2% 34.9%–61.7%

Upcoded SNF claims in which SNFs reported 

providing more therapy on the MDS than was 

indicated in the medical record 101 56.8% 42.8%–70.2%

Upcoded SNF claims in which reviewers 

determined that the amount of therapy was not 

reasonable and necessary 101 25.6% 14.6%–39.4%

SNF claims with lower paying RUGs than were 

appropriate (downcoded) 499 2.5% 1.3%–4.5%

SNF claims that did not meet Medicare 

coverage requirements 499 2.1% 0.7%–4.7%

Total inappropriate Medicare payments for 

SNF claims 499 $1.5 billion $988 million–$2.0 billion

Inappropriate Medicare payments in proportion 

to total payments to SNFs in 2009 499 5.6% 3.7%–7.6%

Medicare payments for SNF claims with 

inaccurate RUGs 499 $1.2 billion $736 million–$1.6 billion

SNF claims that had inaccurate information on 

the MDS 487 47.3% 41.2%–53.5%

Source: Office of Inspector General medical record review, 2012.
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 24

APPENDIX E

Point Estimates and 95-Percent Confidence Intervals of 

Minimum Data Set* Categories With Misreported Information

MDS Category

Point Estimate

(n=487)

95-Percent

Confidence Interval

Therapy minutes and days for physical, 

occupational, and speech therapy 30.3% 24.7% – 36.3% 

Special care (e.g., intravenous 

medication, tracheostomy care) 16.8% 12.3% – 22.1%

Activities of daily living (e.g., bed 

mobility, eating) 6.5% 4.1% – 9.7% 

Oral/nutritional status (e.g., parenteral 

feeding) 4.8% 2.5% – 8.2%

Skin conditions and treatments 

(e.g., ulcers, wound dressings) 2.4% 1.0% – 4.8%

Nursing rehab/restorative care (e.g., 

grooming, communication, transfer) 0.8% 0.2% – 2.2%

Continence 0.6% 0.1% – 1.8%

Problem conditions (e.g., fever, 

delusions, vomiting) 0.6% 0.0% – 2.4%

Disease diagnosis 0.5% 0.0% – 2.0%

Medications 0.2% 0.0% – 1.2%

Physician orders 0.2% 0.0% – 1.0%

Respiratory therapy 0.2% 0.0% – 1.0%

Physician visits 0.1% 0.0% – 1.0%

Cognitive patterns 0.0% N/A

Communication/hearing patterns 0.0% N/A

Mood and behavior patterns 0.0% N/A

Time awake 0.0% N/A

Source: Office of Inspector General medical record review, 2012.

* MDS
APPENDIX F 

Agency Comments 

·',p•tc.. .,., (-l-	DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 

-~..,, ........ (; 	 Administrator 


Washington, DC 20201 

SEP 2 7 ZOll DATE: 

TO: 	 Daniel R. Levinson 


Inspector General 


FROM: 	 Marilyn Ta~nner 

Acting ~dmihistrator 

SUBJECT: 	 Office ofInspector General (OIG) Draft Report: Inappropriate Payments to 

Skilled Nursing Facilities Cost Medicare More Than a Billion Dollars in 2009 

(OEI-02-09-00200) 

Thank you for the opportunity to review and comment on the OIG draft report titled, 

"Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More lban a Billion 

Dollars in 2009," (OEI-02-09-00200). The Centers for Medicare & Medicaid Services (CMS) 

appreciates the time and resources OIG has utilized in reviewing this issue. 

The CMS has taken and continues to take proactive steps to reduce inaccurate, medically 

unnecessary, and fraudulent claims by skilled nursing facilities (SNFs). CMS is committed to 

identifying and educating SNFs who consistently bill for a high number of services specifically 

for higher paying resource utilization groups (RUGs). lbe measures implemented by CMS 

include issuing a Comparative Billing Report (CBR) focused on SNFs with high therapy 

utilization, implementing internal monitoring activities related to SNF utilization, and utilizing 

the Fraud Prevention System to look for aberrant billing practices. These efforts are designed to 

address the issues the OIG has found over the past few years with billing by SNFs as well as the 

concerns expressed by the Medicare Payment Advisory Commission regarding SNFs billing 

improperly for therapy to obtain additional Medicare payments. These initiatives are discussed 

in greater detail in CMS's responses to the OIG's recommendations. 

lbe findings contained in this report reflect OIG's review ofSNF claims from 2009 to determine 

ifthe information reported on the Minimum Data Set (MDS) was consistent and supported by 

documentation in the medical record. lbe SNFs use the information on the MDS to assign 

beneficiaries to RUGs. The amount Medicare pays the SNFs is based on the RUG level of a 

beneficiary. lbis report is the second in a series of reports about SNF payments and quality of 

care. 

lbe OIG found that in 2009, one-quarter of all claims billed by SNFs were in error. This 

resulted in a potential $1.5 billion in inappropriate payments. Upcoding, mainly for ultra-high 

therapy, was the error seen on the majority ofthe claims. The other claims were either 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 25 
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 26

APPENDIX F (CONTINUED)
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 27

APPENDIX F (CONTINUED)
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 28

APPENDIX F (CONTINUED)
 

Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009 (OEI-02-09-00200) 29

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 Kellis served as the team leader for this study. Other Office of 

Evaluation and Inspections staff from the New York regional office who 

conducted the study include Judy Bartlett. Central office staff who 

provided support include Kevin Farber, Sandy Khoury, Berivan Demir 

Neubert, Sue Nonemaker, Debra Roush, and Julie Taitsman. 
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.