[Federal Register Volume 61, Number 117 (Monday, June 17, 1996)]
[Notices]
[Pages 30623-30625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15269]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General


Publication of OIG Special Fraud Alert: Fraud and Abuse in the 
Provision of Services in Nursing Facilities

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice.

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SUMMARY: This Federal Register notice sets forth a recently issued OIG 
Special Fraud Alert concerning fraud and abuse practices in the 
provision of medical and other health services to residents of nursing 
facilities. For the most part, OIG Special Fraud Alerts address 
national trends in health care fraud, including potential violations of 
the Medicare anti-kickback statute. This Special Fraud Alert, issued 
directly to the health care provider community and now being reprinted 
in this issue of the Federal Register, specifically identifies and 
highlights some of the illegal practices that the OIG has uncovered in 
the provision of nursing facility services.

FOR FURTHER INFORMATION CONTACT: Joel J. Schaer, Office of Management 
and Policy, (202) 619-0089.

SUPPLEMENTARY INFORMATION:

I. Background

    The Office of Inspector General (OIG) issues Special Fraud Alerts 
based on information it obtains concerning particular fraudulent and 
abusive practices within the health care industry. These Special Fraud 
Alerts provide the OIG with a means of notifying the industry that we 
have become aware of certain abusive practices which we plan to pursue 
and prosecute, or bring civil and administrative action, as 
appropriate. The Alerts also serve as a powerful tool to encourage 
industry compliance by giving providers an opportunity to examine their 
own practices.
    The Special Fraud Alerts are intended for extensive distribution 
directly to the health care provider community, as well as those 
charged with administering the Medicare and Medicaid programs. On 
December 19, 1994, the OIG published in the Federal Register the texts 
of 5 previously-issued Special Fraud Alerts (59 FR 65372), and 
indicated our intention of publishing all future Special Fraud Alerts 
in this same manner as a regular part of our dissemination of this 
information. Two additional OIG Special Fraud Alerts addressing home 
health fraud and fraud and abuse provisions of medical supplies in 
nursing facilities was published in the Federal Register on August 10, 
1995 (60 FR 40847).
    With regard to the provision of health care services reimbursed by 
Medicare and Medicaid to nursing facilities, this newly-issued Special 
Fraud Alert highlights such fraudulent practices as (1) making claims 
for services not rendered or not provided as claimed, and (2) the 
submission of claims falsified to circumvent coverage limitations on 
medical specialties. A reprint of this Special Fraud Alert follows.

II. Special Fraud Alert: Fraud and Abuse in the Provision of Services 
in Nursing Facilities (May 1996)

    The Office of Inspector General (OIG) was established at the 
Department of Health and Human Services by Congress in 1976 to identify 
and eliminate fraud, waste and abuse in Health and Human Services 
programs and to promote efficiency and economy in departmental 
operations. The OIG carries out this mission through a nationwide 
program of audits, investigations and inspections.

[[Page 30624]]

    To help reduce fraud and abuse in the Medicare and Medicaid 
programs, the OIG actively investigates schemes to fraudulently obtain 
money from these programs and, when appropriate, issues Special Fraud 
Alerts which identify segments of the health care industry that are 
particularly vulnerable to abuse. This Special Fraud Alert focuses on 
the provision of medical and other health care services to residents of 
nursing facilities and identifies some of the illegal practices that 
the OIG has uncovered.

How Nursing Facility Benefits Are Reimbursed

    There were 17,000 nursing facilities in the United States, as of 
June 1995. An OIG study reported that in 1992, Medicare payments to 
nursing facilities included Part B payments of $2.7 billion and Part A 
payments of $3.1 billion for covered stays in nursing facilities. When 
the Federal share of the $24 billion spent by Medicaid is factored in, 
the Federal cost of nursing care reached a total of approximately $20 
billion.
    Many nursing facilities receive reimbursement from both Medicare 
and Medicaid for care and services provided to eligible residents. 
Under Medicare Part A, skilled nursing facility services are paid on 
the basis of cost for covered stays of a limited length. Nursing 
facility residents may be concurrently eligible for benefits under 
Medicare Part B. For Medicaid-eligible residents, extended nursing 
facility stays may be reimbursed by state-administered programs 
financed in part by Medicaid.
    Nursing facilities and their residents have become common targets 
for fraudulent schemes. Nursing facilities represent convenient 
resident ``pools'' and make it lucrative for unscrupulous persons to 
carry out fraudulent schemes. The OIG has become aware of a number of 
fraudulent arrangements by which health care providers, including 
medical professionals, inappropriately bill Medicare and Medicaid for 
the provision of unnecessary services and services which were not 
provided at all. Sometimes, nursing facility management and staff also 
are involved in these schemes.

False or Fraudulent Claims Relating to the Provision of Health Care 
Services

    The government may prosecute persons who submit or cause the 
submission of false or fraudulent claims to the Medicare or Medicaid 
program. Examples of false or fraudulent claims include claims for 
items that were never provided or were not provided as claimed, and 
claims for services which a person knows are not medically necessary.
    Submitting or causing false claims to be submitted to Medicare or 
Medicaid may subject the individual or entity to criminal prosecution, 
civil penalties including treble damages, and exclusion from 
participation in the Medicare and Medicaid programs. The OIG has 
uncovered the following types of fraudulent transactions related to the 
provision of health care services to residents of nursing facilities 
reimbursed by Medicare and Medicaid:

Claims for Services Not Rendered or Not Provided as Claimed

    Common schemes entail falsifying bills and medical records to 
misrepresent the services, or extent of services, provided at nursing 
facilities. Some examples follow:
    <bullet> One physician improperly billed $350,000 over a 2-year 
period for comprehensive physical examinations of residents without 
ever seeing a single resident. The physician went so far as to falsify 
medical records to indicate that nonexistent services were rendered.
    <bullet> A psychotherapist working in nursing facilities 
manipulated Medicare billing codes to charge for 3 hours of therapy for 
each resident when, in fact, he spent only a few minutes with each 
resident. In a nursing facility, 3 hours of psychotherapy is highly 
unusual and often clinically inappropriate.
    <bullet> An investigation of a speech specialist uncovered 
documentation showing that he overstated the time spent on each session 
claimed. Claims analysis showed that the speech specialist actually 
claimed to spend 20 hours with residents every day, far more time than 
possible. Further investigation revealed that some residents had never 
met the specialist, and some were dead at the time when the specialist 
claimed to have provided speech services to them.
    <bullet> A company providing mobile X-ray services made visits to 
nursing facilities, and billed for taking two X-rays when only one was 
actually taken. The case also presented serious concerns about quality 
of care when the investigation revealed that company personnel were not 
certified to take X-rays.

Claims Falsified To Circumvent Coverage Limitations on Medical 
Specialties

    Practitioners of medical specialties have been found to 
misrepresent the nature of services provided to Medicare and Medicaid 
beneficiaries because the Federally funded programs have stringent 
coverage limitations for some specialties, including podiatry, 
audiology, and optometry. For instance:
    <bullet> The OIG has learned about podiatrists whose entire 
practices consisted of visits to nursing facilities. Non-covered 
routine care is provided, e.g., toenail clipping, but Medicare is 
billed for covered services which were not provided or needed. In one 
case, an investigator discovered suspicious billing for foot care when 
it was reported that a podiatrist was performing an excessive number of 
toenail removals, a service that is covered but not frequently or 
routinely needed. This podiatrist billed Medicare as much as $100,000 
in 1 year for toenail removals. Investigators discovered one resident 
for whom bills were submitted claiming a total of 11 toenail removals.
    <bullet> An optometrist claimed reimbursement for covered eye care 
consultations when he, in fact, performed routine exams and other non-
covered services. His billing history indicated that he claimed to have 
performed as many as 25 consultations in one day at a nursing home. 
This is an unreasonably high number, given the nature of a Medicare-
covered consultation.
    <bullet> An audiologist made arrangements with a nursing facility 
and affiliated physicians to get orders for hearing exams that were not 
medically necessary. The audiologist used this access to residents 
exclusively to market hearing aids. In this case, the facility and 
physicians, in addition to the audiologist, could be held liable for 
false or fraudulent claims if they acted with knowledge of the claims 
for unnecessary service.

What To Look For in the Provision of Services to Nursing Facilities

    The following situations may suggest fraudulent or abusive 
activities:
    <bullet> ``Gang visits'' by one or more medical professionals where 
large numbers of residents are seen in a single day. The practitioner 
may be providing medically unnecessary services, or the level of 
service provided may not be of a sufficient duration or scope 
consistent with the service billed to Medicare or Medicaid.
    <bullet> Frequent and recurring ``routine visits'' by the same 
medical professional. Seeing residents too often may indicate that the 
provider is billing for services that are not medically necessary.
    <bullet> Unusually active presence in nursing facilities by health 
care practitioners who are given or request unlimited access to 
resident medical records. These individuals may be

[[Page 30625]]

collecting information used in the submission of false claims.
    <bullet> Questionable documentation for medical necessity of 
professional services. Practitioners who are billing inappropriately 
may also enter, or fail to enter, important information on medical 
charts.

What To Do if You Have Information About Fraud and Abuse Against the 
Medicare and Medicaid Programs

    If you have information about the types of activities described 
above, contact any of the field offices of the Office of Investigations 
of the Office of Inspector General, U.S. Department of Health and Human 
Services, at the following locations:

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         Field offices              States served          Telephone    
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Boston........................  MA, VT, NH, ME RI, CT       617-565-2660
New York......................  NY, NJ, PR, VI.......       212-264-1691
Philadelphia..................  PA, MD, DE, WV, VA...       215-596-6796
Atlanta.......................  GA, KY, NC, SC, FL,         404-331-2131
                                 TN, AL, MS (No.                        
                                 District).                             
Chicago.......................  IL, MN, WI, MI, IN,         312-353-2740
                                 OH, IA, MO.                            
Dallas........................  TX, NM, OK, AR, LA,         214-767-8406
                                 MS (So. District),                     
                                 CO, UT, WY, MT, ND,                    
                                 SD, NE, KS.                            
Los Angeles...................  AZ, NV (Clark Co.),         714-246-8302
                                 So. CA.                                
San Francisco.................  No. CA, NV, AK, HI,         415-437-7960
                                 OR, ID, WA.                            
Washington, DC................  DC and Metropolitan         202-619-1900
                                 areas of VA & MD.                      
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To Report Suspected Fraud, Call or Write

    1-800-HHS-TIPS, Department of Health and Human Services, Office of 
Inspector General, P.O. Box 23489, L'Enfant Plaza Station, Washington, 
D.C. 20026-3489.

    Dated: May 29, 1996.
June Gibbs Brown,
Inspector General.
[FR Doc. 96-15269 Filed 6-14-96; 8:45 am]
BILLING CODE 4150-04-P