The abstract to a study published in October 2024 entitled Overbilling and Killing? An Examination of the Skilled Nursing Industry states: “Skilled Nursing Facility (SNF) systems that provided excess rehab therapy just above revenue thresholds quickly begin upcoding previously unidentified comorbidities under the new PDPM billing regime. Patients at these opportunistic systems develop more than 50% greater preventable conditions and have twice as many verified reviews indicating abuse. Opportunistic systems mask adverse outcomes through underreporting to CMS. Instrumental variable estimates indicate that opportunistic SNF systems are responsible for an additional 35,000 hospitalizations and 30,000 deaths since PDPM was enacted, while overbilling Medicare $4.3 billion. Opportunistic SNF systems are spreading with more than 2.5 times the acquisition rate of accurate billing systems.”
Skilled nursing facilities (SNFs) are designed to provide nursing and rehabilitation services and are typically used for additional rehabilitation and therapy following an inpatient hospital stay. To be eligible for Medicare coverage, a patient must enter the skilled nursing facility within 30 days of a qualifying three-day minimum hospital stay, and the stay must be related to the hospitalization. Medicare Part A covers skilled nursing care for up to 100 days per qualifying inpatient stay.
The Patient Driven Patient Model (PDPM) is a case-mix classification that became effective on October 1, 2019. PDPM was intended to redirect funding from patients receiving intensive therapy to clinically complex patients by basing reimbursement on patient characteristics and comorbidities rather than therapy levels. CMS projected the largest decreases for facilities with a high proportion of Ultra-High rehab residents.
Medicare spending increased from $5,844 per beneficiary in 2000 to more than $15,727 by 2022, a rate of 4.6% per year and almost twice the rate of inflation, representing more than 12% of total federal spending. Some skilled nursing systems extract more than 40% more per patient with similar diagnoses for care. The researchers found widespread differences in rehab therapy provision across skilled nursing systems from January 2016 to September 2019 that are not explained by observable patient characteristics. Consistent with differences driven by financial incentives rather than patient need, variation in therapy provision levels across SNF systems is driven largely by the strategic provision of therapy minutes just above arbitrary minimum reimbursement thresholds.
The study’s authors found: “patients at the most opportunistic systems are 67% more likely to develop pressure ulcers, 7.6% more likely to be re-hospitalized within 30 days, and 9.6% more likely to die within 90 days of leaving the skilled nursing facility. These estimates imply that opportunistic systems are responsible for an additional 10,200 preventable conditions, 35,000 hospitalizations, and 31,000 deaths from October 2019 to December 2022 since PDPM was enacted.”
“While CMS guidelines encourage regulators to consider quality of care when approving acquisitions, opportunistic systems have expanded at over 2.5 times the rate of non-opportunistic systems, suggesting that the profitability of intense use of high-reimbursement codes and reduced staffing combined with light regulatory screening of mergers fuels the expansion of these SNF systems … despite PDPM being designed to stop wasteful and unnecessary Medicare spending, SNF systems quickly gamed the new payment structure demonstrating that changes in reimbursement design alone are unlikely to be successful … although the most opportunistic systems are billing 40% more per patient, generating excess Medicare costs of more than $1.33 billion per year, patients at such systems receive reduced nurse
staffing and increased health deficiencies … underreporting of adverse health outcomes by opportunistic SNF systems results in misleading CMS quality ratings and indicates that more robust summary measures of quality of care are needed for patients and their family members … the fact that opportunistic systems, which underinvest in staffing and
care, are increasing rapidly through acquisitions indicates a spread of poor health outcomes. Considerably tougher penalties, including criminal ramifications, may be needed to change longstanding norms.”
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