SFNursingFacilities

OFFICE OF

INSPECTOR

GENERAL

Fraud and Abuse in the

Provision of Services in

Nursing Facilities

May

1996

eOffice of Inspector General (OIG) was established at

the Department of Health and Human Services by Con

gress in 1976 to identify and eliminate fraud, waste and

abuse in Health and Human Services programs and to pro

mote efficiency and economy in departmental operations.

The OIG carries out this mission through a nationwide pro

gram of audits, investigations and inspections.

To help reduce fraud and abuse in the Medicare and Medic

aid programs, the OIG actively investigates schemes to

fraudulently obtain money from these programs and, when

appropriate, issues Special Fraud Alerts which identify seg

ments 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 resi

dents of nursing facilities and identifies some of the illegal

practices that the OIG has uncovered.

How Nursing Facility Benefits Are

Reimbursed

ere were 17,000 nursing facilities in the United States,

as of June 1995.

OIG study reported that in 1992,

Medicare payments to nursing facilities included Part

payments of $2.7 billion and Part A payments of

$3.1

bil

lion 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

limited length. Nursing facility residents may be con

currently eligible for benefits under Medicare Part

For

Medicaid

eligible residents, extended nursing facility stays

may be reimbursed by state

administered programs finan

ced 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 un

scrupulous persons to carry out fraudulent schemes. The

OIG has become aware of a number of fraudulent arrange

ments 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 man

agement and staff also are involved in these schemes.

False or Fraudulent Claims Relating to the

Provision of Health Care Services

e 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 nev

er provided or were not provided

claimed, and claims for

services which a person knows are not medically necessary.

Submitting or causing false claims to be submitted to Medi

care or Medicaid may subject the individual or entity to

criminal prosecution, civil penalties including treble damag

es, 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 reim

bursed by Medicare and Medicaid:

Claims for Services Not Rendered or Not

Provided as Claimed

ommon schemes entail falsifying bills and medical

records to misrepresent the services, or extent of ser

vices, provided at nursing facilities. Some examples

follow:

(OIG

One physician improperly billed $350,000 over a

year period for comprehensive physical examina

tions of residents without ever seeing a single resi

dent. The physician went so far as to falsify medical

records to indicate that nonexistent services were

rendered.

A psychotherapist working in nursing facilities man

ipulated Medicare billing codes to charge for

hours

of therapy for each resident when, in fact, he spent

only a few minutes with each resident. In a nursing

facility,

hours of psychotherapy is highly unusual

and often clinically inappropriate.

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.

A company providing mobile X

ray services made

visits to nursing facilities, and billed for taking two

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

ractitioners of medical specialties have been found to

misrepresent the nature of services provided to

Medicare and Medicaid beneficiaries because the Fed

erally funded programs have stringent coverage limitations

for some specialties, including podiatry, audiology and op-

tometry. For instance:

The OIG has learned about podiatrists whose entire

practices consist of visits to nursing facilities. Non

covered routine care is provided, e.g., toenail clip

ping, 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 rou-

tinely needed. This podiatrist billed Medicare as

much

$100,000 in

year for toenail removals.

Investigators discovered one resident for whom bills

were submitted claiming a total of

toenail

removals.

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.

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 exclu

sively to market hearing aids.

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

services.

What To Look For in the Provision of

Services to Nursing Facilities

The following situations

may

suggest fraudulent or abusive

activities:

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 consis

tent with the service billed to Medicare or Medicaid.

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.

Unusually active presence innursing facilities by

health care practitioners who are given or request

unlimited access to resident medical records. These

individuals may be collecting information used in the

submission of false claims.

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

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:

Field Offices States Served Telephone

Boston

MA, VT,

NH,

ME 6

565

2660

RI,

New York NY, NJ, PR, VI

212

264

1691

Philadelphia PA,

MD,

DE,

215

596

6796

Atlanta GA,

KY,

NC,

404

331

2131

FL,

TN, AL

MS (No.

District)

Chicago IL,

MN,

WI,

IN,

OH,

IA,

353

2740

Dallas

TX,

NM,

OK,

LA, MS (So. District)

co,

UT, WI, M

ND,

SD,

NE,

214

767

8406

Los Angeles

AZ,

(Clark Co.)

714

246

8302

So.

San Francisco No. CA,

NV,

AK,

415

437

7960

HI,

OR,

ID,

Washington, D.C.

and Metropolitan

202

619

1900

areas of VA

To report Suspected Fraud, Call or Write:

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