SNF Claims Audits so Far – Messy

Back in early June, I wrote a post on how Medicare/CMS was intending to audit 5 claims from every participating SNF in the country. The audits would be staggered and conducted by MACs (Medicare Audit Contractors). That post is available here:

As we are now three months into the audit process, details are emerging about the process and so far, the details are suggesting quite a varied interpretation of proper claims and proper documentation from the contractors. The process apparently, is rather tedious though, it really shouldn’t be. The reason? Documentation requests beyond what is required by Medicare and the RAI (resident assessment instruction/MDS) manual.

Per CMS, the claim audits are necessary due to the rising rate of payment for improper claims – up from 7.8% in 2021 to 15% in 2022. CMS believes the principal driver of the error rate is documentation that doesn’t correspond to the assessment (MDS) and coding. In other words, the disconnect suggests that the resident as assessed is not getting the care in support or consistent with the assessment and therefore, the Medicare payment is improper. It is fraudulent and a potential violation of the False Claims Act to bill Medicare for care not supported by documentation or not required by the medical needs of the patient. The original CMS release on the claims review project is available here:

Supposedly, CMS has started with the top 20% of facilities deemed to be at highest risk of submitting improper claims. If an ADR (additional documentation request) is part of the claim review, the facility has 45 days to submit the data. The MAC then has 30 days, once all the documentation required is submitted, to adjudicate the claim (approve or deny).  Facilities that have claim denials can be subject to additional reviews and mandatory education.

So far, the issues that are most confusing around the process involve lacking documentation for care requirements determined via the MDS, sometimes via the interview processes used to prepare the MDS.  RAC contractors are asking for things like daily documentation of diet modifications determined necessary in the MDS.  This level of documentation is not required by the RAI Manual or by CMS Conditions of Participation.  The ambiguity is causing facilities to adjust documentation processes (not recommended) or to scramble to find additional documentation to substantiate care provided (though such documentation is not required).  

Other issues involve MDS Coordinators inputting data and signing as completed, when they (he/she) did not actually collect the data, for example, from a resident interview.  Another involves using orders to substantiate a medical necessity but having no documentation to support that the needed treatment or intervention was “performed”.  In a number of cases, CMS has not required such level (performance) documentation for non-pharmaceutical orders or treatments.

Medicare claims and documentation link to a number of potential traps for SNFs.  First, facilities are required to have an Ethics and Compliance program which monitors and corrects when necessary, billing problems that could lead to an assumption of fraudulent or improper claims.  

Second, claim processes that generate consistent error levels eliminate the safe harbor assumption that providers have – a complete claim is presumptively paid.  If the rate is above 10% of the initial review of claims, additional claims are subject to review on a pre-payment basis meaning, that the provider must justify via audit, that claims are proper and supported BEFORE payment is made. As this process can take 75 days (45 for additional documentation, 30 for review by the MAC), providers can have their cashflow significantly, adversely impacted.  Claims paid, when paid, are paid without interest.

Third, claim issues can matriculate to survey/certification issues.  Facilities with claim problems and continued TPE audits will have these results shared with survey and enforcement officials as part of ongoing compliance and integrity activity (anti-fraud activity).   This additional level of scrutiny can lead to additional levels of non-claims related penalties and enforcement if MDS issues, documentation and care delivery discrepancies are found.

Finally, facilities with poor billing compliance and claims audits are deemed higher risks today for everything from liability insurance policies to debt underwriting.  Granted, these risks are broadly determined by suffice to say, facilities that have ongoing compliance problems (billing, survey and certification) are not viewed as premier risks deserving of the best level of premium or lowest levels of interest rates.


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