Nursing Homes Overbilled Medicare by $1.5 Billion, Half of Claims Misreported

About a quarter of reimbursement claims skilled nursing facilities billed to Medicare in 2009 were erroneous and resulted in $1.5 billion in inappropriate payments to those facilities, says a report from the Department of Health and Human Services’ Office of the Inspector General (OIG).

The billion-and-a-half dollars of over-billing represents 5.6% of the $26.9 billion Medicare paid to skilled nursing facilities in 2009.



In most cases, skilled nursing facilities overcharged for services provided by manipulating the coding system, while a small percentage under-billed Medicare. A majority of the claims were for high-intensity therapy. The remaining claims did not meet Medicare coverage requirements.

Using minimum data sets (MDS) to asses each Medicare beneficiary’s clinical condition, functional status along with expected and actual use of services, OIG found that skilled nursing facilities misreported information for 47% of the claims in 2009.

Medicare and Medicaid, along with Social Security, accounted for more than 43% of all federal spending in 2011, according to a March 2012 report by the Congressional Research Service.


As President Obama and lawmakers in Washington wrestle with program spending cuts in preparation for the upcoming fiscal cliff, limiting abusive Medicare over-billing looks to be a top priority in reducing the federal deficit for the policy changes scheduled for January 2013.

Recommendations in the report to the Centers for Medicare & Medicaid Services (CMS) included increasing and expanding reviews of nursing home claims; monitoring compliance with new therapy assessments; and following up on those nursing homes that submitted claims with wrong information.

In response to the Inspector General’s report, CMS said is has taken “proactive steps” toward reducing medically unnecessary claims filed by skilled nursing facilities. Much of CMS’s damage control will be executed through OIG’s six recommendations.

OIG has named its look into the Medicare overbilling issue ‘Operation Vacuum Cleaner,’ according to The Wall Street Journal.

Written by Jason Oliva