Medicare:

Tighter Rules Needed to Curtail Overcharges for Therapy in Nursing Homes

HEHS-95-23: Published: Mar 30, 1995. Publicly Released: Apr 19, 1995.

Additional Materials:

Contact:

Laura A. Dummit
(202) 512-8942
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed billings for inappropriate or undelivered therapy services, focusing on overcharges to Medicare nursing home patients.

GAO found that: (1) the providers responsible for overcharges for therapy services are often rehabilitation companies or nursing homes; (2) the problem of overcharging is national in scope and growing in magnitude; (3) markups on therapy services result from providers exploiting weaknesses in Medicare's payment rules; (4) Medicare has been charged $600 per hour or more for therapists' salaries of $12 to $25 per hour; (5) the Health Care Financing Administration's (HCFA) rules regarding abusive therapy billing practices are not adequate to combat new business practices designed to generate increased Medicare revenue; (6) HCFA has known of the billing problem since 1990, but has yet to develop rules to improve Medicare reimbursement policies; and (7) implementation of such rules could be a lengthy process.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA's proposed salary equivalency guidelines for contracted physical therapy and respiratory services, speech language pathology, and occupational therapy services were released as final rules earlier this year (April 1, 1998). This is expected to save $240 million in FY 1998 and 1999.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to set explicit limits to ensure that Medicare pays no more for therapy services than would any prudent purchaser.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Not Implemented

    Comments: With the implementation of PPS, services are no longer billed to Part A.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to strengthen certification requirements to better ensure that those entities billing Medicare are accountable for the services provided to the beneficiaries.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: HCFA officials do not agree that establishing a uniform definition of time units is necessary. They believe that it is more useful to precisely identify what was done rather than how much time was spent doing it. The Administration's Medicare legislative proposals include provisions requiring use of HCFA Common Procedures Coding System codes for this process.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to define billable therapy service units so they relate to the time spent with the patient.

    Agency Affected: Department of Health and Human Services

 

Explore the full database of GAO's Open Recommendations »

Sep 15, 2016

Sep 14, 2016

Sep 12, 2016

Sep 9, 2016

Sep 6, 2016

Aug 31, 2016

Looking for more? Browse all our products here