Seniors usually go to a nursing facility to get well, but instead it’s the government that might be feeling the ill effects.

Investigators found that Medicare and Medicaid is wasting billions in overpayments to skilled nursing facilities (SNF).  In 2009 alone, for example, one-quarter of all claims by the medical centers were found to be incorrect or fraudulent.  A government watchdog estimated the Centers for Medicare and Medicaid Services (CMS) had paid out $1.5 billion to cover such unnecessary costs.

“Given the findings of this report and our prior report, further actions are needed to deter SNFs from billing inappropriately and to prevent Medicare from paying for these claims,” the Health and Human Services Inspector General declared this week.  “Considering the high cost of SNF services, substantial savings to the government could result if CMS focused additional attention on these payments.”

For its lax oversight that allowed for unnecessary and wasteful payments to skilled nursing facilities, CMS wins this week’s Golden Hammer, a distinction given by the Washington Guardian to the worst examples of government waste, fraud or abuse of taxpayer money.

The main culprit, the IG found, was therapy, be it physical, speech or rehabilitative.  Medical facilities exaggerated the amount of therapy that some patients received, and in some cases billed for therapy that never took place.

SNFs “reported providing more therapy…than was indicated in the medical record,” investigators found, often listing patients as using higher levels of therapy than was actually needed.  On average, the difference between the services patients received and the services the government was billed for was $100 a day.  In one case, the IG found, the difference was over $400 per day.

Sometimes the nursing facilities billed for therapy that never took place.  In one example, a patient was listed as having received speech therapy, even though the treatment never took place, and doctors evaluated that it wasn’t needed.  In another case, a patient was listed as having received “the highest level of therapy” even though – yet again – the doctor had determined it wasn’t necessary.

The IG said CMS needs to expand its efforts to stop unnecessary payments and better identify which medical facilities are cheating the system.  CMS agreed with the findings in the study and said it is working to clamp down on unnecessary and wasteful payments.

“The CMS has taken and continues to take proactive steps to reduce inaccurate, medically unnecessary, and fraudulent claims by skilled nursing facilities,” said Marilyn Tawenner, acting head of CMS.  “CMS is committed to identifying and educating SNFs who consistently bill for a high number of services.”