Performance Improvement 2009. Does Medicare Correctly Process Denial of Payment Remedies for Skilled Nursing Facilities?


This study determined if fiscal intermediaries appropriately processed denials of Medicare payment remedies for skilled nursing facilities that have been found noncompliant with Federal program participation standards. Denial of payment is an enforcement remedy that the agency may used to address noncompliance with Federal quality of care standards in skilled nursing facilities. The agency is responsible for imposing denial of payment remedies but relies on its fiscal intermediary’s to identify and reject the relevant Medicare claims.

Three-quarters of the denial of payments for new admission remedies were processed incorrectly. In 40 percent of the total cases, errors resulted in one or more inappropriate payments to nursing facilities. These overpayments exceeded $5 million. In the other 34 percent of the total cases, processing errors occurred but did not result in claims paid in error, either because the facilities did not have new admissions during the remedy periods or the facilities were aware of the remedies and did not submit claims for new admissions during the remedy periods. Errors were attributable primarily to late processing and problems with agency’s provision of denial of payment instructions to the appropriate fiscal intermediaries. Approximately half of claims involving readmissions lacked codes indicating the readmission status, which made these claims appear to be new admissions that should be denied. CMS plans to develop new internal procedures to ensure that it effectively communicates denials of payment for new admissions instructions to fiscal intermediaries and Medicare administrative contractors.  CMS has created a protocol between itself and the fiscal intermediaries and Medicare administrative contractors to ensure follow-up notification and CMS is updating its manual to clarify coding and verification requirements.

Report Title: Nursing Home Enforcement: Processing Denials of Medicare Payment
Agency Sponsor: OS-OIG, Office of Inspector General
Federal Contact: Erin Lemire, 202-205-9523
Performer: Staff; Office of Inspector General
PIC ID: 8999

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