Audits Coming for Skilled Nursing Facilities Across the US


From June 5th onwards, skilled nursing facilities across the United States will face a significant regulatory change: a five-claim audit. This initiative, aimed at accurately assessing and reducing improper payments, has caught the attention of facilities and industry experts alike.

Details of the Audit Process

Early in May, the Centers for Medicare & Medicaid Services (CMS) revealed the audits’ plans, implemented by Medicare Administrative Contractors (MAC). Although a related public memo was later removed, insiders confirm the reviews will continue as planned. Each MAC in every region will be tasked with drawing five Medicare Part A claims from every facility under their purview, checking for possible inaccuracies.

Implications of the Audit Results

The outcomes of these audits will necessitate:

  • Basic training
  • Adjustments to prepayment claims
  • Detailed, personalized education for providers who’ve errors exceeding 20% of their claims

This action was initiated following a Health and Human Services report that discovered skilled nursing facilities had the highest rate of improper payments. Alarmingly, almost a quarter of these were due to inadequate documentation.

Industry Experts Weigh In

Stacy Baker, OTR/L, RAC-CT, director of audit services for Proactive LTC Consulting, shared, “Examining Medicare FFS improper payment data, the rates of improper SNF payments have reached an unprecedented high, nearly double that of the 2021 report.” This reality reflects the urgency of the upcoming audits.

Data from the Comprehensive Error Rate Testing reports unveiled a nearly 10% rise in improper payments since 2020. The rate was reported to be 15.1% in 2022, a stark increase from 7.79% in 2021.

Root Causes and Solutions

CMS attributes this hike to missing case-mix group component documentation. Baker sees the audit as an attempt to rectify poor billing practices post the Patient Driven Payment Model’s introduction.

However, Alicia Cantinieri BSN, VP of MDS policy and education for Zimmet Healthcare Services, highlights that multiple risk factors could hasten providers’ audit process. These include past performance, a history of additional documentation requests (ADR), frequent errors in Section GG, diagnoses without medical record to support MDS inclusion, and even illegible RN signatures.

Audits will be carried out prepayment, unless providers request post-payment review due to financial constraints.

Audit Preparedness: Key Steps for Providers

Baker suggested providers should take the following steps to prepare for audits:

  • Revisit their triple-check procedure to ensure a clean claims process
  • Validate each HIPPS code’s CMG with clear supporting documentation
  • Analyze their data and conduct internal audits
  • Review their Program for Evaluating Payment Patterns Electronic Report (PEPPER) to identify any “outlier billing patterns”

For an effective ADR response, providers should:

  • Establish a process and team immediately and assign clear responsibilities
  • Organize documentation to simplify the contractor’s review process
  • Ensure adequate time for staff members with clinical and MDS coding expertise to verify the claim and documentation
  • Maintain a copy of the entire package supplied to the MAC for potential appeals
  • Document and retain records/receipts of timely ADR submission

With this audit on the horizon, skilled nursing facilities must prioritize their preparation to ensure compliance and minimize potential errors.