Nursing Homes Overbilling and Underreporting Negative Outcomes
Are nursing homes hiding poor care behind fake billing and bad data? Overbilling and underreporting are major problems that keep families in the dark and patients at risk. These practices can also lead to fraud investigations and lawsuits. In this week’s episode, nursing home abuse lawyer Rob Schenk welcomes guest Alex Priest to talk about how billing and reporting issues cover up abuse and what can be done about it.
Priest:
A website where somebody can enter their zip code, they’ll see the facilities that are close to what the CMS quality rating is. You know what our own quality rating is. Many times it’s the same. Sometimes there’s a significant difference that can be driven by some of these. Under-reporting of adverse health outcomes and such.
Intro
Schenk:
Hey out there. Welcome back to the Nursing Home Abuse Podcast. My name is Rob. I’ll be your host for this episode. Today we’re talking about data, specifically CMS data about reimbursement and negative outcomes in nursing homes and how essentially the data reveals that there are some repeat offenders that tend to overbuild Medicare and under provide their services, but we’re not having that conversation alone.
We have the fantastic Alex Priest outta the University of Rochester Simon, or University of Rochester, Simon Business School. Sorry about that. He, and along with co-author John Griffin have released a paper about overbilling in skilled nursing. And it’s a fantastic read. It’ll be linked in the show notes.
As I mentioned, we’re talking about overbilling and under providing care. A systemic issue in nursing homes today. We’re not doing that alone. We have the fantastic Alex Priest on. Alex is a professor. Of finance at the Simon Business School at the University of Rochester. His research, Overbilling and Killing? An Examination of the Skilled Nursing Industry, examines fraud and misrepresentation on financial markets and healthcare.
He believes that research should extend beyond academia and that researchers have a unique opportunity to shed light on real world issues through systemic data analysis. And we’re so happy to have him on the show today. Alex, welcome to the show. Thanks for having me. I just wanna really get right into it.
What inspired your research regarding nursing facilities hiding negative outcomes and overbilling?
Schenk:
So tell me about your background and finance and how you got led down the road of uncovering fraud in nursing homes.
Priest:
Sure. I’m an academic org in a variety of fields. Most of my research focuses on fraud and misconduct, usually in a financial setting. My co-author on this project, John Griffin also studies fraud in, in many contexts, and it’s been thinking about healthcare.
For a while. And so that’s initially how we started getting interested in the general topic of healthcare. Now I think that studying these practices of fraud in skilled nursing facilities or nursing homes is a great example of something we see as academics a lot. And that’s that, although we know fraud exists, it’s generally very difficult to measure. Everybody has anecdotes. You can look at lawsuits, but we certainly know that lawsuits may represent only a small portion of total fraud or abuse. And this is where I view our role as academics and that we can provide a large public services that, we have the training, the tools, and the data to systematically study these things so that we can say not just.
Was there a case of fraud or abuse, but how common does it seem to be? And we started working with this Medicare data. And at first this paper was really only about billing practices and has, slowly morphed over time into relating this to quality of care. And we also have a bit to say about the commonly available Medicare star ratings.
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What are the results of your research?
Schenk:
So to walk us through then what data set did you look at? You and your co-author? Yeah. And then what does it show, and then what are your conclusions?
Priest:
Yeah, so we are looking at Medicare claims data. So this is going to be the universe. So every Medicare claim in skilled nursing from 2016 to 2023.
And essentially what we’re going to be looking at is these various billing practices. And so there was a large change in the reimbursement system, which occurred in 2019. Reimbursement moved primarily from a therapy based reimbursement under RUG four, meaning that providers were getting paid on how many minutes of therapy they’re providing.
To a the, this new patient driven payment model or PDPM which more directly ties reimbursement to the reporting patient conditions and comorbidities. At a very high level, what we look at in terms of billing practices in this paper is a over utilization of therapy during the first half of that sample. And a practice we’re gonna call upcoding for the, this new PD DPM, which is, reporting conditions that the patient may or may not actually have in terms in order to increase reimbursement amounts.
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Schenk:
Okay. So WW walk us through that. So what are, what, how are skilled nursing facilities using this PDPM to bring in more money?
Priest:
Yeah. Let me give you an example. So under PD DPM, reimbursement is tied on, tied to the specific conditions and characteristics that a facility reports a patient having. Just one specific example of this is the speech language pathology component of reimbursement’s tied to whether a patient has a primary condition, which qualifies as an acute neurologic condition Now.
Facilities are able to increase their reimbursement by assigning a primary condition, which is qualifying as acute neurologic. Now, one of the difficulties, of course, is determining whether this is upcoding in the sense that facilities are recording a diagnosis that patients actually don’t have.
Or is this just more thorough diagnoses? So this is of course, a challenge in trying to study whether this represents fraudulent behavior or are these facilities just doing their job? So one thing we look at is we use the fact that to qualify for a Medicare part a stay, a patient has to have an inpatient hospital stay of at least three days.
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So we look on the hospital claims data. Is there any indication that this patient indeed had an acute neurologic condition immediately prior to their skilled nursing stay? And we find in many cases there’s not. You can also look at the relative presence of these acute neurologic conditions before and after PD DPM.
So prior to the adoption of PD, DPM facilities received no extra reimbursement for these acute neurologic conditions. And what do you find is that after the adoption of PDPM, the same facilities. Really systems or chains of facilities. So these are multiple facilities that are operated by the same common ownership or management.
So the same facilities that under the previous therapy based system have the highest over utilization of therapy. All of a sudden suddenly receive a very large spike in acute neurologic conditions. As soon as PDPM is enacted, there’s no evidence that this can be supported due to the hospital claims data.
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How does this affect care?
Schenk:
What would, what is the result of what we’re saying? Is that up to code? If they’ve indicated this person has an acute neurological condition they’re getting more money. Is that the point. Okay. So then. What does the data say with respect to lemme say this, what does the data say when they come back to you?
They are in the nursing homes that are under scrutiny, saying we, that’s, it’s true. They have these conditions and we use the money to do X. Does the data support the x?
Priest:
Yeah, so it is a great question and I think it’s actually not at all clear whether this is a bad thing for patients.
If you just think about the fact that you might actually want your provider to be able to extract the maximum amount of Medicare reimbursement. And when we started this paper, we weren’t really sure. So we started investing is investigating the quality of care at these facilities. And what we find is that the same facilities.
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Those that are engaging in the most upcoding are simultaneously investing in patient care. So for example, they have much slower levels of nurse staffing. They have higher levels of deficiencies, which are noted on the publicly available CMS reports. They’re more likely to be identified as a special focused facility, which is a designation by CMS that these facilities are quite far behind.
We also look at a variety of patient health outcomes. To do this, we combine this with a variety of other Medicare data sets, including hospitalizations or visits to a hospice. And we find that facilities or patients that visit these facilities are more likely to develop adverse health outcomes.
They’re more likely to develop pressure ulcers or urinary tract infections. They’re more likely to be re-hospitalized. All of these suggests that no, of these facilities that are engaged in these sub coating practices, they don’t appear to actually be using those additional funds to provide higher care.
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Do you see these outcomes as intentional profit-seeking, or systemic neglect from poor staffing and oversight?
Schenk:
And that’s and I guess like I’m obviously nothing’s 100% certain, but this is, you’re saying it’s more likely does the data support that? An overwhelming majority of the time that these facilities are code upcoding, the outcomes are negative.
Priest:
So everything I’m saying is kind. Is true on average. It doesn’t mean that there are facilities which have very intense diagnoses, which are using the additional money to fund better care, but they seem to be the exception rather than the rule. So it does seem to be the case that there is a very strong component that these billing practices are tied to quality of care and it’s in this negative relationship.
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How can future payment models prevent SNFs from simply gaming the next system like they did with PDPM?
Schenk:
So I’m not Ernie Toss, so I’m not like an expert on CMS and rug scores and PDMs and all that kind of stuff. However, it’s my understanding that at least PD PM was to, was a response to That’s right. The fraud of the rug or the therapy systems. What do, based on what you’ve learned as an, in your research is there a model that you would suggest that would reduce the fraud?
Priest:
Yeah. You’re exactly right. PDPM was largely sold by CMS. As the fix for this rug for therapy over utilization. Now our main finding is that you completely change the reimbursement model. These are two very different models of reimbursement, and it’s the same players, the same facilities are chains that were providing the highest levels of therapy over utilization that are suddenly gaming the new system.
Now, I think. One of my implications from that is that just changing the reimbursement system alone may not actually solve the problems that you have. And in fact, I would argue that based on the facts, that it’s the same systems that are doing this in both reimbursement schemes. That would tend to suggest that current levels of enforcement are not deterring these providers from engaging in these various practices.
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Now, I think there is maybe some common sense you could do that would make it harder or more difficult to game these systems. For one I don’t think that tying reimbursement to patient condition is inherently a bad idea. However, if you let facilities report what conditions a patient has, then of course that’s going to lead to incentives to over-report conditions that are gonna be the highest compensating.
That being said, any system you design is going to have flaws if there’s not an enforcement when facilities or systems and facilities are abusing the reimbursement schemes, then that incentive is always going to be there for providers.
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Schenk:
So at the end of the day I guess it’s like you, there needs to be more teeth in the enforcement. There’s gotta be ramifications for these players that are continually, scheme.
Priest:
And I’ll disclaim this by stating that I’m not an attorney and I realize there’s probably many legal obstacles to prosecuting these types of cases. I think one thing is that we know that enforcement is only a very small percentage of abuse and fraud within the system.
Another thing that we think might be helpful, again, I’m not an attorney here is that if there were more criminal penalties in addition to the civil penalties for engaging in these types of practices. But yeah, at the end of the day we think that ramping up enforcement would certainly be one way to cut back against some of these practices.
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What are some other key takeaways that the public should know about your findings?
Schenk:
So I’ll have a link to Alex and John’s paper or their study in the show notes. So if you wanna read it, you can. It’s a good read. It’s a substantial read. I think it’s almost a hundred pages, but it’s worth it. But what are you guys working on now? Are you continuing with skilled nursing or are you gonna do something else?
Priest:
Yeah, so for the time being, we’re continuing with the skilled nursing. We are in the process of expanding the scope of this project to one, characterize more about the various ownership groups that are engaged in these practices. And two we’re gonna further explore some of the healthcare quality and especially the.
Manipulation of CMS quality ratings which is actually not something I had mentioned earlier. But we find that the CMS quality ratings. So this is the one to five star. Rating that Medicare publishes. And by far the most popular rating that potential patients are gonna be consulting.
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We actually show that this is pretty manipulated by facilities. There seems to be pretty severe under reporting of adverse health outcomes that contribute to those ratings. As a result of that we argue that the CMS quality ratings are. Not as accurate or not as reliable as many people might think.
And so one thing we have done is we have published our own ranking of these systems. That’s at Care Watch. And that’s our attempt to make our findings as accessible as possible to the common person. This is, a website where somebody can enter their zip code. They’ll see the facilities that are close to what the CMS quality rating is.
You know what our own quality rating is. Many times it’s the same. Sometimes there’s a significant difference that are kinda be driven by some of these under-reporting of adverse health outcomes and such.
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Schenk:
And all that information will be in the show notes, but again, that’s Care Watch excellent website.
It’s, this reminds me, and of course, like I’m not telling you anything that you don’t already know, but Freakonomics, the, where the, there, there’s a, there was one story in particular, how they uncovered the fraud in sumo wrestling based on statistics about one the, to the better guy would let the other guy lose if the better guy was in a good position to take a loss and you would expect that in return and blah, blah, blah.
And that’s through mathematics. They figured out the fraud and sumo wrestling, and that’s what this reminds me of. But anyway, but Alex, we really appreciate you doing the work that you do, and we appreciate you spending some time with us to talk about your findings.
Priest:
Thanks a lot. I appreciate it.
Schenk:
Folks. I hope that you found this episode educational. Remember that you can find the information with respect to Alex’s links and his papers in the show notes. It’s a good read. It’s really interesting stuff that he’s doing out there. If you have any ideas for topics that you would like for me to discuss, please let me know.
If you have any ideas for people that you would like for me to talk to, please let me know that as well. New episodes of the Nursing Home Abuse Podcast come out every single Monday. And with that folks, we’ll see you next time.