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California stands out in analysis of sky-high nursing home bills

Nursing homes in some California counties are billing Medicare for the most expensive services at a rate ten times greater than what regulators accounted for, costing tax payers tens of millions.

That’s what an analysis by the Washington Post showed. The Post examined nursing homes billing Medicare for “ultra high” (and ultra-expensive) levels of care. 

Photo by Christina Jewett

The category was created in the interest of fighting fraud and creating a category for only five percent of patients with the greatest needs. Instead of taming growing costs, though, they grew even more rapidly as nursing homes moved more and more patients in that rarified category, the Post reported.

An interactive map of U.S. counties shows some in California where not 5 percent, but rather more than 50 percent of patients are put into that cost-plus category, including Orange, San Bernardino, Contra Costa, Sacramento and Yolo counties.

The Post’s sources suggest that the shift of patients into these categories may have more to do with profit-seeking by nursing homes and less to do with patients, by and large, needing higher levels of care. The problem was once linked to $542 million in overpayments – but it’s quadrupled since then.

"Facilities have been able to bill the way they want, and they are billing for more services than they are providing to people," said Toby S. Edelman, a senior attorney for the Center for Medicare Advocacy, a watchdog group in Washington. "There's been a lot of abuse."

Federal analysts assigned to the inspector general's office for the Department of Health and Human Services are examining the billing program. "There is a lot of vulnerability in the system, and we are concerned by what we've seen," said Jodi Nudelman, regional inspector general for the HHS New York field office, which is conducting the examination.

The growth in the number of patients put in the “ultra high” category has been incredible. A chart on p. 141 of this report by MedPac, an agency that advises Congress on Medicare issues, shows that patient days billed at the highest rate leaped from fewer than 10 percent in 2001 to closer to 30 percent by 2007.

One Orange County-based nursing home chain stood out in the Post’s review. North American Health Care (NAHC), operates 35 facilities, most in California, which are under review by the federal Health and Human Services Office of Inspector General.

Here’s what the Post found:

Across the chain, 64 percent of NAHC patients are billed in the highest category; the national average is 9 percent. The category covers the most extensive medical care combined with the most intensive rehabilitation.

The pattern was discovered last year by the Service Employees International Union, which has been feuding with NAHC over efforts to organize the homes' employees.

The Post independently analyzed an updated version of the data and confirmed the pattern. The Post also found that NAHC operated 21 of the top 30 facilities nationally with the highest percentage of residents billed in the most expensive category.

….The SEIU gave results of its NAHC examination to Rep. Pete Stark (D-Calif.), who chairs a House Ways and Means subcommittee that oversees Medicare. In September, Stark asked the HHS inspector general to investigate, alleging that NAHC "may have overbilled Medicare more than $180 million through a system-wide pattern of 'upcoding.'

John L. Sorensen, NAHC's president and chief executive, said residents in the highest category are recovering from major surgeries and need specialized care. He said doctors favor his chain because it provides high levels of care.

The Post did not list the chain’s home and the company’s Web site offers few details. However, California’s Medi-Cal provides one list of the chain’s facilities on an audit of its parent company.

Nursing homes will have a tougher time billing for expensive services that are not needed, though, under two rules that were part of the health reform package signed into law last week, the Post reported.


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cdreese1's picture
If a facility is admitting rehab patients after hip and knee replacements they would have more patients billed at the highest categories because they need to have the necessary therapy that is prescribed by the physicians to get them home to enjoy a higher quality of life. These facilities can not do anything other then what a doctor orders them to do and a licensed therapists will do when it comes to rehab therapy.

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