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The Health and Human Services’ Office of the Inspector General (OIG) identified ultra-high therapy Resource Utilization Groups (RUGs), a classification system to determine reimbursement levels for patients in skilled nursing facilities (SNF), as an important area to monitor by the Centers for Medicare & Medicaid Services (CMS) contractors in SNFs. The OIG’s warnings were based on two studies: A 2010 report titled "Questionable Billing by Skilled Nursing Facilities," which noted that payments for ultra-high therapy RUGs increased from $5.7 billion in 2006 to $10.7 billion in 2008 although the patient populations had not changed; and its 2012 report titled “Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More than a Billion Dollars in 2009,” which found a number of problems with billing by SNFs, including the submission of inaccurate, medically unnecessary, and fraudulent claims. 

Is your facility a therapy outlier?
You can find out if your facility is outside the norms of providing therapy services by checking a CMS report titled the Program for Evaluating Payment Patterns Electronic Report – called “PEPPER” for short. PEPPER, which was distributed to facilities in late August 2013, allows providers to see how their facility compares to all other SNFs across the state, nation or MAC jurisdiction in three key categories: Therapy RUGs with High ADLsNontherapy RUGs with High ADLs; and, Change of Therapy Assessment. If providers are outside the “norms” in any category, chances are they  will be contacted by a CMS contractor (MAC, RA, ZPIC).  

Currently, ultra-high therapy RUGs is not on the Medicare Recovery Auditor's (RA) list of CMS approved audit issues, but RAs may be paying closer attention to this issue in SNFs in the future. CMS has granted approval to RAs for Region B (CGI which covers KY, IL, IN, OH, MI, MN and WI) to conduct test claims of ultra-high therapy RUGs to determine whether this issue should be added to Region B and Region D approved issues list.  

In 2012, Zone Program Integrity Contractors (ZPICs), whose primary national goal is to identify, investigate and recover funds in cases of suspected Medicare fraud, has begun focusing on ultra-high RUGs in Florida SNFs. Additionally, the US Department of Justice (DOJ) and the Office of Inspector General (OIG) have begun joint investigations focusing on the alleged over-utilization of ultra-high RUGs in SNFs. 

AHCA Says CMS is incorrectly using anti-fraud tools to implement flawed policy… read more​

 Additional Resources

AHCA expresses its appreciation for permission to use the RUGs IV chart to: 

a. Health Care Compliance Association (HCCA) Compliance Institute 

b. Shawn Halcsik, Vice President of Compliance, Evergreen Rehabilitation

c. Paula Sanders, Post & Schell, P.C.