Main Series Page: Troubled Times in Nursing Homes
By Thomas J. Cole
Journal Investigative Reporter
You've heard the story about the Pentagon's $640 toilet seats. But how about Medicare's $1,503 wheelchair cushions, its $45 gauze bandages and its $688-an-hour costs for occupational and speech therapy?
Congress' General Accounting Office documented those overcharges -- and more -- in reports about Medicare fraud and abuse in the nursing-home industry.
The agency told Congress in 1996:
"Although most providers are honest and bill appropriately, a wide array of provider types -- including durable medical equipment suppliers, laboratories, physicians, optometrists and psychiatrists -- have been involved in the fraudulent or abusive billing of Medicare for services and supplies furnished to nursing-facility patients."
The Health Care Financing Administration, which runs Medicare, told a House committee in 1997 that examples of nursing-home fraud included billings for unneeded mental-health services, inflated prices for medical supplies, residents wrongly enrolled in hospice programs to increase Medicare payments and excessive occupational and speech therapy charges.
An agency official said:
"The nursing-home population has a high percentage of patients who are incapable of monitoring their own bills and may not have family members to do this for them; this makes them easy prey for unscrupulous providers and suppliers."
Nursing homes received about $23 billion in fee-for-service payments for nursing-home stays in 1996 and 1997. Federal auditors estimate that about $3.1 billion of those payments were improper.
Improper payments can result from fraud, abuse or unintentional billing errors by Medicare providers.
Beverly Enterprises of Fort Smith, Ark., the nation's largest nursing-home chain, announced last week it reached tentative agreement to settle federal investigations related to Medicare billings.
Beverly said the settlements and related matters will cost it between $175 million and $225 million. The company declined to elaborate.
Another major nursing-home company, Vencor of Louisville, Ky., has been ordered by the Health Care Financing Administration to repay $90 million to Medicare.
Horizon/CMS Healthcare Corp. of Albuquerque paid $5.7 million to Medicare and Medicaid in 1996 and 1997. The company, which ran nursing homes and rehabilitation facilities, was later sold.
Medicare's new fixed rates for nursing-home stays are based on reimbursements to homes in 1995, including any reimbursements that were improper due to fraud, abuse and unintentional billing errors by care providers.
"I just don't think that there is as much fraud and abuse in the system as some would like us to believe there is," said Mark Wimer, president and chief operating officer of Sun Healthcare Group.
Some of the money paid improperly to nursing homes was the result of unintentional billing errors, which Wimer said aren't fraud and abuse.
And Medicare billing requirements are often complicated and unclear, he said. There is a lot of "gray" in the system, Wimer added.
Congress and the Clinton administration have stepped up efforts to combat fraud and abuse by all providers in Medicare and Medicaid.
For example, the Department of Justice and the Office of Inspector General at the Department of Health and Human Services have received more money to bring enforcement actions.
The federal government in the past two years has collected more than $1.2 billion in cases resulting from fraud and abuse.
The government efforts apparently have caused health-care providers to be more cautious: Federal auditors have estimated improper payments to all Medicare providers dropped by more than one-third last year.
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