Office of Inspector General

Review of Potential Improper Payments Made by Medicare Part B for Services covered Under the Part A Skilled Nursing Facility Prospective Payment System

BACKGROUND

Under the consolidated billing provision of the prospective payment system (PPS) for skilled nursing facilities (SNF), the SNF is responsible for billing Medicare for virtually all of the services rendered to its residents in a Medicare Part A stay. As a result, outside suppliers of services to SNF residents must now bill the SNF rather than the Medicare program. This review was performed as a follow-up action to our report (A-01-99-00531) dated March 2000 which found the Medicare program was paying twice for the same service--once to the SNF under the Part A PPS and again to an outside supplier under Medicare Part B.

OBJECTIVE

The objective of our review was to determine the extent of improper payments made by Medicare Part B to outside suppliers for services already included in the Medicare Part A prospective payment to the SNF. The period covered by our review is Calendar Year (CY) 1999. To accomplish our objective, we performed a nationwide computer match, using the Health Care Financing Administrations (HCFA) National Claims History file, to identify improper payments made by Part B to suppliers.

SUMMARY OF FINDINGS

Based on our nationwide computer match, we identified a potential $47.6 million in improper payments made by Medicare Part B to suppliers for services that were already included in the PPS payment that Part A made to the SNF for a covered stay. We also found instances where suppliers billed and were paid by both the SNF and Part B.