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RACs Target Skilled Nursing Facilities with High Therapy Resource Utilization Groups

Recent Recovery Audit Contractor (RAC) activity demonstrates that the Centers for Medicare and Medicaid Services (CMS) may soon allow RACs to target skilled nursing facilities (SNFs) with certain levels of Ultra High Therapy Resource Utilization Groups (RUGs). 

Although Ultra High Therapy Resource Utilization Groups are not currently a CMS-approved audit topic, RACs are permitted to audit “test claims” and suggest new audit activity based on the results. In a recent demand letter, the RAC stated that the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services has found an “overwhelming majority of error in assignments by providers under the RUGs categorization system to Ultra High Therapy RUGs, resulting in overpayments to SNFs.”

These claims arose out of a 2010 OIG report which alleged that 1) SNFs are increasingly billing higher-paying RUGs, 2) for-profit SNFs are more likely than nonprofit SNFs to bill for higher-paying RUGs, and 3) in general, many SNFs maintain questionable billing for therapy services.

Specifically, the RAC claims that the OIG identified as “…errors in the sample could be traced to the providers’ therapy minutes recorded on the Minimum Data Set not matching the minutes recorded in the medical record and the patient’s care and resource needs.” Further, it seems that SNFs with 10-15% of residents in the Ultra High Therapy RUGs category may be subject to RAC audits.

If the issue is approved by CMS, RACs will begin burdensome document requests and therapy audits nationwide. Providers of Ultra High Therapy RUGs should consider self-auditing internal records in order to ensure that the minutes of therapy and other medical records support the therapy provided.

If you need assistance with an internal audit, or implementing compliance program to identify and correct potential risk areas related to RAC audits, please contact a Wachler & Associates attorney at 248-544-0888.