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Gov't audit insider: Skilled nursing facility payments

Healthcare Auditing Weekly, November 4, 2003

The Office of Inspector General (OIG) performed this audit to identify ineligible Medicare skilled nursing facility (SNF) payments made under the administrative responsibility of Blue Cross and Blue Shield (BCBS) of Arizona, Inc.

The OIG used the following methodology:

1. The OIG performed substantial data analysis to establish a database of SNF claims that Medicare paid, even though the Centers for Medicare and Medicaid Services' National Claim History File did not support the existence of a preceding three-day inpatient hospital stay.

2. The OIG limited its audit testing to determine whether any other sources supported the required three-day inpatient hospital stay.

3. The OIG's determined through its validation process whether any eligible SNF stays were inadvertently included in the database.

4. The OIG selected a statistical sample of 200 SNF stays from the BCBS of Arizona database (reimbursed $1,282,587) and compared the SNF admission to inpatient information in the common working file (CWF) system.

5. For each of the 200 SNF stays selected in its sample, the OIG reviewed the inpatient listing claims screen from the various CWF host sites to identify any inpatient stays omitted from its database that would make the SNF stay eligible for Medicare reimbursement.

6. Using the OIG Office of Audit Services RAT-STATS Unrestricted Variable Appraisal Program, the OIG projected the amount of SNF payments eligible for Medicare reimbursement.

7. Since the OIG intended its database to quantify only ineligible Medicare reimbursement, it used the "difference estimator" estimation method to measure the amount of eligible Medicare reimbursements that it inadvertently included in the database.

8. Using the difference estimator, the OIG adjusted the database of ineligible SNF payments and calculated the upper and lower limits at the 90% confidence level. According to an OIG estimate, the lower limit of the 90th percentile of ineligible SNF payments under BCBS of Arizona's responsibility amounted to $1.7 million during the period of January 1, 1997 to December 31, 2001.

Click here to read the audit report: "Ineligible Medicare Payments to Skilled Nursing facilities Under the Administrative Responsibility of Blue Cross and Blue Shield of Arizona, Inc.

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