OIG: Confusion at the Heart of RUGs Errors.

Honest confusion on the part of providers caused by a complicated assessment system, rather than sinister motives to maximize Medicare reimbursement, explains why patients under the Prospective Payment System (PPS) are so frequently misreported, according to two reports released earlier this year by the Department of Health and Human Services (HHS) Office of Inspector General (OIG). The OIG gathered information from three different sources: a review of nursing home medical records for a sample of 640 residents, a self-administered survey of 64 nursing home MDS coordinators and a telephone survey of 64 nursing home administrators.

OIG's review of signed MDSs indicated that 85% of nursing homes had at least four professionals assess each resident. "However, we found differences between the MDS and the rest of the medical record, some of which may affect care planning," the OIG noted. A medical record review of the MDS showed that an average of 17% of the 406 fields for each resident was different from the medical record. One of the highest rates of difference was 31% in Section G, Physical Functioning and Structural Problems. "Many MDS coordinators (40%) report Section G is the most difficult to complete, and 20% of the MDS coordinators report that they would make changes to Section G. This is one of the most subjective sections of the MDS," said the OIG.

"Clearly, nursing homes are attempting to systematically complete the MDS and implement the plans of care," the OIG concluded. "However, they are having difficulty administering an inherently complex process. There are apparently differences in nursing home staffs' understanding of the MDS and the resident assessment process."

The OIG recommended that the Health Care Financing Administration (HCFA) more clearly define MDS elements, especially Section G, and work with the industry to provide improved training.

In the second OIG review, 76% of the cases reviewed had reporting discrepancies, but these consisted of both upcoding and downcoding, by 46% and 30%, respectively. Testing the potential effect of this on Medicare reimbursement, the OIG found it to be not statistically significant. The fact that coding differences are both higher and lower, the OIG added, "indicates confusion or difficulties in implementing the MDS, rather than an effort to 'upcode' the RUGs to increase Medicare reimbursement. However, such a practice cannot be ruled out, and our study demonstrates how vulnerable Medicare is to such a practice.... Clearly, there are variations in interpretation in the way people are using the system."

In addition to its previous MDS clarification and training recommendations, OIG suggested that nursing homes be required to establish an audit trail to validate the connection between the 108 MDS elements that drive the RUG code and actual RUG calculations--for example, paying particular attention to discrepancies between MDS reporting and therapy log books.

Providers made their views known, too, telling the OIG that PPS has increased their administrative burdens. Ninety-three percent of MDS coordinators and 98% of nursing home administrators reported that the introduction of PPS has created additional responsibilities for existing staff. About 40% of both groups reported that new staff had been hired.

Nursing Home Medicaid Census to Decline?

In what might not be good news for nursing homes struggling to maintain census, final Medicaid regulations published in the January 11 Federal Register are designed to help elderly and disabled people live at home more affordably. The regulations allow states to disregard portions of income that have traditionally disqualified people from Medicaid eligibility. As of March 12, states no longer have to take into account personal expenses for such items as food, clothing or housing before determining eligibility. "This final rule gives states opportunities to correct spend-down problems so that more people could leave institutional settings and live in the community," HCFA explained.

Before this regulation, under so-called "medically-needy" rules, a state could offer Medicaid coverage to those whose income minus medical bills met the medically-needy income standard. In more than 40% of the states, however, that standard was significantly below the poverty level, and people with high medical bills were often forced to keep their incomes low to qualify for coverage.

New federal spending under the regulation is estimated at $960 million over five years, with states possibly spending a similar amount--assuming they follow through on this new opportunity.