Medicare

Nursing homes and therapy companies continue to bill Medicare at very high rates for occupational and speech therapy. Moreover, the bills do not specify the amount of time spent with patients or the treatments provided. The weaknesses that GAO reported more than a year ago--the lack of salary guidelines setting limits on Medicare reimbursements for occupational and speech therapist's services and unclear billing for these services--persist. Although the Health Care Financing Administration (HCFA) recognized as early as 1990 that inappropriate charges for occupational speech therapy were a problem, it is still trying to establish salary equivalency guidelines for these services. HCFA proposed guidelines based on a Bureau of Labor Statistics survey of average salaries for hospital therapists, but the industry was not satisfied and did its own survey. HCFA is now analyzing those survey results. The prospect for a quick resolution to the billing problem with therapy services is unlikely. Historically, it has taken HCFA years to reduce high payment rates for supplies or services. Given the typical time involved in meeting federal notification and publication requirements for changing Medicare prices, salary equivalency guidelines may not be implemented until the summer of 1997 at the earliest. GAO urges Congress to consider granting HCFA legislative relief from these requirements.

GAO found that: (1) therapy charges billed to Medicare by skilled nursing facilities (SNF) and rehabilitation agencies have more than doubled since 1990; (2) some providers are exploiting weaknesses in Medicare's payment system, since HCFA places no absolute dollar limit on Medicare reimbursements for occupational and speech therapy; (3) HCFA is unable to determine whether a claim is reasonable prior to payment, since SNF are not required to specify how much therapy time they are billing for specific services; (4) HCFA has taken a number of interim actions to curb inappropriate charges, such as implementing salary equivalency guidelines for those SNF providing occupational and speech therapy services; and (5) HCFA officials have emphasized the importance of more systematic legislative approaches, such as unified billing, to solve the problem of therapy overcharges.