Nursing Homes

Although Medicaid is the largest single payer for nursing home care, Medicare pays a substantial portion of the health care costs of nursing home residents. For the opportunistic provider, a nursing home represents a vulnerable elderly population in a single location and the opportunity for multiple billings. Many nursing home patients are mentally impaired, and their care is controlled by the nursing home. Because these patients would not realize what items or services were billed on their behalf, some providers may take advantage of the situation by submitting fraudulent claims. GAO testified that fraudulent billing has occurred because (1) the complexities of the reimbursement process invite exploitation and (2) poor control over Medicare claims has reduced the likelihood that inappropriate claims will be denied. GAO is encouraged by recent efforts to combat fraud and abuse--the pending implementation of provisions in the Health Insurance Portability and Accountability Act and a proposal made by the administration.

GAO noted that: (1) while most providers abide by the rules, some unscrupulous providers of supplies and services have used the nursing facility setting as a target of opportunity; (2) this has occurred for several reasons: (a) the complexities of the reimbursement process invite exploitation; and (b) insufficient control over Medicare claims has reduced the likelihood that inappropriate claims will be denied; (3) GAO is encouraged by a number of recent efforts to combat fraud and abuse, the pending implementation of provisions in the Health Insurance Portability and Accountability Act (HIPPA) and a legislative proposal made by the administration; and (4) while these efforts should make a difference in controlling fraud and abuse in nursing homes, it is too early to tell whether these efforts will be sufficient.