CMS Directive to MACs: Audit 100 Percent of SNFs

Today, I’m writing about skilled nursing facilities (SNFs). The Centers for Medicare & Medicaid Services (CMS) recently directed the Medicare Administrative Contractors (MACs) to audit five Medicare claim submissions from every SNF in their jurisdiction. These audits just began on June 5, and will continue to be rolled out in waves.

Now, why is this audit happening? Well, it is intended to lower the improper payment rate found in SNFs nationwide. In 2022, the Comprehensive Error Rate Testing program (CERT) calculated that SNFs had a 15.1-percent error rate. It was the highest error rate of all fee-for-service (FFS) provider types, and nearly double the 2021 CERT report’s SNF error rate of approximately 7.8 percent.

There are several possible causes generating the high error rate, but the most impactful one identified in the CERT report was insufficient documentation. A total of 73.8 percent of the incorrect claims resulted from insufficient documentation. It is not surprising, given this, that CMS wants to address SNF billing. CMS also stated that another reason for this substantial increase was likely the result of a change in the payment model. The Resource Utilization Group (RUG) IV model changed relatively recently to the patient-driven payment model for SNF claims with dates of service on or after Oct. 1, 2019.

Coming back to the present, the MACs will be conducting probe-and-educate reviews. However, unlike traditional TPE reviews, which normally have three rounds of audits, as noted earlier there will only be one round, with a sample of just five claims from the total universe of claims submitted by each SNF in the MACs’ jurisdictions. Generally, the sample selection will be for prepayment review, but there can be occasional post-payment review if the provider requests it due to financial burden. The first wave of audits started with the top 20 percent of providers showing the highest risk, as identified by the MACs’ data analysis. However, providers that are under review by other contractors will be excluded from review.

All providers, regardless of whether any errors are found during the audit, can expect to receive detailed letters of the findings from the MACs. However, if improper claims are discovered among the audited sample, then the provider will receive education from the MAC. The amount and type of education depends on the error rate. Providers with an error rate of 20 percent or less, just one incorrect claim out of five, will receive widespread education with an option, if requested by the provider, to receive one-on-one education. Providers with error findings greater than 20 percent will be offered one-on-one education in the results letter. Each MAC should reach out to providers to schedule the education, and the MAC’s education should include claim-specific information, like the denial reasons and clinical facts. This is intended to be an opportunity for providers to review, ask questions, and receive meaningful feedback.

So, what can be done? Well, there are at least two things that a SNF provider can do at this stage. First, and most importantly, they can start triple-checking their claims before submission to ensure that all necessary documentation is provided. The second is keeping an eye on the mail for any detailed results letters from MACs!