By Gary Herschman and Anjana Patel

In light of the recent OIG report, SNFs should aggressively take steps to limit their risk of potential liability and exposure as CMS implements new programs to curb inappropriate SNF billing practices, including but not limited to the following:

1. First and foremost, SNFs should conduct internal random audits of their Part A resident medical records and billings, focusing on:
■ the accuracy of claims for RUGs labeled “high” and above;
■ ensuring that medical records reflect and are consistent with all services and clinical conditions contained in the MDS document that was submitted;
■ ensuring that there are documented physician orders in the medical record to support any MDS section related to therapy and other ancillary services; and
■ compliance with other areas that are the subject of enforcement initiatives by CMS and its contractors. For purposes of objectivity and integrity of the audit process, the internal team of auditors should not consist of staff who completed the MDS forms or who initially coded and/or billed the claims.

2. SNFs should also engage an external auditor to review a random sample of MDS forms and their related medical records and billing/coding for purposes of confirming accuracy and completeness. This will demonstrate the facility’s good faith efforts to ensure compliant billing and thus could provide an additional layer of protection against OIG scrutiny. Moreover, SNFs should consider retaining any such external auditors through their legal counsel in order to keep such activities confidential and protected by the attorney-client privilege to the fullest extent possible.

3. Actions should be taken proactively with respect to any negative findings of internal or external audits, such as:
■ any erroneous billings should be remedied via corrected submissions to Medicare and/or its contractors; and
■ staff should be inserviced with respect to correcting any past oversights/errors so that MDS assessments, medical record documentation, and Medicare coding/billing are accurate and complete moving forward.

4. In connection with the SNF’s corporate compliance program, facility staff should be trained upon hire and at least annually thereafter (or more frequently if warranted) with respect to:
■ the general requirements and processes of its compliance program and code of conduct;
■ adhering to the required schedule of routine quarterly MDS assessments, along with ensuring that “significant change in status” MDS assessments are conducted in a timely and comprehensive manner (as such requirements were modified in FY 2012);
■ any new and/or modified state and federal regulatory requirements and restrictions applicable to SNFs; and
■ other issues of potential exposure/concern identified from time to time by federal regulators, such as therapies and medical necessity of services, as well as by the facility’s own prior audits.

5. As noted by OIG in the report, this study is a part of a larger review of questionable billing practices by SNFs. A study released in February focused on the extent to which SNFs meet certain federal requirements regarding the quality of care provided to beneficiaries.

Thus SNFs also should be proactive and conduct the same internal/external audits and inservices described above, with a focus on compliance with quality of care standards.

The OIG report can be accessed at:


Gary W. Herschman is chair of the Health Care Practice Group at Sills Cummis & Gross, P.C., and may be reached at Anjana D. Patel is vice-chair of the Health Care Practice Group and may be reached at The authors would like to thank John Barry and Jonathan Keller, law clerks with the firm, for their assistance with preparing this article. The views and opinions expressed in this article are those of the authors and do not necessarily reflect those of Sills Cummis & Gross P.C.