The House Government Reform and Oversight Human Resources and Intergovernmental Relations Subcommittee on Human Resources hosted George F. Grob during hearings on nursing home Medicare fraud.

Mr. Grob, Deputy Inspector General, Evaluation and Inspections of the US Department of Health and Human Services, gave testimony on the conditions of fraud, abuse and waste in nursing homes.

He began his testimony by telling the members that he would focus on the billings “gaming” by some unscrupulous suppliers of medical services and supplies and nursing home owners.

He would reveal, he told the members, how this gaming may take the form of fraudulent billings to unnecessary services to excessive prices for services and products. He emphasized it would call forth aggressive legislation and administrative action to put an end to these problems.

He explained just who the affected parties were in these incidents: what he called the “dually eligible” either low income elderly or disabled persons who qualify to receive benefits under both Medicare and Medicaid programs.

With regards to nursing homes, these residents’ nursing home bills are financed by Medicaid but at the same time, they receive medical services and supplies reimbursement through Medicare Part B.

He pointed out, however, that the problems arise in any case, even if the payments are made by private insurance or Medicare Part A. He stated his belief that the very complexity of multiple payers in this scenario creates the “vulnerabilities which I will describe”.

The information he shared resulted from a program called Operation Restore Trust. This two year project was designed to demonstrate new and innovative ways to fight waste, fraud and abuse in the Medicare program.

It looked at problems with hospices, home health, nursing homes and durable medical equipment suppliers in five states – California, Florida, Illinois, Texas and New York.

The Office of Inspector General, the Health Care Financing Administration, the Administration on Aging, the Department of Justice, and other law enforcement agencies worked together to get the evidence and data he would cite.

How Medicare and Medicaid Fund Nursing Homes

Almost three million people were in nursing homes, in 1996, whose bill was being footed by either Medicare or Medicaid. They received services ranging from personal assistance with bathing, dressing and eating to skilled therapy and nursing services. Room and board was also picked up by one of the two programs.

The cost? The two programs combined paid a total of $46 billion for all nursing care services in 1995. Broken down, it looked like this: $42 billion went to nursing homes; $4 billion went to a variety of providers of supplies and services for Medicare beneficiaries living in nursing homes.

Let’s examine the contributions made by Medicare.
Medicare Part A pays: 1. As much as 100 days after being hospitalized for skilled nursing home stays. However, the resident must pick up a $95/day co-pay after 20 days. 2. These payments break down into three components: a. per diem costs for routine nursing care, room and board and admin and overhead costs. These costs have a limit. b. Ancillary services such as lab costs, drugs, therapy and radiology. Although these payments have no limit, they are paid on the basis of a reasonable cost. c. Capital, also paid on a cost basis but not subject to a limit.