A new audit from the Office of Inspector General (OIG) found that Medicare Part D improperly paid millions of dollars for drugs dispensed to residents during skilled nursing facility (SNF) stays covered under Medicare Part A.
Medicare rules state that Part D should not pay for prescription drugs if they are already covered under Part A, such as during a resident’s SNF stay. However, OIG reviewed prescription drug event (PDE) data from 2018 to 2020 and found that in all 215 sampled cases, Part D paid for drugs that should have been billed to Part A.
In 89 of those cases, SNF medical records confirmed the drugs were administered during a Part A-covered stay. In the remaining 136 cases, documentation was not available to verify administration. Based on this sample, OIG estimated that up to $465.1 million in total drug costs may have been improperly paid by Part D during the audit period. Of that, approximately $245.4 million was confirmed as administered during Part A SNF stays.
This is not a new issue. An earlier OIG report from 2009 raised similar concerns, and audits in 2012 and 2019 found the same pattern during hospice care.
OIG made several recommendations to the Centers for Medicare & Medicaid Services (CMS), including that it work with Part D sponsors to correct or delete inappropriate PDEs, evaluate the financial impact of these payments, and improve the sharing of information about residents’ SNF stays to help prevent future errors. CMS agreed with all five recommendations.
Facilities can use CMS’s SNF Billing Reference educational tool to help determine when prescription drugs should be billed to Medicare Part A instead of Part D. Accurate billing helps avoid compliance issues and ensures proper use of Medicare funds.
You can view the full OIG report here.
Compliance Perspective
Issue
SNFs must ensure that prescription drugs provided to residents during Medicare Part A-covered stays are billed appropriately. Medicare Part D does not cover drugs when payment is available under Part A. When facilities incorrectly bill Part D for drugs that should be covered under Part A, it results in improper payments and does not comply with Medicare billing requirements. Failure to follow proper billing protocols can result in noncompliance and may lead to financial or regulatory penalties for facilities.
Discussion Points
- Review and update policies and procedures to ensure compliance with Medicare billing guidelines. Specifically, confirm that protocols clearly distinguish when prescription drugs should be billed under Part A versus Part D. Ensure systems are in place to track Part A coverage periods and prevent inappropriate billing to Part D.
- Educate appropriate staff on Medicare’s requirements for drug coverage during SNF stays. Provide training on how to determine the correct payer and emphasize the importance of verifying a resident’s Medicare Part A status before submitting claims for prescription drugs.
- Conduct regular audits to identify any instances of drugs billed to Part D that should have been covered under Part A. Use audit findings to correct errors, recover overpayments, and improve compliance. Ensure documentation supports the timing and administration of all drugs billed during Medicare-covered SNF stays.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*