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Nursing homes dread paperwork from state audit

The Pennsylvania Department of Public Welfare this month launched an unprecedented Medicaid audit at 75 nursing homes in Southeastern Pennsylvania as part of a campaign to eliminate waste, fraud, and abuse.

The Pennsylvania Department of Public Welfare this month launched an unprecedented Medicaid audit at 75 nursing homes in Southeastern Pennsylvania as part of a campaign to eliminate waste, fraud, and abuse.

Industry executives and others, who say long-term care centers already undergo frequent audits, said they were not worried about the possible discovery of expensive errors.

But they dread the logistics of preparing four years of Medicaid billing records for 100 percent review - while puzzling over how much money the DPW expects to recover from improper bills.

"I don't know what drove this," said Joanne Jones, president of Premier Healthcare Resources Inc., a consultant to the long-term-care industry.

"The projected volume of recovery is small, and, secondly, they already have an audit process in place," said Jones, whose firm sometimes takes over management of facilities.

The audit covers nursing homes in Chester, Delaware and Philadelphia Counties. Those facilities collected nearly $600 million in Medicaid revenue in 2011 and at least $2 billion over the four years ended June 30 that are subject to the audit.

Pennsylvania spent $3.6 billion in Medicaid money on nursing-home care in fiscal 2012. Medicaid is supported by federal and state funds.

The group with the most money at stake is the Roman Catholic Archdiocese of Philadelphia, whose four facilities under audit had $61 million in 2011 Medicaid revenue.

Spokesman Kenneth A. Gavin said the archdiocese had been notified of the audit but had not received formal requests for data. "Our facilities will comply fully with the process," he said.

The DPW hired a New York company, HMS Holdings Inc., to perform the audit on a contingency basis. HMS gets to keep between 10.25 percent and 12.5 percent of what it recovers.

The agency estimated the value of HMS's four-year contract, which became effective last Tuesday, at $625,000. That would mean HMS is expected to recover about $6 million, about 0.3 percent of the $2 billion in Medicaid money paid to the facilities during the period.

The DPW answered questions by e-mail but did not say how much the audit could accomplish.

The nursing home audit fits with a broader federal effort to recoup money that Medicare and Medicaid paid because of fraud or mistakes by providers, as a way to trim the growth rate in federal health-care spending.

In the year ended Sept. 30, 2012, the federal Centers for Medicare and Medicaid Services said its audit contractors recovered $2.3 billion in Medicare funds from hospitals and other health-care providers. Medicare spent $554 billion in 2011.

In 2010, the Affordable Care Act required states to copy the Medicare audit program for Medicaid. Medicaid covers elderly in nursing homes after they run out of money.

The Medicare and Medicaid audits required by the federal government have a provision requiring the government to compensate health-care providers for underpayments.

But the HMS nursing home audits in Pennsylvania, which are being performed under a separate contract, will not look at underpayments.

"I think that's a little bit demoralizing," said Michael J. Wilt, executive director of the Pennsylvania Association of County Affiliated Homes, a Harrisburg trade group for county-owned nursing homes.

"If you find something good, why shouldn't that be included?" Wilt said.

Rules for the federally mandated Medicare and Medicaid audits require contractors to minimize the administrative burden for Medicaid providers, but experts said that did not appear to be the case in Pennsylvania.

Paula G. Sanders, a lawyer in Post & Schell P.C.'s Harrisburg office and chair of its health-care group, said several of her clients in the three-county region being audited "are concerned about how they will be able to respond to the audits in a timely fashion, given the scope of material requested."

At least one might rent a scanning copier and upgrade computers to handle the processing. Some have configured space to create a secure room for work space and storage, Sanders said.

The audit will check whether Medicaid was the payer of last resort, meaning that the patient lacked money that should have been used before Medicaid, and that Medicaid did not overpay.

"It appears that this is a check on the system, which would include the area agencies on aging and the county assistance offices," which determine eligibility for Medicaid, said Louis J. Shiber, engagement director for health care at CliftonLarsonAllen L.L.P. "All of this information that goes on a bill really does come from somebody else," he said.

Changes in facility ownership could make the audit, which stretches back to July 1, 2008, especially challenging. Wesley Enhanced Living, an operator of retirement communities, for example, took over Stapeley, a retirement home in the Germantown section of Philadelphia, in 2010.

"If we have to go back to 2008, undoubtedly that's going to hurt. It's a different system. It's not around any more," Wesley's CEO, Jeff Petty, said.

Like other executives, Petty said he doubted HMS would find much. "The vast majority of providers, and I would include us in that, are pretty conservative about billing," Petty said.

Revenue Breakdown

Five nursing home operators accounted for 40 percent

of the Medicaid funds paid in 2011 to facilities in Chester, Delaware, and Philadelphia Counties. Shown are the percentage of patient days paid for by Medicaid and 2011 Medicaid revenue in millions of dollars.


                           No. of    Percent    Medicaid

Operator                     facilities    Medicaid   revenue

Archdiocese of Philadelphia   4          75%       $61

Fair Acres Geriatric Center    1         91          60

Genesis Healthcare             9         68          49

Inglis House                   1         96          36

Philadelphia Nursing Home      1         97          34

SOURCE: Pa. Dept. of Public Welfare and Inquirer research