OIG Supplemental Compliance Program Guidance for Nursing Facilities, 56832-56848 [E8-22796]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Office of Inspector General
• Inspector General Office, Health and Human Services Department

[Federal Register Volume 73, Number 190 (Tuesday, September 30, 2008)]
[Notices]
[Pages 56832-56848]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-22796]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General


OIG Supplemental Compliance Program Guidance for Nursing 
Facilities

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice.

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SUMMARY: This Federal Register notice sets forth the supplemental 
compliance program guidance (CPG) for nursing facilities developed by 
the Office of Inspector General (OIG). OIG is supplementing its prior 
CPG for nursing facilities issued in 2000. The supplemental CPG 
contains new compliance recommendations and an expanded discussion of 
risk areas. The supplemental CPG takes into account Medicare and 
Medicaid nursing facility payment systems and regulations, evolving 
industry practices, current enforcement priorities (including the 
Government's heightened focus on quality of care), and lessons learned 
in the area of nursing facility compliance. The supplemental CPG 
provides voluntary guidelines to assist nursing facilities in 
identifying significant risk areas and in evaluating and, as necessary, 
refining ongoing compliance efforts.

FOR FURTHER INFORMATION CONTACT: Amanda Walker, Associate Counsel, 
Office of Counsel to the Inspector General, (202) 619-0335; or 
Catherine Hess, Senior Counsel, Office of Counsel to the Inspector 
General, (202) 619-1306.

Background

    Beginning in 1998, OIG embarked on a major initiative to engage the 
private health care community in preventing the submission of erroneous 
claims and in combating fraud and abuse in the Federal health care 
programs through voluntary compliance efforts. As part of that 
initiative, OIG has developed a series of CPGs directed at the 
following segments of the health care industry: Hospitals; clinical 
laboratories; home health agencies; third-party billing companies; the 
durable medical equipment, prosthetics, orthotics, and supply industry; 
hospices; Medicare Advantage (formerly known as

[[Page 56833]]

Medicare+Choice) organizations; nursing facilities; ambulance 
suppliers; physicians; and pharmaceutical manufacturers.\1\ It is our 
intent that CPGs encourage the development and use of internal controls 
to monitor adherence to applicable statutes, regulations, and program 
requirements. The suggestions made in the CPGs are not mandatory, and 
nursing facilities should not view the CPGs as exhaustive discussions 
of beneficial compliance practices or relevant risk areas.
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    \1\ Copies of the CPGs are available on our Web site at https://
www.oig.hhs.gov/fraud/complianceguidance.html.
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    OIG originally published a CPG for the nursing facility industry on 
March 16, 2000.\2\ Since that time, there have been significant changes 
in the way nursing facilities deliver, and receive reimbursement for, 
health care services, as well as significant changes in the Federal 
enforcement environment and increased concerns about quality of care in 
nursing facilities, which continues to be a high priority of OIG. In 
response to these developments, and in an effort to receive initial 
input on this guidance from interested parties, OIG published a notice 
in the Federal Register on January 24, 2008, seeking stakeholder 
comments.\3\ After consideration of the public comments and the issues 
raised, OIG published a draft supplemental CPG for Nursing Facilities 
in the Federal Register on April 16, 2008, to ensure that that all 
parties had a reasonable and meaningful opportunity to provide input 
into the final product.\4\
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    \2\ See 65 FR 14289 (March 16, 2000), ``Publication of the OIG 
Compliance Program Guidance for Nursing Facilities'' (2000 Nursing 
Facility CPG), available on our Web site at https://oig.hhs.gov/
authorities/docs/cpgnf.pdf.
    \3\ See 73 FR 4248 (January 24, 2008), ``Solicitation of 
Information and Recommendations for Revising the Compliance Program 
Guidance for Nursing Facilities,'' available on our Web site at 
https://oig.hhs.gov/authorities/docs/08/CPG_Nursing_Facility_
Solicitation.pdf.
    \4\ See 73 FR 20680 (April 16, 2008), ``Draft OIG Supplemental 
Compliance Program Guidance for Nursing Facilities,'' available on 
our Web site at https://oig.hhs.gov/fraud/docs/complianceguidance/
NurseCPGIIFR.pdf.
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    We received seven comments on the draft document, all from trade 
associations. We also held stakeholder meetings with the commenters who 
chose to meet with us. OIG considered the written comments and input 
from the meetings during the development of the final supplemental CPG. 
Commenters uniformly supported OIG's efforts to update the 2000 Nursing 
Facility CPG. Some of the commenters suggested that OIG clarify the 
draft supplemental CPG to reflect more fully the role consultant 
pharmacists can play, in conjunction with other members of residents' 
care teams, in achieving appropriate medication management in nursing 
facilities. Other commenters suggested modifications to other aspects 
of the draft supplemental CPG, including physician roles and 
contractual issues. The final supplemental CPG incorporates 
clarifications responsive to these comments. Several commenters 
suggested legislative or policy changes outside the scope of the 
supplemental CPG, and those comments are not addressed by the final 
supplemental CPG.
    In the draft supplemental CPG, we specifically solicited 
suggestions regarding specific measures of compliance program 
effectiveness tailored to nursing facilities. We did not receive 
suggestions proposing such measures, and therefore did not include an 
effectiveness measures section in the final supplemental CPG.

OIG Supplemental Compliance Program Guidance for Nursing Facilities

    This document is organized in the following manner:

I. Introduction
    A. Benefits of a Compliance Program
    B. Application of Compliance Program Guidance
II. Reimbursement Overview
    A. Medicare
    B. Medicaid
III. Fraud and Abuse Risk Areas
    A. Quality of Care
    1. Sufficient Staffing
    2. Comprehensive Resident Care Plans
    3. Medication Management
    4. Appropriate Use of Psychotropic Medications
    5. Resident Safety
    (a) Promoting Resident Safety
    (b) Resident Interactions
    (c) Staff Screening
    B. Submission of Accurate Claims
    1. Proper Reporting of Resident Case-Mix by SNFs
    2. Therapy Services
    3. Screening for Excluded Individuals and Entities
    4. Restorative and Personal Care Services
    C. The Federal Anti-Kickback Statute
    1. Free Goods and Services
    2. Service Contracts
    (a) Non-Physician Services
    (b) Physician Services
    3. Discounts
    (a) Price Reductions
    (b) Swapping
    4. Hospices
    5. Reserved Bed Payments
    D. Other Risk Areas
    1. Physician Self-Referrals
    2. Anti-Supplementation
    3. Medicare Part D
    E. HIPAA Privacy and Security Rules
IV. Other Compliance Considerations
    A. An Ethical Culture
    B. Regular Review of Compliance Program Effectiveness
V. Self-Reporting
VI. Conclusion

I. Introduction

    Continuing its efforts to promote voluntary compliance programs for 
the health care industry, the Office of Inspector General (OIG) of the 
Department of Health and Human Services (Department) publishes this 
Supplemental Compliance Program Guidance (CPG) for Nursing 
Facilities.\5\ This document supplements, rather than replaces, OIG's 
2000 Nursing Facility CPG, which addressed the fundamentals of 
establishing an effective compliance program for this industry.\6\
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    \5\ For purposes of convenience in this guidance, the term 
``nursing facility'' or ``facility'' includes a skilled nursing 
facility (SNF) and a nursing facility (NF) that meet the 
requirements of sections 1819 and 1919 of the Social Security Act 
(Act) (42 U.S.C. 1395i-3, 1396r), respectively, as well as entities 
that own or operate such facilities. Where appropriate, we 
distinguish SNFs from NFs. While long-term care providers other than 
SNFs or NFs, such as assisted living facilities, should find this 
CPG useful, we recognize that they may be subject to different laws, 
rules, and regulations and, accordingly, may have different or 
additional risk areas and may need to adopt different compliance 
strategies. We encourage all long-term care providers to establish 
and maintain effective compliance programs.
    \6\ See 2000 Nursing Facility CPG, supra note 2.
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    Neither this supplemental CPG, nor the original 2000 Nursing 
Facility CPG, is a model compliance program. Rather, the two documents 
collectively offer a set of guidelines that nursing facilities should 
consider when developing and implementing a new compliance program or 
evaluating an existing one. We are mindful that many nursing facilities 
have already devoted substantial time and resources to compliance 
efforts. For those nursing facilities with existing compliance 
programs, this document may serve as a roadmap for updating or refining 
their compliance plans. For facilities with emerging compliance 
programs, this supplemental CPG, read in conjunction with the 2000 
Nursing Facility CPG, should facilitate discussions among facility 
leadership regarding the inclusion of specific compliance components 
and risk areas.
    In drafting this supplemental CPG, we considered, among other 
things, public comments; relevant OIG and Centers for Medicare & 
Medicaid Services (CMS) statutory and regulatory authorities (including 
CMS's regulations governing long-term care facilities at 42 CFR part 
483; CMS transmittals, program memoranda, and other guidance; and the 
Federal fraud and abuse statutes, together with the anti-kickback safe

[[Page 56834]]

harbor regulations and preambles); other OIG guidance (such as OIG 
advisory opinions, special fraud alerts, bulletins, and other public 
documents); experience gained from investigations conducted by OIG's 
Office of Investigations, the Department of Justice (DOJ), and the 
State Medicaid Fraud Control Units; and relevant reports issued by 
OIG's Office of Audit Services and Office of Evaluation and 
Inspections. We also consulted with CMS, DOJ, and nursing facility 
resident advocates.
    This supplemental CPG responds to developments in the nursing 
facility industry, including significant changes in the way nursing 
facilities deliver, and receive reimbursement for, health care 
services, evolving business practices, and changes in the Federal 
enforcement environment. Moreover, this supplemental CPG reflects OIG's 
continued focus on quality of care in nursing facilities. Together with 
our law enforcement partners, we have used, with increasing frequency, 
Federal civil fraud remedies to address cases involving poor quality of 
care, including troubling failure of care on a systemic level in some 
organizations. To promote compliance and prevent fraud and abuse, OIG 
is supplementing the 2000 Nursing Facility CPG with specific risk areas 
related to quality of care, claims submissions, the Federal anti-
kickback statute, and other emerging areas.

A. Benefits of a Compliance Program

    Nursing facilities are vital to the health and welfare of millions 
of Americans. OIG recognizes that most facilities and the people who 
work in them strive daily to provide high quality, compassionate, cost-
effective care to residents. A successful compliance program addresses 
the public and private sectors' common goals of reducing fraud and 
abuse, enhancing health care providers' operations, improving the 
quality of health care services, and reducing their overall cost. 
Meeting these goals benefits the nursing facility industry, the 
Government, and residents alike. Compliance programs help nursing 
facilities fulfill their legal duty to provide quality care; to refrain 
from submitting false or inaccurate claims or cost information to the 
Federal health care programs; and to avoid engaging in other illegal 
practices.
    A nursing facility may gain important additional benefits by 
voluntarily implementing a compliance program, including:
     Demonstrating the nursing facility's commitment to honest 
and responsible corporate conduct;
     Increasing the likelihood of preventing unlawful and 
unethical behavior or identifying and correcting such behavior at an 
early stage;
     Encouraging employees and others to report potential 
problems, which permits appropriate internal inquiry and corrective 
action and reduces the risk of False Claims Act lawsuits, and 
administrative sanctions (e.g., penalties, assessments, and exclusion), 
as well as State actions;
     Minimizing financial loss to the Government and taxpayers, 
as well as corresponding financial loss to the nursing facility;
     Enhancing resident satisfaction and safety through the 
delivery of improved quality of care; and
     Improving the nursing facility's reputation for integrity 
and quality, increasing its market competitiveness and reputation in 
the community.
    OIG recognizes that implementation of a compliance program may not 
entirely eliminate improper or unethical conduct from nursing facility 
operations. However, an effective compliance program demonstrates a 
nursing facility's good faith effort to comply with applicable 
statutes, regulations, and other Federal health care program 
requirements, and may significantly reduce the risk of unlawful conduct 
and corresponding sanctions.

B. Application of Compliance Program Guidance

    Given the diversity of the nursing facility industry, there is no 
single ``best'' nursing facility compliance program. OIG recognizes the 
complexities of the nursing facility industry and the differences among 
facilities. Some nursing facilities are small and may have limited 
resources to devote to compliance measures; others are affiliated with 
well-established, large, multi-facility organizations with a widely 
dispersed work force and significant resources to devote to compliance.
    Accordingly, OIG does not intend this supplemental CPG to be a 
``one-size-fits-all'' guidance. OIG strongly encourages nursing 
facilities to identify and focus their compliance efforts on those 
areas of potential concern or risk that are most relevant to their 
organizations. A nursing facility should tailor its compliance measures 
to address identified risk areas and to fit the unique environment of 
the facility (including its structure, operations, resources, the needs 
of its resident population, and prior enforcement experience). In 
short, OIG recommends that each nursing facility adapt the objectives 
and principles underlying this guidance to its own particular 
circumstances.
    In section II below, for contextual purposes, we provide a brief 
overview of the reimbursement system. In section III, entitled ``Fraud 
and Abuse Risk Areas,'' we present several fraud and abuse risk areas 
that are particularly relevant to the nursing facility industry. Each 
nursing facility should carefully examine these risk areas and identify 
those that potentially affect it. Next, in section IV, ``Other 
Compliance Considerations,'' we offer recommendations for establishing 
an ethical culture and for assessing and improving an existing 
compliance program. Finally, in section V, ``Self-Reporting,'' we set 
forth the actions nursing facilities should take if they discover 
credible evidence of misconduct.

II. Reimbursement Overview

    We begin with a brief overview of Medicare and Medicaid 
reimbursement for nursing facilities as context for the subsequent risk 
areas section. This overview is intended to be a summary only. It does 
not establish or interpret any program rules or regulations. Nursing 
facilities are advised to consult the relevant program's payment, 
coverage, and participation rules, regulations, and guidance, which 
change over time. Any questions regarding payment, coverage, or 
participation in the Medicare or Medicaid programs should be directed 
to the relevant contractor, carrier, CMS office, or State Medicaid 
agency.

A. Medicare

    Medicare reimbursement to SNFs and NFs depends on several factors, 
including the character of the facility, the beneficiary's 
circumstances, and the type of items and services provided. Generally 
speaking, SNFs are Medicare-certified facilities that provide extended 
skilled nursing or rehabilitative care under Medicare Part A. They are 
typically reimbursed under Part A for the costs of most items and 
services, including room, board, and ancillary items and services. In 
some circumstances (discussed further below), SNFs may receive payment 
under Medicare Part B. Facilities that are not SNFs are not reimbursed 
under Part A. They may be reimbursed for some items and services under 
Part B.
    Medicare pays SNFs under a prospective payment system (PPS) for 
beneficiaries covered by the Part A extended care benefit.\7\ Covered

[[Page 56835]]

beneficiaries are those who require skilled nursing or rehabilitation 
services and receive the services from a Medicare-certified SNF after a 
qualifying hospital stay of at least 3 days.\8\ The PPS rate is a 
fixed, per diem rate.\9\ The maximum benefit is 100 days per ``spell of 
illness.'' \10\
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    \7\ Section 1888(e) of the Act (42 U.S.C. 1395yy(e)) (noting the 
PPS rate applied to services provided on or after July 1, 1998). See 
also CMS, ``Consolidated Billing,'' available on CMS's Web site at 
https://www.cms.hhs.gov/SNFPPS/05_ConsolidatedBilling.asp.
    \8\ Sections 1812(a)(2) and 1861(i) of the Act (42 U.S.C. 
1395d(a)(2), 1395x(i)).
    \9\ Section 1888(e) of the Act (42 U.S.C. 1395yy(e)).
    \10\ Section 1812(a)(2)(A) of the Act (42 U.S.C. 
1395d(a)(2)(A)).
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    CMS adjusts the PPS per diem rate per resident to ensure that the 
level of payment made for a particular resident reflects the resource 
intensity that would typically be associated with that resident's 
clinical condition.\11\ This methodology, referred to as the Resource 
Utilization Group (RUG) classification system, currently in version 
RUG-III, uses beneficiary assessment data extrapolated from the Minimum 
Data Set (MDS) to assign beneficiaries to one of the RUG-III 
groups.\12\ The MDS is composed of data variables for each resident, 
including diagnoses, treatments, and an evaluation of the resident's 
functional status, which are collected via a Resident Assessment 
Instrument (RAI).\13\ Such assessments are conducted at established 
intervals throughout a resident's stay. The resident's RUG assignment 
and payment rate are then adjusted accordingly for each interval.\14\
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    \11\ Section 1888(e)(4)(G)(i) of the Act (42 U.S.C. 
1395yy(e)(4)(G)(i)).
    \12\ Id.
    \13\ Sections 1819(b)(3) and 1919(b)(3) of the Act (42 U.S.C. 
1395i-3(b)(3), 1396r(b)(3)), and their implementing regulation, 42 
CFR 483.20, require nursing facilities participating in the Medicare 
or Medicaid programs to use a standardized RAI to assess each 
nursing facility resident's strengths and needs.
    \14\ See id.
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    The PPS payments cover virtually all of the SNF's costs for 
furnishing services to Medicare beneficiaries covered under Part A. 
Under the ``consolidated billing'' rules, SNFs bill Medicare for most 
of the services provided to Medicare beneficiaries in SNF stays covered 
under Part A, including items and services that outside practitioners 
and suppliers provide under arrangement with the SNF.\15\ The SNF is 
responsible for paying the outside practitioners and suppliers for 
these services.\16\ Services covered by this consolidated billing 
requirement include, by way of example, physical therapy, occupational 
therapy, and speech therapy services; certain non-self-administered 
drugs and supplies furnished ``incident to'' a physician's services 
(e.g., ointments, bandages, and oxygen); braces and orthotics; and the 
technical component of most diagnostic tests.\17\ These items and 
services must be billed to Medicare by the SNF.\18\
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    \15\ Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (42 
U.S.C. 1395u, 1395aa); Section 1888(e) of the Act (42 U.S.C. 
1395yy(e)) (noting the PPS rate applied to services provided on or 
after July 1, 1998). See also Consolidated Billing, supra note 7.
    \16\ See id.
    \17\ Section 1888(e) of the Act (42 U.S.C. 1395yy); Consolidated 
Billing, supra note 7.
    \18\ Id.
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    The consolidated billing requirement does not apply to a small 
number of excluded services, such as physician professional fees and 
certain ambulance services.\19\ These excluded services are separately 
billable to Part B by the individual or entity furnishing the service. 
For example, professional services furnished personally by a physician 
to a Part A SNF resident are excluded from consolidated billing and are 
billed by the physician to the Part B carrier.\20\
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    \19\ Id.
    \20\ Id.
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    Some Medicare beneficiaries reside in a Medicare-certified SNF, but 
are not eligible for Part A extended care benefits (e.g., a beneficiary 
who did not have a qualifying hospital stay of at least 3 days or a 
beneficiary who has exhausted his or her Part A benefit). These 
beneficiaries--sometimes described as being in ``non-covered Part A 
stays''--may still be eligible for Part B coverage of certain 
individual services. Consolidated billing would not apply to such 
individual services, with the exception of therapy services.\21\ 
Physical therapy, occupational therapy, and speech language pathology 
services furnished to SNF residents are always subject to consolidated 
billing.\22\ Claims for therapy services furnished during a non-covered 
Part A stay must be submitted to Medicare by the SNF itself.\23\ Thus, 
according to CMS guidance, the SNF is reimbursed under the Medicare fee 
schedule for the therapy services, and is responsible for reimbursing 
the therapy provider.\24\
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    \21\ Section 1888(e)(2)(A) of the Act (42 U.S.C. 
1395yy(e)(2)(A)); CMS, ``Skilled Nursing Facilities (SNF) 
Consolidated Billing (CB) as It Relates to Therapy Services,'' MLN 
Matters Number: SE0518 (MLN Matters SE0518), available on CMS's Web 
site at https://www.cms.hhs.gov/MLNMattersArticles/downloads/
SE0518.pdf.
    \22\ Id.
    \23\ MLN Matters SE0518, supra note 21.
    \24\ Id.
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    When a beneficiary resides in a nursing facility (or part thereof) 
that is not certified as an SNF by Medicare, the beneficiary is not 
considered an SNF resident for Medicare billing purposes.\25\ 
Accordingly, ancillary services, including therapy services, are not 
subject to consolidated billing.\26\ Either the supplier of the 
ancillary service or the facility may bill the Medicare carrier for the 
Part B items and services directly.\27\ In these circumstances, it is 
the joint responsibility of the facility and the supplier to ensure 
that only one of them bills Medicare.
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    \25\ Id.
    \26\ Id.
    \27\ Id.
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    Part B coverage for durable medical equipment (DME) presents 
special circumstances because the benefit extends only to items 
furnished for use in a patient's home.\28\ DME furnished for use in an 
SNF or in certain other facilities providing skilled care is not 
covered by Part B. Instead, such DME is covered by the Part A PPS 
payment or applicable inpatient payment.\29\ In some cases, NFs that 
are not SNFs can be considered a ``home'' for purposes of DME coverage 
under Part B.\30\
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    \28\ Section 1861(n) of the Act (42 U.S.C. 1395x(n)).
    \29\ Section 1861(h)(5) of the Act (42 U.S.C. 1395x(h)(5)).
    \30\ Section 1861(n) of the Act (42 U.S.C. 1395x(n)).
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B. Medicaid

    Medicaid provides another means for nursing facility residents to 
pay for skilled nursing care, as well as room and board in a nursing 
facility certified by the Government to provide services to Medicaid 
beneficiaries. Medicaid is a State and Federal program that covers 
certain groups of low-income and medically needy people. Medicaid also 
helps residents dually eligible for Medicare and Medicaid pay their 
Medicare premiums and cost-sharing amounts. Because Medicaid 
eligibility criteria, coverage limitations, and reimbursement rates are 
established at the State level, there is significant variation across 
the nation. Many States, however, pay nursing facilities a flat daily 
rate that covers room, board, and routine care for Medicaid 
beneficiaries.

III. Fraud and Abuse Risk Areas

    This section should assist nursing facilities in their efforts to 
identify operational areas that present potential liability risks under 
several key Federal fraud and abuse statutes and regulations. This 
section focuses on areas that are currently of concern to the 
enforcement community. It is not intended to address all potential risk 
areas for nursing facilities. Identifying a particular practice or 
activity in this section is not intended to imply that the practice or 
activity is necessarily illegal

[[Page 56836]]

in all circumstances or that it may not have a valid or lawful purpose. 
This section addresses the following areas of significant concern for 
nursing facilities: Quality of care, submission of accurate claims, 
Federal anti-kickback statute, other risk areas, and Health Insurance 
Portability and Accountability Act of 1996 (HIPAA) privacy and security 
rules.
    This guidance does not create any new law or legal obligations, and 
the discussions in this guidance are not intended to present detailed 
or comprehensive summaries of lawful or unlawful activity. This 
guidance is not intended as a substitute for consultation with CMS, a 
facility's fiscal intermediary or Program Safeguard Contractor, a State 
Medicaid agency, or other relevant State agencies with respect to the 
application and interpretation of payment, coverage, licensure, or 
other provisions that are subject to change. Rather, this guidance 
should be used as a starting point for a nursing facility's legal 
review of its particular practices and for development or refinement of 
policies and procedures to reduce or eliminate potential risk.

A. Quality of Care

    By 2030, the number of older Americans is estimated to rise to 71 
million,\31\ making the aging of the U.S. population ``one of the major 
public health challenges we face in the 21st century.'' \32\ In 
addressing this challenge, a national focus on the quality of health 
care is emerging.
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    \31\ Centers for Disease Control and Prevention (CDC), ``The 
State of Aging and Health in America 2007,'' available on CDC's Web 
site at https://www.cdc.gov/aging/pdf/saha_2007.pdf.
    \32\ Id. (quoting Julie Louise Gerberding, M.D., MPH, Director, 
CDC, U.S. Department of Health and Human Services).
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    In cases that involve failure of care on a systemic and widespread 
basis, the nursing facility may be liable for submitting false claims 
for reimbursement to the Government under the Federal False Claims Act, 
the Civil Monetary Penalties Law (CMPL), or other authorities that 
address false and fraudulent claims or statements made to the 
Government.\33\ Thus, compliance with applicable quality of care 
standards and regulations is essential for the lawful behavior and 
success of nursing facilities.
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    \33\ ``Listening Session: Abuse of Our Elders: How We Can Stop 
It: Hearing Before the Senate Special Committee on Aging,'' 110th 
Congress (2007) (testimony of Gregory Demske, Assistant Inspector 
General for Legal Affairs, Office of Inspector General, U.S. 
Department of Health and Human Services), available at https://
aging.senate.gov/events/hr178gd.pdf; see also 18 U.S.C. 287 
(concerning false, fictitious, or fraudulent claims); 18 U.S.C. 1001 
(concerning statements or entries generally); 18 U.S.C. 1035 
(concerning false statements relating to health care matters); 18 
U.S.C. 1347 (concerning health care fraud); 18 U.S.C. 1516 
(concerning obstruction of a Federal audit); the Federal False 
Claims Act (31 U.S.C. 3729-3733); section 1128A of the Act (42 
U.S.C. 1320a-7a) (concerning civil monetary penalties); section 
1128B(c) of the Act (42 U.S.C. 1320a-7b(c)) (concerning false 
statements or representations with respect to condition or operation 
of institutions). In addition to the Federal criminal, civil, and 
administrative liability for false claims and kickback violations 
outlined in this CPG, nursing facilities also face exposure under 
State laws, including criminal, civil, and administrative sanctions.
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    Nursing facilities that fail to make quality a priority, and 
consequently fail to deliver quality health care, risk becoming the 
target of governmental investigations. Highlighted below are common 
risk areas associated with the delivery of quality health care to 
nursing facility residents that frequently arise in enforcement cases. 
These include sufficient staffing, comprehensive care plans, medication 
management, appropriate use of psychotropic medications, and resident 
safety. This list is not exhaustive. Moreover, nursing facilities 
should recognize that these issues are often inter-related. Nursing 
facilities that attempt to address one issue will often find that they 
must address other areas as well. The risk areas identified in sections 
III.B. (Submission of Accurate Claims), III.C. (Anti-Kickback), and 
III.D. (Other Risk Areas) below are also intertwined with quality of 
care risk areas and should be considered as well.
    As a starting point, nursing facilities should familiarize 
themselves with 42 CFR part 483 (part 483), which sets forth the 
principal requirements for nursing facility participation in the 
Medicare and Medicaid programs. It is essential that key members of the 
organization understand these requirements and support their facility's 
commitment to compliance with these regulations. Targeted training for 
care providers, managers, administrative staff, officers, and directors 
on the requirements of part 483 will help nursing facilities ensure 
that they are fulfilling their obligation to provide quality health 
care.\34\
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    \34\ The requirement to deliver quality health care is a 
continuing obligation for nursing facilities. As regulations change, 
so too should the training. Therefore, this recommendation envisions 
more than an initial employee ``orientation'' training on the 
nursing facility's obligations to provide quality health care. CMS 
has multiple resources available to assist nursing facilities in 
developing training programs. See CMS, ``Sharing Innovations in 
Quality, Resources for Long Term Care,'' available on CMS's Web site 
at https://siq.air.org/default.aspx; CMS, ``Skilled Nursing 
Facilities/Long-Term Care Open Door Forum,'' available on CMS's Web 
site at https://www.cms.hhs.gov/OpenDoorForums/25_ODF_SNFLTC.asp; 
CMS, ``State Operations Manual,'' Pub. No. 100-07, available on 
CMS's Web site at https://www.cms.hhs.gov/Manuals/IOM/list.asp; see 
also Medicare Quality Improvement Community, ``MedQIP--Medicare 
Quality Improvement Community,'' available on CMS's Web site at 
https://www.medqic.org. Nursing facilities may also find it useful to 
review the CMS Quality Improvement Organizations Statement of Work, 
available at https://www.cms.hhs.gov/QualityImprovementOrgs/04_
9thsow.asp. In addition, facilities may wish to stay abreast of 
emerging best practices, which are often promoted by industry 
associations.
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1. Sufficient Staffing
    OIG is aware of facilities that have systematically failed to 
provide staff in sufficient numbers and with appropriate clinical 
expertise to serve their residents. Although most facilities strive to 
provide sufficient staff, nursing facilities must be mindful that 
Federal law requires sufficient staffing necessary to attain or 
maintain the highest practicable physical, mental, and psychosocial 
well-being of residents.\35\ Thus, staffing numbers and staff 
competency are critical.
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    \35\ Sections 1819(b)(4)(A) and 1919(b)(4)(A) of the Act (42 
U.S.C. 1395i-3(b)(4)(A), 1396r(b)(4)(A)); 42 CFR 483.30.
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    The relationship between staff ratios, staff competency, and 
quality of care is complex.\36\ No single staffing model will suit 
every facility. A staffing model that works in a nursing facility today 
may not meet the facility's needs in the future. Nursing facilities, 
therefore, are strongly encouraged to assess their staffing patterns 
regularly to evaluate whether they have sufficient staff members who 
are competent to care for the unique acuity levels of their residents.
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    \36\ For example, State nursing facility staffing standards, 
which exist for the majority of States, vary in types of regulated 
staff, the ratios of staff, and the facilities to which the 
regulations apply. See Jane Tilly, et al., ``State Experiences with 
Minimum Nursing Staff Ratios for Nursing Facilities: Findings from 
Case Studies of Eight States'' (November 2003) (joint paper by The 
Urban Institute and the Department), available at https://
aspe.hhs.gov/daltcp/reports/8statees.htm.
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    Important considerations for assessing staffing models include, 
among others, resident case-mix, staff skill levels, staff-to-resident 
ratios, staff turnover,\37\ staffing schedules, disciplinary records, 
payroll records, timesheets, and adverse

[[Page 56837]]

event reports (e.g., falls or adverse drug events), as well as 
interviews with staff, residents, and residents' family or legal 
guardians. Facilities should ensure that the methods used to assess 
staffing accurately measure actual ``on-the-floor'' staff rather than 
theoretical ``on-paper'' staff. For example, payroll records that 
reflect actual hours and days worked may be more useful than 
prospectively generated staff schedules.
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    \37\ Nursing facilities operate in an environment of high staff 
turnover where it is difficult to attract, train, and retain an 
adequate workforce. Turnover among nurse aides, who provide most of 
the hands-on care in nursing facilities, means that residents are 
constantly receiving care from new staff who often lack experience 
and knowledge of individual residents. Furthermore, research 
correlates staff shortages and insufficient training with 
substandard care. See OIG, OEI Report OEI-01-04-00070, ``Emerging 
Practices in Nursing Homes,'' March 2005, available on our Web site 
at https://oig.hhs.gov/oei/reports/oei-01-04-00070.pdf (reviewing 
emerging practices that nursing facility administrators believe 
reduce their staff turnover).
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2. Comprehensive Resident Care Plans
    Development of comprehensive resident care plans is essential to 
reducing risk. Prior OIG reports revealed that a significant percentage 
of resident care plans did not reflect residents' actual care 
needs.\38\ Through its enforcement and compliance monitoring 
activities, OIG continues to see insufficient care plans and their 
impact on residents as a risk area for nursing facilities.
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    \38\ See, e.g., OIG, OEI Report OEI-02-99-00040, ``Nursing Home 
Resident Assessment Quality of Care,'' January 2001, available on 
our Web site at https://oig.hhs.gov/oei/reports/oei-02-99-00040.pdf.
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    Medicare and Medicaid regulations require nursing facilities to 
develop a comprehensive care plan for each resident that addresses the 
medical, nursing, and mental and psychosocial needs for each resident 
and includes reasonable objectives and timetables.\39\ Nursing 
facilities should ensure that care planning includes all disciplines 
involved in the resident's care.\40\ Perfunctory meetings or plans 
developed without the full clinical team may create less than 
comprehensive resident-centered care plans. Inadequately prepared plans 
make it less likely that residents will receive coordinated, 
multidisciplinary care. Insufficient plans jeopardize residents' well-
being and risk the provision of inadequate care, medically unnecessary 
care services, or medically inappropriate services.
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    \39\ 42 CFR 483.20(k). An effective compliance program would 
also monitor discharge and transfer of residents for compliance with 
Federal and State regulations. See, e.g., 42 CFR 483.12 (detailing 
transfer and discharge obligations). Because many of the legitimate 
reasons for transfer or discharge relate to the medical or 
psychosocial needs of the resident, the care plan team may be in a 
position to provide recommendations on discharge or transfer of a 
resident.
    \40\ 42 CFR 483.20(k)(2)(ii) (requiring an interdisciplinary 
team, including the physician, a registered nurse with 
responsibility for the resident, and other disciplines involved in 
the resident's care).
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    To reduce these risks, nursing facilities should design measures to 
ensure an interdisciplinary and comprehensive approach to developing 
care plans. Basic steps, such as appropriately scheduling meetings to 
accommodate the full interdisciplinary team, completing all clinical 
assessments before the meeting is convened,\41\ opening lines of 
communication between direct care providers and interdisciplinary team 
members, involving the resident and the residents' family members or 
legal guardian,\42\ and documenting the length and content of each 
meeting, may assist facilities with meeting this requirement.
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    \41\ Nursing facilities with residents with mental illness or 
mental retardation should ensure that they have the Preadmission 
Screening and Resident Review (PASRR) screens for their residents. 
See 42 CFR 483.20(m). In addition, for residents who do not require 
specialized services, facilities should ensure that they are 
providing the ``services of lesser intensity'' as set forth in CMS 
regulations. See 42 CFR 483.120(c). Care plan meetings can provide 
nursing facilities with an ideal opportunity to ensure that these 
obligations are met.
    \42\ Where possible, residents and their family members or legal 
guardians should be included in the development of care and 
treatment plans. Unless the resident has been declared incompetent 
or otherwise found to be incapacitated under State law, the resident 
has a right to participate in his or her care planning and 
treatment. 42 CFR 483.10(d)(3).
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    Another risk area related to care plans includes the involvement of 
attending physicians in resident care. Although specific regulations 
govern the role and responsibilities of attending physicians,\43\ the 
nursing facility also has a critical role--ensuring that a physician 
supervises each resident's care.\44\ Facilities must also include the 
attending physician in the development of the resident's care plan.\45\ 
Thus, an effective compliance program would ensure physician 
involvement in these processes.\46\ For example, many facilities 
schedule meetings to discuss a particular resident's care plan. 
Facilities may wish to develop policies and procedures to facilitate 
participation by attending physicians, who often are not physically 
present at the nursing facility on a daily basis. Facilities may 
improve communication with physicians by providing advance notice of 
care planning meetings. Nursing facilities should evaluate, in 
conjunction with the attending physician, how best to ensure physician 
participation--whether via consultation and post-meeting debriefing, or 
telephone or personal attendance at meetings--with a focus on serving 
the best interests of the resident and complying with applicable 
regulations.
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    \43\ See, e.g., 42 CFR 483.40(b), (c), (e).
    \44\ 42 CFR 483.40(a).
    \45\ 42 CFR 483.20(k)(2)(ii).
    \46\ See 42 CFR 483.40(a) (obligating a facility to ensure a 
physician supervises resident care); 42 CFR 483.40(b) (requiring 
physicians to review the resident's ``total program of care'').
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3. Medication Management
    The Act requires nursing facilities to provide ``pharmaceutical 
services (including procedures that assure accurate acquiring, 
receiving, dispensing, and administering of all drugs and biologicals) 
to meet the needs of each resident.'' \47\ Nursing facilities should be 
mindful of potential quality of care problems when adopting and 
implementing policies and procedures to provide these services. A 
failure to manage pharmaceutical services properly can seriously 
jeopardize resident safety and even result in resident deaths.
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    \47\ Sections 1819(b)(4)(A)(iii) and 1919(b)(4)(A)(iii) of the 
Act (42 U.S.C. 1395i-3(b)(4)(A)(iii) and 1396r(b)(4)(A)(iii)). In 
addition, under 42 CFR 483.60, SNFs and NFs must ``provide routine 
and emergency drugs and biologicals to [their] residents, or obtain 
them under an agreement described in [section] 483.75(h) * * *'' 
Nursing facilities must meet this obligation even if a pharmacy 
charges a Medicare Part D copayment to a dual eligible beneficiary 
who cannot afford to pay the copayment. See CMS, ``Part D Questions 
re: Co-pays for Institutionalized Individuals April 19, 2006,'' 
Question 2. and Response, in ``Medicare Part D Claims Filing Window 
Extended to 180 Days,'' Medicare Rx Update: May 9, 2006, available 
on CMS's Web site at https://www.cms.hhs.gov/Pharmacy/downloads/
update050906.pdf.
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    Nursing facilities can promote compliance by having in place proper 
medication management processes that advance patient safety, minimize 
adverse drug interactions, and ensure that irregularities in a 
resident's drug regimen are promptly discovered and addressed. Nursing 
facilities should implement policies and procedures for maintaining 
accurate drug records and tracking medications. Nursing facilities 
should provide appropriate training on a regular basis to familiarize 
all staff involved in the pharmaceutical care of residents with proper 
medication management. To this end, the facility's consultant 
pharmacist is an important resource. Consultant pharmacists, who 
specialize in the medication needs specific to older adults or 
institutionalized individuals, can help facilities ``identify, 
evaluate, and address medication issues that may affect resident care, 
medical care, and quality of life.'' \48\
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    \48\ CMS, ``State Operations Manual,'' Pub. No. 100-07, Appendix 
PP, section 483.60, available on CMS's Web site at https://
cms.hhs.gov/manuals/Downloads/som107ap_pp_guidelines_ltcf.pdf.
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    CMS regulations require that nursing facilities employ or obtain 
the services of a licensed pharmacist to ``provide[] consultation on 
all aspects of the provision of pharmacy services in the facility * * 
*.'' \49\ The pharmacist must review the drug regimen of each resident 
at least once a month and

[[Page 56838]]

report any irregularities discovered in a resident's drug regimen to 
the attending physician and the director of nursing.\50\ These 
pharmacists are also required to: (1) ``[e]stablish[] a system of 
records of receipt and disposition of all controlled drugs * * * ;'' 
and (2) ``[d]etermine[] that drug records are in order and that an 
account of all controlled drugs is maintained and periodically 
reconciled.'' \51\ As indicated in CMS guidance, ``[t]he facility may 
provide for this service through any of several methods (in accordance 
with [S]tate requirements) such as direct employment or contractual 
agreement with a pharmacist.'' \52\ Some of the consultant pharmacists 
obtained by nursing facilities are employed by long-term care 
pharmacies that furnish drugs and supplies to nursing facilities.\53\ 
Whatever the arrangement or method used, the nursing facility and 
consultant pharmacist should work together to achieve proper medication 
management in the facility.
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    \49\ 42 CFR 483.60(b)(1).
    \50\ 42 CFR 483.60(c).
    \51\ 42 CFR 483.60(b)(2), (3).
    \52\ CMS, ``State Operations Manual,'' Pub. No. 100-07, Appendix 
PP, section 483.60, available on CMS's Web site at https://
cms.hhs.gov/manuals/Downloads/som107ap_pp_guidelines_ltcf.pdf. In 
cases where the nursing facilities employ or contract directly with 
pharmacists to provide consultant pharmacist services, the nursing 
facility should ensure that the pharmacist's compensation is not 
structured in any manner that reflects the volume or value of drugs 
prescribed for, or administered to, patients.
    \53\ Nursing facilities that receive consultant pharmacist 
services under contract with a long-term care pharmacy should be 
mindful that the provision or receipt of free services or services 
at non-fair-market value rates between actual or potential referral 
sources present a heightened risk of fraud and abuse. For further 
discussion of the anti-kickback statute and service arrangements, 
see sections III.C.1. and III.C.2.
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4. Appropriate Use of Psychotropic Medications
    Based on our enforcement and compliance monitoring activities, OIG 
has identified inappropriate use of psychotropic medications for 
residents as a risk area in at least two ways--the prohibition against 
inappropriate use of chemical restraints and the requirement to avoid 
unnecessary drug usage.
    Facilities have affirmative obligations to ensure appropriate use 
of psychotropic medications. Specifically, nursing facilities must 
ensure that psychopharmacological practices comport with Federal 
regulations and generally accepted professional standards.\54\ The 
facility is responsible for the quality of drug therapy provided in the 
facility. Federal law prohibits facilities from using any medication as 
a means of chemical restraint for ``purposes of discipline or 
convenience, and not required to treat the resident's medical 
symptoms.'' \55\ In addition, resident drug regimens must be free from 
unnecessary drugs.\56\ For residents who specifically require 
antipsychotic medications, CMS regulations also require, unless 
contraindicated, that residents receive gradual dose reductions and 
behavioral interventions aimed at reducing medication use.\57\
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    \54\ See, e.g., 42 CFR 483.20(k)(3) (requiring services that are 
``provided or arranged by the facility'' to comport with 
professional standards of quality); 42 CFR 483.25 (requiring 
facilities to provide necessary care and services, including the 
resident's right to be free of unnecessary drugs); 42 CFR 483.75(b) 
(requiring facilities to provide services in compliance ``with all 
applicable Federal, State, and local laws, regulations, and codes, 
and with accepted professional standards and principles * * *'').
    \55\ 42 CFR 483.13(a).
    \56\ 42 CFR 483.25(l)(1). An unnecessary drug includes any 
medication, including psychotropic medications, that is excessive in 
dose, used excessively in duration, used without adequate 
monitoring, used without adequate indications for its use, used in 
the presence of adverse consequences, or any combination thereof. 
Id.
    \57\ 42 CFR 483.25(l)(2).
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    In light of these requirements, nursing facilities should ensure 
that there is an adequate indication for the use of the medication and 
should carefully monitor, document, and review the use of each 
resident's psychotropic drugs. Working together, the attending 
physicians, medical director, consultant pharmacist, and other resident 
care providers play a critical role in achieving these objectives. 
Compliance measures could include educating care providers regarding 
appropriate monitoring and documentation practices and auditing drug 
regimen reviews \58\ and resident care plans to determine if they 
incorporate an assessment of the resident's ``medical, nursing, and 
mental and psychosocial needs,'' \59\ including the need for 
psychotropic medications for a specific medical condition.\60\ The 
attending physicians, the medical director, the consultant pharmacist, 
and other care providers should collaborate to analyze the outcomes of 
care using the results of the drug regimen reviews, progress notes, and 
monitoring of the resident's behaviors.
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    \58\ 42 CFR 483.60(c).
    \59\ 42 CFR 483.20(k).
    \60\ 42 CFR 483.25(l)(2).
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5. Resident Safety
    Nursing facility residents have a legal right to be free from abuse 
and neglect.\61\ Facilities should take steps to ensure that they are 
protecting their residents from these risks.\62\ Of particular concern 
is harm caused by staff and fellow residents.\63\
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    \61\ Sections 1819 and 1919 of the Act (42 U.S.C. 1351i-3 and 
1396r); 42 CFR 483.10; see also 42 CFR 483.15 and 483.25.
    \62\ See id.
    \63\ For an overview of research relating to resident abuse and 
neglect, see Catherine Hawes, Ph.D., ``Elder Abuse in Residential 
Long-Term Care Settings: What is Known and What Information is 
Needed?,'' in Elder Mistreatment: Abuse, Neglect, and Exploitation 
in an Aging America (National Research Council, 2003); U.S. 
Government Accountability Office (GAO), GAO Report GAO-02-312, 
``Nursing Homes: More Can Be Done to Protect Residents from Abuse,'' 
March 2002, available on GAO's Web site at https://www.gao.gov/
new.items/d02312.pdf; Administration on Aging, Elder Abuse Web site, 
available at https://www.aoa.gov/eldfam/elder_rights/elder_abuse/
elder_abuse.aspx.
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(a) Promoting Resident Safety
    Federal regulations mandate that nursing facilities develop and 
implement policies and procedures to prohibit mistreatment, neglect, 
and abuse of residents.\64\ Facilities must also thoroughly investigate 
and report incidents to law enforcement, as required by State laws.\65\ 
Although experts continue to debate the most effective systems for 
enhancing the reporting, investigation, and prosecution of nursing 
facility resident abuse, an effective compliance program recognizes the 
value of a demonstrated internal commitment to eliminating resident 
abuse.\66\ An effective compliance program will include policies, 
procedures, and practices to prevent, investigate, and respond to 
instances of potential resident abuse, neglect, or mistreatment, 
including injuries resulting from staff-on-resident abuse and neglect, 
resident-on-resident abuse, and abuse from unknown causes.
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    \64\ 42 CFR 483.13(c); see also 42 CFR 483.13(a).
    \65\ Id.
    \66\ Under State mandatory reporting statutes, persons such as 
health care professionals, human service professionals, clergy, law 
enforcement, and financial professionals may have a legal obligation 
to make a formal report to law enforcement officials or a central 
reporting agency if they suspect that a nursing facility resident is 
being abused or neglected. To ensure compliance with these statutes, 
nursing facilities should consider training relating to compliance 
with their relevant States' laws. Nursing facilities can also assist 
by providing ready access to law enforcement contact information.
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    Confidential reporting is a key component of an effective resident 
safety program. Such a mechanism enables staff, contractors, residents, 
family members, visitors, and others to report threats, abuse, 
mistreatment, and other safety concerns confidentially to senior staff 
empowered to take immediate action. Posters, brochures, and online 
resources that encourage readers to report suspected safety problems to 
senior facility staff are commonly used. Another commonly

[[Page 56839]]

used compliance component for reporting violations is a dedicated 
hotline that allows staff, contractors, residents, family members, 
visitors, and others with concerns to report suspicions. Regardless of 
the reporting vehicle, ideally coverage for reporting and addressing 
resident safety issues would be on a constant basis (i.e., 24 hours per 
day/7 days per week). Moreover, nursing facilities should make clear to 
caregivers, facility staff, and residents that the facility is 
committed to protecting those who make reports from retaliation.
    Facilities may also want to consider a program to engage everyone 
who comes in contact with nursing facility residents--whether health 
care professionals, administrative and custodial staff, family and 
friends, visiting therapists, or community members--in the mission of 
protecting residents. Such a program could include specialized training 
for everyone who interacts on a regular basis with residents on 
recognizing warning signs of neglect or abuse and on effective methods 
to communicate with potentially fearful residents in a way likely to 
induce candid self-reporting of neglect or abuse.\67\
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    \67\ Facilities could explore partnering with the ombudsmen and 
other consumer advocates in sponsoring or participating in special 
training programs designed to prevent abuse. See ``Elder Justice: 
Protecting Seniors from Abuse and Neglect: Hearing Before the Senate 
Committee on Finance,'' 107th Congress (2002) (testimony of 
Catherine Hawes, Ph.D., titled ``Elder Abuse in Residential Long-
Term Care Facilities: What is Known About the Prevalence, Causes, 
and Prevention''), available at https://finance.senate.gov/hearings/
testimony/061802chtest.pdf.
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(b) Resident Interactions
    The nursing facility industry, resident advocacy groups, and law 
enforcement are becoming increasingly concerned about resident abuse 
committed by fellow residents. Abuse can occur as a result of the 
failure to properly screen and assess, or the failure of staff to 
monitor, residents at risk for aggressive behavior. Such failures can 
jeopardize both the resident with aggressive behaviors and the 
victimized resident.
    Heightened awareness and monitoring for abuse are crucial to 
eradicating resident-on-resident abuse. Nursing facilities can advance 
their mission to provide a safe environment for residents through 
targeted education relating to resident-on-resident abuse (particularly 
for staff with responsibilities for admission evaluations). Thorough 
resident assessments, comprehensive care plans, periodic resident 
assessments, and proper staffing assignments would also assist nursing 
facilities in their mission to provide a safe environment for 
residents.
(c) Staff Screening
    Nursing facilities cannot employ individuals ``[f]ound guilty of 
abusing, neglecting, or mistreating residents,'' or individuals with 
``a finding entered into [a] State nurse aide registry concerning 
abuse, neglect, mistreatment of residents or misappropriation of their 
property.'' \68\ Effective recruitment, screening, and training of care 
providers are essential to ensure a viable workforce. Although no pre-
employment background screening can provide nursing facilities with 
absolute assurance that a job applicant will not commit a crime in the 
future, nursing facilities must make reasonable efforts to ensure that 
they have a workforce that will maintain the safety of their residents.
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    \68\ 42 CFR 483.13(c)(1)(ii).
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    Commonly, nursing facilities screen potential employees against 
criminal record databases. OIG is aware that there is a ``great 
diversity in the way States systematically identify, report, and 
investigate suspected abuse.'' \69\ Nonetheless, a comprehensive 
examination of a prospective employee's criminal record in all States 
in which the person has worked or resided may provide a greater degree 
of protection for residents.\70\
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    \69\ OIG, Audit Report A-12-12-97-0003, ``Safeguarding Long-Term 
Care Residents,'' September 1998, available on our Web site at 
https://oig.hhs.gov/oas/reports/aoa/d9700003.pdf.
    \70\ Because there is no one central repository for criminal 
records, there is a significant limitation to searching the criminal 
record databases only for the State in which the facility is 
located. A better practice may be to search databases for all States 
in which the applicant resided or was employed.
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    Verification of education, licensing, certifications, and training 
for care providers can also assist nursing facilities in their efforts 
to ensure they provide patients with qualified and skilled caregivers. 
Many States have requirements that nursing facilities conduct these 
checks for all professional care providers, such as therapists, medical 
directors, and nurses. Federal regulations require a nursing facility 
to check its State nurse aide registry to ensure that potential hires 
for nurse aide positions have met competency evaluation requirements or 
are otherwise exempted from registration requirements.\71\ In addition, 
the facility must also check every State nurse aide registry it 
``believes will include information'' on the individual.\72\ To ensure 
compliance with this requirement, facilities should have mechanisms in 
place to identify which State registries they must examine.
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    \71\ 42 CFR 483.75(e)(5).
    \72\ 42 CFR 483.75(e)(6).
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B. Submission of Accurate Claims

    Nursing facilities must submit accurate claims to Federal health 
care programs. Examples of false or fraudulent claims include claims 
for items not provided or not provided as claimed, claims for services 
that are not medically necessary, and claims when there has been a 
failure of care. Submitting a false claim, or causing a false claim to 
be submitted, to a Federal health care program may subject the 
individual, the entity, or both to criminal prosecution, civil 
liability (including treble damages and penalties) under the False 
Claims Act, and exclusion from participation in Federal health care 
programs.
    Common and longstanding risks associated with claim preparation and 
submission include duplicate billing, insufficient documentation, and 
false or fraudulent cost reports. While nursing facilities should 
continue to be vigilant with respect to these important risk areas, we 
believe these risk areas are relatively well understood in the 
industry, and therefore they are not specifically addressed in this 
section.
    As reimbursement systems have evolved, OIG has uncovered other 
types of fraudulent transactions related to the provision of health 
care services to residents of nursing facilities reimbursed by Medicare 
and Medicaid. In this section, we will discuss some of these risk 
areas. This list is not exhaustive. It is intended to assist facilities 
in evaluating their own risk areas. In addition, section III.A. above 
outlines other regulatory requirements that, if not met, may subject 
nursing facilities to potential liability for submission of false or 
fraudulent claims.
1. Proper Reporting of Resident Case-Mix by SNFs
    We are aware of instances in which SNFs have improperly upcoded 
resident RUG assignments.\73\ Classifying a resident into the correct 
RUG, through resident assessments, requires accurate and comprehensive 
reporting about the resident's conditions and needs. Inaccurate 
reporting of data could result in the misrepresentation of the 
resident's status, the submission of false claims, and potential 
enforcement actions. Therefore, we have identified

[[Page 56840]]

the assessment, reporting, and evaluation of resi