MEDICARE SKILLED NURSING FACILITY REIMBURSEMENT AND UPCODING
Article first published online: 17 JUN 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Volume 23, Issue 7, pages 821–840, July 2014
How to Cite
Bowblis, J. R. and Brunt, C. S. (2014), MEDICARE SKILLED NURSING FACILITY REIMBURSEMENT AND UPCODING. Health Econ., 23: 821–840. doi: 10.1002/hec.2959
- Issue published online: 4 JUN 2014
- Article first published online: 17 JUN 2013
- Manuscript Accepted: 20 MAY 2013
- Manuscript Revised: 14 APR 2013
- Manuscript Received: 24 SEP 2012
- skilled nursing facilities;
- Prospective Payment System;
Post-acute care provided by skilled nursing facilities (SNFs) is reimbursed by Medicare under a prospective payment system using resource utilization groups (RUGs) that adjust payment intensity on the basis of predefined ranges of weekly therapy minutes provided and the functionality of the patient. Individual RUGs account for differences in the intensity of care provided, but there exists significant regional variation in the payments SNFs receive from Medicare due to the use of geographic adjustment factors. This paper is the first to use this geographic variation in the generosity of Medicare reimbursement to empirically test if SNFs respond to payment differences between RUG categories. The results are highly suggestive that SNFs upcode patients by providing additional therapy minutes to increase revenue, whereas we find no evidence of upcoding related to patient functionality scores. Simulating how different payment differentials affect RUG selection, we predict that reducing the financial incentive to upcode could result in significant savings to Medicare. Copyright © 2013 John Wiley & Sons, Ltd.