Facilities Accused of Nursing Home Neglect Are Often Overbilling Taxpayers, Study Warns

Research suggests nursing homes that overbill Medicare are often pocketing those profits, and not using them to improve care or services to residents.

A new study indicates that many of the same nursing homes that charge Medicare for conditions that patients don’t have, so as to illegally increase their bottom lines at the expense of taxpayers, are facilities where residents face an increased risk of nursing home neglect, abuse and reduced quality of care.

Medical facilities that accept Medicare bill the Centers for Medicare and Medicaid Services (CMS) for patient care, procedures, hospitalizations and other treatment. Since U.S. tax dollars fund the CMS and Medicare insurance, these expenses and reimbursements are paid through the taxes of every American.

However, a study published in the journal Social Science Research Network on October 15, reveals that not only are many nursing homes overbilling the federal government at the expense of American taxpayers, but many of these same facilities also have high rates of abuse, infections, bed sores, and other side effects linked to subpar care.

In the new study, a research team led by Dr. John M. Griffin of the University of Texas Department of Finances, examined patient diagnoses and billing codes at CMS-funded skilled nursing facilities.

The data indicates certain nursing homes, which researchers called “opportunistic systems,” not only overbilled Medicare by $4.3 billion, but patients in those facilities also faced higher rates of nursing home neglect and other adverse effects. In fact, these nursing facilities are more likely to intentionally submit incorrect diagnosis codes to bill for conditions patients don’t have.

The researchers found that patients at these facilities are 60% more likely to develop preventable conditions. The facilities have 45% higher rates of bed sores, and 50% higher rates of urinary tract infections compared to other facilities. These conditions often occur in elderly patients who are not cleaned, showered, and cared for in a timely manner.

The study also indicated patients begin to develop previously unidentified health conditions that are considered “preventable” at double the rates of other facilities.

Nursing homes that overcharge Medicare were found to have 2.5 times the reports of patient neglect and abuse than other nursing care facilities, the data indicates. They also have 37% fewer registered nurses per patient and have 60% more deficiencies reported during health inspections.

Researchers linked the “opportunistic facilities” to an additional 35,000 hospitalizations and 30,000 deaths since the new billing methods were enacted in 2019. The facilities are also responsible for 3,100 cases of preventable health conditions every year, the researchers concluded.

The study indicates that the same nursing homes that overbill Medicare are also cutting back on expenses that would help care for patients. The facilities bill the federal government an average of $32,794 per patient, compared to $15,021 in other insurance systems. However, the data suggests they do not use these funds to offer improved care for patients, instead pocketing them to increase profit margins.

Study authors said there is a need for skilled nursing facilities to compete over quality of care given to patients, and not on pricing. Patient preference for local facilities or facilities convenient to home can also hinder competition, the researchers found.

Griffin’s team recommends more attention be placed on measuring and quantifying patient health outcomes. Research can help with monitoring and transparency while penalties and criminal charges can help with enforcement.