In this 3-part blog series, we will focus on issues that were identified in the recent OIG audit of PDPM records and MDS. The first area relates to a lack of documentation to support technical requirements.

Billing and coding for medical services provided under the Centers for Medicare & Medicaid Services (CMS) should always be accurate and supported by requirements outlined in the regulations. For Skilled Nursing Facilities (SNF), billing for Medicare Part A is outlined in the Medicare Benefit Policy Manual Chapter 8. Billing for Medicare Part A changed from the old RUGs based system on October 1, 2019. Under the old system, therapy intensity was a driver in reimbursement. The new system for reimbursement, the Patient Driven Payment Model (PDPM), correlates the documented patient characteristics to payment.

Over the past six years, there has been time to learn the new PDPM coding requirements that are entered into the Minimum Data Set (MDS) assessments.  The coding in the MDS translates to a five-digit Health Insurance Prospective Payment System (HIPPS) code, which defines the payment the facility receives. The documentation in the medical record must support the coding. In addition to the requirements for documentation, CMS outlines technical requirements that must also be met. These include:

  • A three-day qualifying hospital stay
  • An order to admit to skilled care
  • A signed physician’s Initial Certification, 14-day and subsequent 30-day Recertifications
  • Documentation of daily skilled nursing and/or therapy services
  • Demonstration that the MDS is completed timely and signed by an RN

In addition to the technical requirements, there are over 150 entries in the MDS assessment that could potentially change the reimbursement. Since the Pandemic ceased, CMS has increased review of PDPM accuracy. This started in June 2023 with the SNF 5-Claim Probe and Educate (SPE) audits. These were designed to sample five pre-pay PDPM records from every SNF in the United States. If the scores on those five records were unacceptable, the SNF would proceed into a regular Targeted Probe and Educate (TPE) audit. The TPE has up to three rounds of reviews, each 20-40 records. CMS has also implemented Recovery Audit Contractor (RAC) post-payment audits for PDPM.

The Office of Inspector General (OIG) recently completed an audit of 100 sampled claims at a large SNF in New York. The OIG report found that the SNF did not comply with Medicare requirements for 99 of 100 claims. There were three overarching issues identified in the report to explain the errors. These were defined as:

  • The medical record did not support that the individual was assigned the correct reimbursement rate code (HIPPS).
  • Individuals did not require skilled nursing services.
  • Did not meet documentation requirements.

The lack of physician orders was one technical issue cited that LW Consulting, Inc. (LWCI) also frequently identifies when performing PDPM coding and billing audits. Especially if the admission is a re-admission, the new admit to skilled care order on the date of the re-admission is missing.

Many of the areas cited in the OIG report relate to coding that does not specifically support the requirements outlined in the Resident Assessment Instrument (RAI) Manual. This RAI Manual 2025 very clearly provides coding expectations and examples that should be followed for accurate coding. Although there is some “grey” area in the CMS regulations, deviation from the RAI manual is a risk area when it comes to audits.

If you have had high error rates on your SPE audit samples, you should expect to receive TPE requests. If you have not had an external audit to identify if you are documenting the technical requirements for accurate coding, LWCI can assist.

In part 2 of this blog series, we will focus on accurate coding of Active Diagnoses and Medical Necessity, areas of focus from the OIG report.

LW Consulting, Inc. (LWCI) offers a comprehensive range of services to assist your organization in maintaining compliance, identifying trends, providing education and training,  or conducting documentation and coding audits. For more information, contact LWCI to connect with one of our experts!