Process Improvement

Audit and Denial Awareness in LTPAC Organizations

Doctor looking at paperwork.

During the height of the pandemic healthcare organizations were able to focus on their patients without the distraction of having to address payer and surveyor audits, and in some cases, payer denials. However, it is expected that the Office of the Inspector General (OIG) will increase its reviews in light of the July 2022 report, Audits Of Nursing Home Life Safety And Emergency Preparedness In Eight States Identified Noncompliance With Federal Requirements And Opportunities For The Centers For Medicare & Medicaid Services To Improve Resident, Visitor, And Staff Safety. At the same time payers will be validating the accuracy of coding and billing for services rendered for any errors that could result in recoupment of payments.

With the worst of the pandemic hopefully in our rearview mirror, we need to proactively assess our billing, operational and patient safety practices for the past 18-24 months, tweak our processes where needed, and prepare for possible audits on the horizon. 

Assess Your Readiness

Managed Care Payers: Managed care organizations pride themselves on managing the costs of care for their beneficiaries. They will often seek care options that can deliver services the insured need in the least expensive but appropriate setting. It is not unusual for skilled nursing facility services to be denied for a resident when they can safely receive the same benefits at home with home health services.

When assessing the acceptance of a patient to your facility or service, be certain to obtain advance authorization from the payer. Medicare Advantage Organizations (MAOs) are included in this category and have financial incentives to effectively manage the costs of care for their beneficiaries. Recent coverage has criticized MAOs for inflating hierarchical condition category coding and limiting patient access to medically necessary services available to traditional Medicare patients. Should LTPAC organizations see denials of services for their patients from an MAO, it may be necessary to advocate on behalf of the patient and report any issues to their regional OIG office.

Medicare Focused Audits:

We should expect several reimbursement-driven audits designed to validate the accuracy of claims submitted during the peak of the pandemic. Payers know that LTPAC organizations were short staffed, and the available staff were focused on patient care. Documentation to support services and the billing for those services may have suffered as a result, which now makes them easy pickings for a payment audit.

  • Payment Model Audits: Audits and denials related to the Patient-Driven Payment Model (PDPM) and Patient-Driven Groupings Model (PDGM) have been relatively minimal. Both models had their inaugural entry just prior to the start of the COVID-19 pandemic. Now, with nearly two years of transactions, CMS has data that can be used to identify variations that may warrant further investigation. Consider evaluating your internal data and compare the reimbursement your organization received under the applicable payment model versus the reimbursements received prior to the model’s implementation.

For PDPM, retrospectively review the documentation of Speech Language Pathology and Non-Therapy Ancillary diagnoses, as these conditions can boost the case mix indices for the stays. Likely to be under the microscope are conditions in the skilled nursing facility (SNF) setting like complication or comorbidity (CCs), and major complication or comorbidity (MCCs) for inpatient hospital diagnostic-related groups (DRGs).

  • Medicare Certification and Re-Certification: Historically, this has been the number one reason for payment denials. We suggest reassessing the process and responsibilities to capture the certifications in a manner that is timely and complete. Work closely with the physician office staff who routinely refer patients to your organization to help cement the relationship and secure their cooperation.
  • SNF PEPPER: The PEPPER report offers all SNF providers insights into monitored services. Evaluate your facility’s report to determine if your organization is out of alignment with your peers. Some of those services include:
  1. High PT/OT case mix
  2. High Speech Language Pathology case mix
  3. 20-day episodes of care
  4. 90+ day episodes of care
  5. 3-5-day readmissions
  • COVID-19: Patients who contracted COVID-19 while under your care would likely be cases audited by Medicare. Facilities should expect that Medicare will validate appropriate use of any waivers, particularly waiver 1135.

State Survey Readiness:

Many states are still behind with surveys following the delays caused by the COVID-19 pandemic. Facilities should use this extra time to ensure survey readiness by reviewing their latest set of survey outcomes and plans for corrections found on the CMS-2567. State-specific information on survey timeliness can be obtained from each state’s Department of Health. 

Understanding general trends in a state’s citation patterns can be a power tool to prepare for a survey. Facilities can review survey findings on the CMS website. This data can be filtered to identify each state’s deficiencies.

The top ten national survey deficiencies between January and July 2022: 

F Tag


Total Tags

Percentage of Total Tags 01/01/22 -07/01/22


Infection Prevention and Control




Free of Accidents Hazards/Supervision/Devices




Food Procurement, Store/Prepare/Serve – Sanitary




Quality of Care




Develop/Implement Comprehensive Care Plan




ADL Care Provided for Dependent Residents




Label/Store Drugs and Biologicals




Treatment/Services to Prevent/Heal Pressure Ulcers




Respiratory/Tracheostomy Care and Suctioning




Reporting of Alleged Violations



The OIG report on Nursing Home Life Safety also identified “… a total of 2,233 areas of noncompliance with life safety and emergency preparedness requirements at 150 of the 154 nursing homes the OIG visited.” The report said that “… these deficiencies occurred because of several factors, including inadequate oversight by management, staff turnover, inadequate oversight by State survey agencies, and a lack of any requirement for mandatory participation in standardized life safety training programs." This statement alone identifies areas that nursing home leadership should address with both policies, procedures and action plans. Considerations may include:

  • Key metrics that need to be monitored daily by administration to ensure it has a pulse on what is happening in the home.
  • When turnover reaches a defined level, or when the organization has “X” vacancies and is unable to recruit additional staff, what actions will be taken (e.g., offer overtime, stop accepting new residents, employ contract service staff for, etc.)?
  • Ensuring that all staff participate in life-safety education. An option to consider is an online education instead of an in-person one. Then verify the program’s completion with a test and certificate process.

Organizations may want to review recent guidance issued by CMS in the State Administrative Memorandums.  Reviewing your organization’s performance in these areas would help identify the needs for corrective actions and proactively address the standards on an ongoing basis.

Losing reimbursement is one thing but losing your organization’s certification or license is far more serious. Reviewing the focus areas of your state surveyors and published CMS and OIG initiatives will highlight where your energies should be spent.


Rose T. Dunn, MBA, RHIA, CHPS, FACHE, FHFMA, Chief Operating Officer, First Class Solutions, Inc.

Deanna M. Peterson, MHA, RHIA, CHPS, LNHA, Vice President, First Class Solutions, Inc.

Ian Kramer, MS, Sr. Industry Consultant, SAS Institute Inc.

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