Medicare’s transition to a new pricing model will reduce the risk of fraud, but likely lower the quality of care for some patients. A report by Skilled Nursing News begins by detailing the new payment scheme implemented by Medicare named Patient-Driven Payment Model, or PDPM. Under PDPM’s new pricing structure, Medicare sets reimbursement rates according to a patient’s healthcare needs. Previously, healthcare providers billed Medicare individually for every service, procedure, or medication. To provide a practical example, if an elderly woman sustained a mild fracture at her nursing home then Medicare would reimburse her nursing home a predetermined amount for similarly-healthy patients who suffer minor fractures. Previously, Medicare would reimburse the nursing home for each itemized healthcare service provided to the injured woman – physical therapy sessions, x-rays, medication, etc. The federal healthcare agency says the reimbursement amount depends on numerous factors including the patient’s health, diagnosis, and care plan.
According to the federal government, the former “pay-for-service” model led to widespread fraud, where healthcare providers provided medically unnecessary services and procedures to their patients just to increase their Medicare billing. Artificially inflated therapy services appear to the most common for the fraudsters. Last year, Signature HealthCARE, the owner of 115 nursing homes across the country, agreed to pay a $30 million fine for defrauding Medicare. In Alabama, SNF Management agreed to a $10 million fine the next month.