Bronx, NY — A federal watchdog has opened a new chapter in oversight of the Patient Driven Payment Model, launching a series of audits targeting how nursing homes bill Medicare under the system. Its first review has already sparked fierce pushback from the facility at the center of the findings.
The US Department of Health and Human Services Office of Inspector General (OIG) reported Tuesday that Pinnacle Multicare Nursing and Rehabilitation Center failed to meet Medicare rules for 99 out of 100 sampled PDPM claims filed in 2020 and 2021. The agency says those errors resulted in $1.1 million in improper payments — a figure it then extrapolated to a projected overbilling of at least $31.2 million.
Pinnacle’s leadership sharply disputes the findings, arguing that the audit ignores the realities of the early COVID-19 emergency, when federal regulators had relaxed certain admissions and documentation requirements to accommodate crisis conditions.
Attorney Alyssa A. Friedman, speaking on behalf of the Bronx facility, said reviewers “misconstrued or misstated” regulatory and coding guidance and applied an overly technical interpretation of PDPM during a period when the facility was managing high-acuity residents during one of the nation’s worst outbreak zones.
Provider Pushback on Audit Methods
In written comments to the OIG, Pinnacle argued it was being penalized for “immaterial and trivial” documentation issues and disputed the assertion that most reviewed residents did not require skilled nursing care. Many patients, Friedman said, had complex conditions that warranted skilled intervention even if records did not match reviewers’ preferred formatting.
She also questioned the qualifications of the OIG’s clinical reviewer and said requests for information about that reviewer’s background went unanswered. According to Pinnacle, its own internal analysis — conducted by experienced long-term care clinicians — found that auditors misinterpreted Medicare regulations and PDPM requirements.
Industry experts echoed some of those concerns. Jennifer Napier, practice director at Engage Consulting, said elements of the report would be “shocking” to many operators and warned that such findings could carry implications for states that base their Medicaid payments on PDPM case-mix models.
OIG Begins a Broader Review
The Pinnacle review marks the first in a series of audits examining skilled nursing billing under PDPM. An OIG spokesperson confirmed the agency is already auditing three additional facilities but declined to detail the data-mining methods used to select them.
The report notes that skilled nursing claims have historically shown vulnerability to improper payments. In Pinnacle’s case, OIG auditors flagged a spike in Medicare Part A reimbursement and cited issues ranging from HIPPS code selection to determinations that certain residents did not meet the threshold for skilled care.
Pinnacle called the report’s conclusions “statistically implausible” and said auditors sometimes blended regulatory compliance steps with reimbursement criteria — a common concern raised by operators navigating PDPM.
Disputed Repayment Recommendation
OIG recommended the facility repay the estimated $31.2 million, review additional claims for similar errors, and provide more training for clinical and billing staff. Pinnacle did not agree with any of those recommendations and previously urged the agency to withdraw or revise the report — a request OIG declined.
PDPM took effect in late 2019, only months before the pandemic disrupted normal operations nationwide. Providers received little early education or phased-in oversight from federal regulators, a fact Pinnacle says should be central to understanding documentation gaps during the audit period.
If the Centers for Medicare & Medicaid Services accepts the OIG recommendations, Pinnacle plans to “vigorously contest” the findings, Friedman said, arguing that they misrepresent both Medicare criteria and the care delivered during the unprecedented conditions of 2020 and 2021.
