The nursing home industry is getting an extra $1.5 billion next year from Medicare despite a call from an independent Medicare advisory panel that reimbursement has been inflated for the past three years and needs to be scaled back, a Medicare watchdog group says.

?The windfall to skilled nursing facilities comes with no strings attached and there is no reason to believe this windfall will help improve the quality of care or quality of life for nursing home residents,? said Toby Edelman, a senior policy attorney with the Center for Medicare Advocacy Inc., in Washington, D.C.

The overpayment is happening even though the Medicare Payment Advisory Commission, MedPAC, an independent advisory group to Congress, recommended in May that the rates be adjusted because nursing homes are being overpaid, she said.

The federal government said at the time it would move forward with resetting reimbursement rates to be more accurate but decided this past month to study the issue further.

The Center for Medicare has been overpaying nursing homes since January 2006 after expanding the list of categories used in determining patients? medical status for purposes of reimbursement, she said.

Changing the rates led to many of the nation?s nursing homes designating some residents as more medically complex and therefore they received higher reimbursement rates.

By not addressing the issue now, the nursing home industry will reap an extra $780 million next year, Edelman said.

The Medicare advocacy group is calling on the federal government to act instead of bowing to intense lobbying by the industry.

?Congress is not going to do anything now,? she said. ?Hopefully next year they won?t pay them so much.?

The nursing home industry wants the Center for Medicare to fix the rating system, said Rick Hamilton, a certified nursing home administrator with LarsonAllen, a national accounting firm that provides auditing services to nursing homes.

His firm has reviewed records submitted from nursing homes to the Center for Medicare and said there is wide variation among states, facility type and acuity of the patients.

?My personal experience is 80 percent of the time they are underestimating (care given) but 20 percent of the time there is accidental upcoding,? Hamilton said.

An Office of Inspector General report in 2006 found that 22 percent of nursing home claims were overcoded for higher reimbursement, he said.

The Florida Health Care Association, an industry group representing 500 of the state?s 680 nursing homes, takes a different view.

The Center for Medicare didn?t accurately project the effect of creating more case-mix categories, nor of policy changes that call for moving patients out of hospitals faster into nursing care and more home-based care for less-complex patients, said Tony Marshall, chief operating officer for the group.

The Center for Medicare considered it a correction it its forecast ?and decided to do an analysis,? Marshall said. ?We believe the forecast error was not an error, that we had a change in policies relating to the acuity of patients.?

The system used to determine reimbursement to nursing homes is complex. One component alone involves a patient evaluation form with 509 questions, Hamilton said. The forms help determine the nursing home?s reimbursement rates.

Each evaluation can take anywhere from one hour to five hours, depending on the medical complexity of the patient.

This raises questions about how much time staff members have to do the evaluation, how trained they are and whether the patient?s medical record matches the care rendered, Hamilton said.

?When they are rushed with time, they take care of the resident,? he said, adding that notations may not be made in a patient?s record after an event.

On a second front, the nursing home industry is receiving a 3.1 percent inflation adjustment that will mean getting an additional $710 million next year from Medicare.

MedPAC had reviewed nursing homes? operating margins and recommended no cost adjustment to the federal government but the inflation increase is moving forward.

What needs to be considered is that MedPAC is only required to examine Medicare issues and not Medicaid, where reimbursement is below costs, Hamilton said.

Medicaid, a mix of federal and state funds, has long been subsidizing Medicare for nursing homes and their mix of patients.

About 50 percent of nursing home residents are on Medicaid, where the daily reimbursement can be anywhere from $2 a day to $40 a day below what it costs a nursing home to care for the individual, Hamilton said.