Are Nursing Homes Lying About Their Patients To Increase Profits? You Decide
Forbes, March 27, 2026
By Peter Ubel
The Forbes article by Peter Ubel, titled “Are Nursing Homes Lying About Their Patients To Increase Profits? You Decide,” explores a contentious trend in the skilled nursing facility (SNF) industry following major shifts in federal reimbursement policies. With Medicare spending over $50 billion annually on post-hospitalization care, the article examines whether the current “Patient-Driven Payment Model” (PDPM) has inadvertently encouraged facilities to prioritize financial optimization over clinical accuracy.
The Transition in Reimbursement Policy
For years, Medicare administrators were concerned that the “volume-based” payment system—which compensated nursing homes for every individual therapy session or service provided—incentivized facilities to provide unnecessary treatments to drive up bills. In response, the Centers for Medicare & Medicaid Services (CMS) transitioned to the PDPM, a lump-sum payment model. Under this system, facilities receive a set amount of money per patient based on their specific diagnoses and comorbidities rather than the volume of services rendered. The goal was to reward facilities for treating sicker patients and to eliminate the incentive for “therapy-padding.”
The “Sicker” Patient Phenomenon
The article highlights a startling statistical shift observed since the implementation of this model: the reported complexity of nursing home residents has skyrocketed. Facilities are now documenting significantly higher rates of serious medical conditions, such as depression, swallowing disorders, and complex nutritional needs, compared to the years prior to the policy change. While this could theoretically suggest that hospitals are discharging “sicker” patients into nursing homes, the author notes that the timing of this trend aligns precisely with the new financial incentive to record more diagnoses.
Clinical Reality vs. Financial Gaming
The core controversy discussed is whether these diagnoses represent “upcoding”—a practice where facilities exaggerate or carefully select diagnoses to maximize their daily reimbursement rate. The article raises several critical points:
- Documentation vs. Treatment: While the reported number of illnesses has risen, there has not been a corresponding increase in specialized staff or resources to manage these conditions.
- Cognitive and Behavioral Shifts: Clinicians may be under pressure to find and document even minor issues (such as a slight cough being coded as a major swallowing disorder) to move a patient into a higher-paying category.
- Audit Lag: Federal oversight and audits often lag years behind these reporting shifts, allowing facilities to benefit from high reimbursement rates in the interim.
Implications for the Healthcare system: Ubel concludes by questioning the integrity of the data currently being used to fund the long-term care industry. If the “sickness” of the American nursing home population is being inflated for profit, it not only drains the Medicare trust fund but also obscures the true quality of care being provided. The article suggests that while the shift away from volume-based care was well-intentioned, the new model has created a “diagnosis-based” gold rush, leaving it to policymakers and the public to decide if the industry is responding to actual patient needs or simply gaming a flawed system.