Medicare:

Improvements Needed to Address Improper Payments in Home Health

GAO-09-185: Published: Feb 27, 2009. Publicly Released: Mar 13, 2009.

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Medicare spending on home health totaled $12.9 billion in 2006, up 44 percent from 2002. Concerns have been raised that improper payments from practices indicating fraud and abuse may have contributed to Medicare home health spending and utilization. The Centers for Medicare & Medicaid Services (CMS), the agency that administers Medicare, is responsible for minimizing improper payments made on behalf of Medicare beneficiaries. GAO was asked to examine the growth in Medicare home health spending and utilization and the benefit's vulnerability to improper payments. GAO focused on states with the highest growth in Medicare home health spending or utilization; fraudulent and abusive practices contributing to recent spending and utilization; and administrative issues that make it vulnerable to improper payments. GAO analyzed Medicare claims data; reviewed Medicare laws and regulations and CMS documents; and interviewed stakeholders and contractors that administer and protect the home health benefit.

California, Florida, Nevada, Oklahoma, Texas, and Utah were identified as experiencing the highest growth in Medicare home health spending or utilization from 2002 through 2006. These states ranked among the three highest in one or more of four spending and utilization indicators. Florida and Texas were among the top three on three or more indicators. Texas, Florida, and Nevada--the states with the highest percentage growth in Medicare home health spending from 2002 through 2006--had more than double the national spending growth rate of 44 percent during this period. Upcoding--overstating the severity of a beneficiary's condition--by home health agencies (HHA) and other fraudulent and abusive practices contributed to Medicare home health spending and utilization. For example, a CMS contractor found that only 9 percent of claims were properly coded for 670 Houston beneficiaries who had the most severe clinical rating and who were served by potentially fraudulent HHAs. Court cases and Department of Health and Human Services Office of Inspector General actions illustrated that kickbacks and billing for services not rendered also contributed to Medicare spending and utilization. Stakeholders identified these practices as common types of home health fraud and abuse. Inadequate administration of the Medicare home health benefit leaves the benefit vulnerable to improper payments. Although CMS policy charges its contractors, known as Regional Home Health Intermediaries (RHHI), with the responsibility of screening applications from prospective Medicare HHAs, CMS does not require RHHIs to verify the criminal history of persons named on the application. CMS does not generally include physicians, who are in a position to detect certain types of improper billing, in the agency's efforts to detect improper payments. For instance, CMS does not provide physicians responsible for authorizing home health care with information that would enable them to determine whether an HHA was billing for unauthorized care. Current CMS regulations provide for the removal of HHAs or HHA officials from Medicare for one type of abusive billing--billing for services that could not have been rendered. However, the agency has yet to address the removal of HHAs or HHA officials engaging in other types of abusive or improper billing.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Pursuant to the CMS's new authority implemented in its recent provider screening rule, 6028-FC, which became effective on March 25, 2011, certain key officials associated with newly-enrolling home health agencies will be subject to criminal background checks and fingerprinting requirements. Though this provision was finalized in 6028-FC, CMS is in the process of developing sub-regulatory guidance to ensure that the agency has addressed privacy concerns and other operational concerns. CMS will require criminal background checks and fingerprinting of such key officials following 60 days of CMS's publication of its sub-regulatory guidance.

    Recommendation: To strengthen the controls on improper payments in the Medicare home health benefit, the Administrator of CMS should assess the feasibility of verifying the criminal history of all key officials named on an HHA enrollment application.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Open

    Comments: While CMS has taken steps to help address fraud and abuse in home health agencies, CMS had not, as of November 2015, required that certifying physicians receive information on home health services that their patients receive, as GAO recommended in February 2009. CMS increased physician participation in certifying eligibility and establishing a patient's plan of care by implementing a statutory requirement that, as a condition of payment, physicians or their permitted nonphysician practitioners have a face-to-face encounter with a Medicare patient prior to certifying that patient's eligibility for the home health benefit. While requiring a face-to-face encounter does strengthen fraud and abuse controls, providing certifying physicians with information about home health services their patients receive could be a valuable deterrent to home health fraud and abuse. Taking such action could be a useful strategy in addressing fraud and abuse, especially in high-fraud areas. As of August 2016, HHS officials reported that they have not implemented this recommendation. GAO considers it to be open. We will update the status of this recommendation when we receive additional information.

    Recommendation: To strengthen the controls on improper payments in the Medicare home health benefit, the Administrator of CMS should provide physicians whose identification number was used to certify or recertify a plan of care with a statement of services the HHA provided to that beneficiary based on the physician's certification.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  3. Status: Closed - Implemented

    Comments: CMS has taken a number of steps to help lower the improper billing rate in home health claims, consistent with GAO?s 2011 suggested action. In 2011, the agency implemented the Fraud Prevention System (FPS), which uses risk-based algorithms to analyze Medicare fee-for-service claims prior to payment and identify home health agencies, among other provider types, with suspect billing behaviors that are in turn investigated by CMS's contractors. Additionally, beginning January 1, 2015, CMS modified the documentation required to show adherence to the face-to-face physician encounter requirement for home health patients. Specifically, CMS eliminated the requirement for a physician narrative, instead allowing the medical record to provide support for the patient's eligibility for home health services. Insufficient documentation, such as a lack of a physician narrative for a patient receiving home health services, was the most common reason for improper payments in Medicare in 2014. In order to assess home health agencies? compliance with the new requirement, CMS has directed medical review contractors to review a sample of claims from every home health agency, a review that was ongoing as of December 2015. CMS's steps should help the agency understand, address, and reduce improper billing in home health care.

    Recommendation: To strengthen the controls on improper payments in the Medicare home health benefit, the Administrator of CMS should direct CMS contractors to conduct postpayment medical reviews on claims submitted by HHAs with high rates of improper billing identified through prepayment review.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  4. Status: Open

    Comments: CMS responded that the agency is exploring its authority to revoke billing privileges under the existing regulation, 42 CFR 424.535. According to CMS, the revocation regulation at 42 CFR 424.535 provides important authority for CMS to be able to timely reach providers and suppliers that are defrauding the program but is somewhat limiting in terms of the specific abusive billing situations in which it may be used.

    Recommendation: To strengthen the controls on improper payments in the Medicare home health benefit, the Administrator of CMS should amend current regulations to expand the types of improper billing practices that are grounds for revocation of billing privileges. Grounds for revocation could include a pattern of submitting claims that are falsified, for persons who do not meet Medicare's coverage criteria, or for services that are not medically necessary.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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