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.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    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

    Status: Closed - Not Implemented

    Comments: CMS's response did not address our recommendation. The agency's response states that there is no way to perform prepayment review under the prospective payment reimbursement methodology. Our recommendation is specifically about conducting post-payment reviews. Additionally, our work found that regional home health intermediaries (RHHI) did conduct prepayment medical review on claims submitted by home health agencies with billing patterns different from their peers. Our recommendation is that, once prepayment review establishes that a provider has a high rate of improper billing, that the RHHI go back and conduct post payment review of claims by that same provider.

    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

    Status: Closed - Not Implemented

    Comments: CMS stated that it believes this recommendation would be costly and difficult to implement.

    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

    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 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

    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.

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