Medicare: Need to Hold Home Health Agencies More Accountable for
Inappropriate Billings (Letter Report, 06/13/97, GAO/HEHS-97-108).
Pursuant to a congressional request, GAO reviewed Medicare's ability to
detect and prevent inappropriate payments to home health agencies,
focusing on: (1) the weaknesses of existing Medicare controls over the
home health benefit; (2) lessons learned from examining private
insurers' controls over home health payments and recent federal
anitifraud initiatives; and (3) a management approach that could improve
Medicare's ability to avoid substantial payments attributable to abusive
billing practices.
GAO noted that: (1) GAO and others have reported on several occasions
about problems with Medicare's review of home health benefits; (2) yet,
in spite of the need for increased scrutiny indicated by these reports
and by the growth in home health expenditures, Medicare's review of home
health claims decreased in the 1990s; (3) in GAO's test of just 80
high-dollar claims that had been processed without review, the Medicare
claims-processing contractor, after examining each claim and supporting
documentation, denied more than $135,000 in charges, about 43 percent of
total charges, for 46 of the claims; (4) these findings are consistent
with prior federal investigations, one of which estimated that in the
month of February 1993 alone, Medicare paid $16.6 million for home
health claims in Florida that should have been disallowed; (5) the five
private insurers GAO contacted use controls that, although not readily
adaptable to Medicare's coverage terms or billing rules, are
nevertheless instructive regarding the monitoring of claims; (6) the
insurers employ professional staff, such as nurses, to determine in
advance the legitimacy of the request for home health services; (7) in
contrast, the Health Care Financing Administration (HCFA) relies on home
health agencies' compliance with administrative procedures, such as
obtaining a physicians's signature for ordered services, to safeguard
against the submission of improper claims; (8) while Medicare does not
have sufficient administrative funds to undertake the intensity of
claims monitoring done by the private insurers GAO reviewed, the
vigilance of private insurers suggests the value of applying more
scrutiny in this area; (9) reduced funding for payment safeguards in
recent years helps explain the marked absence of adequate claims reviews
by Medicare contractors; (10) new and more stable funding provided
through the Health Insurance Portability and Accountability Act should
help improve Medicare's performance in monitoring home health payments,
but HCFA also needs an enforcement tool that will make providers
accountable for the propriety of their claims; (11) therefore, GAO is
suggesting that the Congress consider directing HCFA to test an approach
that would systematically identify and penalize providers that
habitually bill Medicare inappropriately; and (12) under this approach,
billing offenders would be identified and, if found to have excessively*
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-97-108
TITLE: Medicare: Need to Hold Home Health Agencies More
Accountable for Inappropriate Billings
DATE: 06/13/97
SUBJECT: Health care programs
Program abuses
Home health care services
Monitoring
Claims processing
Fraud
Erroneous payments
Internal controls
Medical expense claims
IDENTIFIER: Medicare Program
HHS Operation Restore Trust
Florida
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Subcommittee on Labor, Health
and Human Services, Education, and Related Agencies, Committee on
Appropriations, U.S. Senate
June 1997
MEDICARE - NEED TO HOLD HOME
HEALTH AGENCIES MORE ACCOUNTABLE
FOR INAPPROPRIATE BILLINGS
GAO/HEHS-97-108
Home Health Agency Accountability
(101375)
Abbreviations
=============================================================== ABBREV
HCFA - Health Care Financing Administration
HHS - Department of Health and Human Services
HIPAA - Health Insurance Portability and Accountability Act
OPM - Office of Personnel Management
Letter
=============================================================== LETTER
B-270233
June 13, 1997
The Honorable Tom Harkin
Ranking Minority Member
Subcommittee on Labor, Health
and Human Services, Education,
and Related Agencies
Committee on Appropriations
United States Senate
Dear Senator Harkin:
Medicare, the nation's health insurance program for the elderly and
disabled, is the single largest payer for home health services.
Between 1988 and 1996 Medicare spending for home health grew from
$2.1 billion to $18 billion and by the year 2000 is projected to
exceed $21 billion. Along with increasing expenditures, the number
of home health agencies has also increased--from about 5,800 to over
9,000.
This growth and accompanying reports of overutilization of home
health services have raised questions about Medicare's ability to
detect and prevent inappropriate payments for this component of the
Medicare program. Congressional committees have held hearings this
year on proposals to control the growth in home health billings.
Under any proposal adopted, however, there would be a continued need
to monitor Medicare payments effectively.
At your request, we (1) examined the weaknesses of existing Medicare
controls over the home health benefit, (2) identified lessons learned
from examining private insurers' controls over home health payments
and recent federal antifraud initiatives, and (3) identified a
management approach that could improve Medicare's ability to avoid
substantial payments attributable to abusive billing practices.
To conduct our study, we selected a sample of 80 high-dollar home
health claims that had been processed in May 1995 and had been
approved without review. We asked a Medicare claims-processing
contractor to review the sample for the appropriateness of the
charges and services claimed. We also analyzed information obtained
from officials of the Health Care Financing Administration (HCFA),
the agency within the Department of Health and Human Services (HHS)
responsible for administering Medicare; data obtained from Medicare's
claims-processing contractors; and information from the HHS Office of
the Inspector General. In addition, we analyzed information obtained
from officials of private insurance companies and the Office of
Personnel Management, which oversees the Federal Employees Health
Benefits Program. (See app. I for a more detailed description of
our scope and methodology.)
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
We and others have reported on several occasions about problems with
Medicare's review of home health benefits (see the list of related
products at the end of this report). Yet, in spite of the need for
increased scrutiny indicated by these reports and by the growth in
home health expenditures, Medicare's review of home health claims
decreased in the 1990s. In our test of just 80 high-dollar claims
that had been processed without review, the Medicare
claims-processing contractor, after examining each claim and
supporting documentation, denied more than $135,000 in charges (about
43 percent of total charges) for 46 of the claims. The reasons for
the denials included failure to substantiate medical necessity,
noncoverage of services or supplies, and inadequate documentation,
including the absence of physician orders. These findings are
consistent with prior federal investigations, one of which estimated
that in the month of February 1993 alone, Medicare paid $16.6 million
for home health claims in Florida that should have been disallowed.
The five private insurers we contacted use controls that, although
not readily adaptable to Medicare's coverage terms or billing rules,
are nevertheless instructive regarding the monitoring of claims. The
insurers employ professional staff, such as nurses, to determine in
advance the legitimacy of the request for home health services. In
contrast, HCFA relies on home health agencies' compliance with
administrative procedures, such as obtaining a physician's signature
for ordered services, to safeguard against the submission of improper
claims. While Medicare does not have sufficient administrative funds
to undertake the intensity of claims monitoring done by the private
insurers we reviewed, the vigilance of private insurers suggests the
value of applying more scrutiny in this area.
Reduced funding for payment safeguards in recent years helps explain
the marked absence of adequate claims reviews by Medicare
contractors. Ten years ago, over 60 percent of home health claims
were reviewed. In 1996, Medicare intermediaries reviewed only 2
percent of all claims. New and more stable funding provided through
the Health Insurance Portability and Accountability Act (HIPAA) of
1996 (P.L. 104-191) should help improve Medicare's performance in
monitoring home health payments, but HCFA also needs an enforcement
tool--a preventive approach--that will make providers accountable for
the propriety of their claims. Therefore, we are suggesting that the
Congress consider directing HCFA to test an approach that would
systematically identify and penalize providers that habitually bill
Medicare inappropriately. Under this approach, billing offenders
would be identified and, if found to have excessively high billing
errors, those offenders, rather than the taxpayer, would be required
to shoulder the cost burden of investigative claims reviews. We
believe that such an approach could also serve as a deterrent to
future billing abuses.
BACKGROUND
------------------------------------------------------------ Letter :2
Medicare is a health insurance program that covers over 38 million
elderly and disabled people. The program, authorized by title XVIII
of the Social Security Act, provides coverage under two parts. Part
A, the hospital insurance program, covers inpatient hospital
services, posthospital care in skilled nursing homes, and care in
patients' homes. Part B, the supplementary medical insurance
program, covers primarily physician services but also a number of
other services, including home health care for beneficiaries not
covered under part A. Almost all Medicare payments for home health
care are made under part A.
BENEFICIARY ELIGIBILITY FOR
HOME HEALTH BENEFIT
---------------------------------------------------------- Letter :2.1
Since the late 1980s when a court decision obligated HCFA to
interpret more liberally Medicare's eligibility and coverage
criteria, beneficiaries have more easily obtained home health
coverage than previously. To qualify, individuals must be confined
to their residences (be "homebound"), be under a physician's care,
and need part-time or intermittent skilled nursing care and/or
physical or speech therapy. In meeting these requirements,
beneficiaries are covered for visits by home health aides, medical
social workers, and occupational therapists. Required medical
supplies are also covered.
Services must be furnished under a plan of care prescribed and
periodically reviewed by a physician. As long as the care is
reasonable and necessary, there are no limits on the number of visits
or length of coverage. Medicare does not require copayments or
deductibles for home health care, except for durable medical
equipment.
HOME HEALTH AGENCY
PARTICIPATION REQUIREMENTS
---------------------------------------------------------- Letter :2.2
Medicare law requires that home health agencies be certified to serve
Medicare beneficiaries. The agencies obtain certification by meeting
specific requirements, commonly referred to as conditions of
participation. These requirements cover the agency's qualifications
and capacity to perform such administrative functions as appropriate
recordkeeping, including patient privacy protections, and such
provider functions as the administering of skilled nursing services.
Typically, HCFA contracts with state public health agencies to
conduct certification and recertification surveys of home health
agencies. Generally, home health agencies found to be out of
compliance are provided an opportunity to develop a corrective action
plan. If the state agency and HCFA approve the plan, the home health
agency can continue to participate in Medicare; it can maintain
certification if the plan results in correction of the problems
identified.
OVERSIGHT OF HOME HEALTH
PAYMENTS
---------------------------------------------------------- Letter :2.3
Regional claims-processing contractors, called intermediaries,
process and pay claims submitted by over 9,000 home health agencies,
which are paid on the basis of the costs they incur up to
predetermined cost limits. In 1995, claims received from home health
agencies represented about 14 percent of all part A claims and 13
percent of part A expenditures.
Intermediaries are responsible for ensuring that Medicare does not
pay home health claims when beneficiaries do not meet the Medicare
home health criteria, when services claimed are not reasonable or
necessary, or when the intensity of services exceeds the level called
for in an approved plan of treatment. They carry out these
responsibilities through medical reviews of claims.
Medical review can be performed either before or after a claim is
approved for payment and involves obtaining home health agency
documentation, such as the beneficiary's plan of care and medical
records. Occasionally, intermediaries conduct site visits--a
postpayment review at the location of a home health agency, where
reviewers can examine plans of care and other medical documentation.
Because of budgetary constraints in recent years, intermediaries
review only about 1 to 3 percent of all claims. They typically only
target providers that have high unexplained utilization rates.
MEDICARE LACKS ADEQUATE
CONTROLS TO EFFECTIVELY MONITOR
HOME HEALTH PAYMENTS
------------------------------------------------------------ Letter :3
Our work in recent years has shown that because of insufficient
funding of payment safeguards, HCFA's monitoring has been unable to
keep pace with the increasing volume of home health claims submitted
to Medicare. This situation may be one of the factors contributing
to the rapid growth in Medicare's home health expenditures.
FUNDING CONSTRAINTS LIMIT
MEDICAL REVIEW OF CLAIMS
---------------------------------------------------------- Letter :3.1
The relationship between funding levels and claims reviewed helps
explain Medicare's current predicament. In 1985, legislation more
than doubled claims review funding, enabling intermediaries to review
over 60 percent of the home health claims processed in fiscal years
1986 and 1987. By 1995, however, when payment safeguard funding for
part A medical review had substantially declined (from $61 million in
1989 to $33 million in 1995), the intermediaries' claims review
target had been lowered to 3.2 percent for all part A claims (or even
lower, depending on available resources, to a required minimum of 1
percent).\1 During this period, the number of home health agencies
participating in Medicare increased by more than a third, and the
volume of home health claims processed more than tripled. Figure 1
illustrates how the total number of claims processed by
intermediaries has risen since 1989, while the number of claims
reviewed has generally declined.
Figure 1: Numbers of Claims
Processed and Reviewed by
Intermediaries Since 1989
(See figure in printed
edition.)
Note: Numbers are for all part A claims, including home health
claims. Data for claims processed are by fiscal year; data for
claims reviewed are by calendar year.
Source: HCFA data.
In our March 1996 report on the deterioration of Medicare's home
health payment controls, we noted the effects of reduced funding on
efforts to deter abusive billing.\2 We found that the infrequency of
the intermediaries' medical review of claims and limited physician
involvement in overseeing home health agencies' plans of care made it
nearly impossible to determine whether the beneficiary receiving home
health services qualified for the benefit, needed the care being
delivered, or even received the services being billed to Medicare.
Also, because of the small percentage of claims selected for review,
home health agencies that billed for noncovered services were less
likely to be identified than was the case a decade earlier.
HIPAA, which now ensures funding for program safeguards through 2003,
allows HCFA to count on stable funding in the coming years. However,
per-claim expenditures for medical review and other controls will
remain below the 1989 level after adjusting for inflation. We
project that in 2003, payment safeguard spending as authorized by the
act will be just over half of the 1989 per-claim level, after
adjusting for inflation.
--------------------
\1 Because this review target is the minimum for part A claims as a
group, the actual percentage of home health claims reviewed could be
higher or lower than the target level specified.
\2 Medicare: Home Health Utilization Expands While Program Controls
Deteriorate (GAO/HEHS-96-16, Mar. 27, 1996).
BETTER CONTROLS OVER
PAYMENTS NEEDED
---------------------------------------------------------- Letter :3.2
In recent years, we have reported on the marked absence of HCFA
guidance for intermediaries on monitoring high-dollar claims despite
postpayment reviews that have found Medicare paying substantial sums
for claims not satisfying key payment criteria. In a recent test, we
asked one regional intermediary--Blue Cross of California--to do
medical reviews for a sample of high-dollar home health claims that
it had originally processed and approved without review.
We selected 80 claims from the universe of home health claims
processed by the California intermediary in May 1995 (see app. I for
a more detailed description of how these claims were selected). The
intermediary found that 46 of the 80 claims submitted by 26 home
health agencies should have been partially or totally denied and
subsequently did deny them. For the 46 claims totaling $313,655 in
charges for services and supplies, about 43 percent, or $135,640,
were denied. The intermediary's reasons for the denials included
failure to substantiate medical necessity, noncoverage of services or
supplies, and inadequate documentation, including the absence of
physician orders. Specifically, the intermediary found the
following:
Of $18,132 in charges for the care of a beneficiary's decubitus
ulcer (open wound) for 30 days, 36 percent ($6,483) were denied,
including charges for almost half of the skilled nursing visits
(four per day) that were not considered medically necessary.
Of $4,100 in charges for supplies related to care provided over 4
weeks, 31 percent were not adequately documented in the medical
records or should have been part of the paid nurse's visit and
not billed separately. About half of the amount denied was for
supplies never received by the beneficiary.
Of $17,953 in charges for medical supplies related to the treatment
of a beneficiary's salivary gland disease, the intermediary
denied the entire amount because the medical documentation and
the itemized list of supplies provided were not consistent and
did not support the supplies the agency billed for.
Nine of the 80 claims--representing nearly half ($61,250) of the
total dollars disapproved--were denied because the home health
agencies did not submit any of the medical records the
intermediary had requested for the review.
The California intermediary also visited a home health agency where
it reviewed supporting documentation for a random sample of 464
claims. The agency had been targeted for a comprehensive review
because of its high billings. The review team found that the
agency's claims for $39,384 were appropriate; however, claims for
$27,834 were considered not medically necessary and were denied, and
claims in the amount of $330,444 were denied for nonmedical reasons,
including undated or otherwise invalid plans of care, no plan of
care, and billing for supplies not covered.
The findings from our test sample of claims subjected to medical
review are consistent with reports by the HHS Inspector General on
home health agency fraud and abuse. A 1995 Inspector General report
on home health services in Florida found that an estimated 26 percent
of home health claims did not meet Medicare reimbursement
requirements.\3 On that basis, the Inspector General estimated that
$16.6 million of the $78 million in claims approved for payment by
intermediaries in February 1993 were unallowable. Claims did not
meet reimbursement requirements because beneficiaries were not
homebound, services were considered unnecessary, and visits were not
documented in the medical records.
--------------------
\3 Results of the Audit of Medicare Home Health Services in Florida
(HHS/OIG, A-04-94-02087, June 16, 1985).
PRIVATE INSURERS' APPROACHES
AND FEDERAL INITIATIVES
EMPHASIZE NEED FOR
ACCOUNTABILITY
------------------------------------------------------------ Letter :4
The various approaches to control home health payments used by five
private insurers we examined collectively underscore the importance
of implementing measures to help prevent abusive billings and also
hold providers accountable for services billed. Recent federal
fraud-fighting efforts targeting abusive billers in the home health
industry have also demonstrated the need for greater claims scrutiny.
PRIVATE INSURER STRATEGIES
INSTRUCTIVE, BUT NOT EASILY
ADAPTED TO MEDICARE
---------------------------------------------------------- Letter :4.1
Because of differences in beneficiary population, claims volume, and
specific benefit provisions, the controls used by private insurers to
contain home health costs would not be easily adapted to the Medicare
program. The five insurers we contacted use some combination of
patient cost-sharing (deductibles and copayments) and caps on the
number of allowed visits to help control home health utilization;
however, cost-sharing and preset utilization limits are not
permissible under Medicare's home health benefit provisions.
In addition, all five of the insurers routinely verify the basis for
proposed plans of home care and oversee, using professional staff,
how the care plans are implemented. Company-employed or contract
nurses typically interview the home health agency's nurses, the
discharge planner (when the patient has been hospitalized), the
patient, and sometimes the family. They attempt to determine in
advance the legitimacy of the patient's need for home-based medical
services. Often the insurers employ utilization review nursing
staffs or insurance company caseworkers to monitor and approve visits
on an incremental basis. For example, one insurer approves visits in
increments of 10 or fewer, or in time intervals of 2 to 4 weeks. For
high-cost cases, all the insurers we examined used some form of case
management that typically involved monitoring by nurses. As case
managers, they track the volume of services provided, the outcomes
being achieved, and the appropriateness of continuing care.
In contrast, the sheer volume of Medicare's home health claims and
scarce funds for monitoring payments have resulted in an approach
that relies substantially on the home health agencies themselves. In
1996, more than 10 percent of Medicare beneficiaries--roughly 4
million people--received home health services. To cope with this
caseload, HCFA relies on the home health agencies to rely, in turn,
on attending physicians to monitor patient progress, the proper
development and periodic review of plans of care, and the medical
necessity of services delivered.
Unlike their private insurer counterparts, Medicare intermediaries
are not responsible for approving the plans of care developed by the
home health agencies. The physician's signature on a plan of care is
intended to serve as a quality control, but in practice the
certifying physician may not have ever seen the patient for whom the
care plan is designed. Moreover, the intermediaries' relatively few
medical reviews of claims generally do not include an independent
verification of the documentation prepared and submitted by the home
health agencies. Likewise, although Medicare requires home health
agencies to update a beneficiary's plan of care at least every 62
days, the intermediary does not routinely review updated plans. As
for high-cost cases, nearly 40 percent of Medicare's home health
beneficiaries receive more than 30 visits. Because of the
prohibitive costs, intermediaries cannot systematically monitor such
long-term or otherwise expensive cases to ensure the care being
delivered is appropriate to the patients' needs.
FEDERAL ANTIFRAUD EFFORTS
TARGET HOME HEALTH PAYMENTS
---------------------------------------------------------- Letter :4.2
Given the growth in Medicare spending for home health services,
nursing home services, and medical equipment and supplies, the HHS
Inspector General and other federal and state agencies banded
together to target fraudulent and abusive billing practices in these
industries. This effort, called Operation Restore Trust, was
conducted initially in five states and reported identifying almost
$188 million in inappropriate payments in its 2 years of operation.
Among the lessons learned to date from Operation Restore Trust is the
importance of coordination among the various program and enforcement
agencies involved at the federal, state, and local levels.
Coordination, for example, between Medicare intermediaries and state
surveyors in the project's several states resulted in the
decertification of many of the targeted home health agencies and in
the recovery of substantial sums in inappropriate payments.\4
For example, in investigations conducted in Louisiana and Texas, the
Medicare intermediary trained state surveyors on billing and
beneficiary coverage issues. The intermediary also provided a list
of agencies that it believed to be billing improperly. In turn, the
surveyors passed on to the intermediary information obtained from
their site visits to home health agencies and beneficiaries. This
exchange of information allowed the intermediary to identify claims
that (1) were made on behalf of beneficiaries who were obviously not
homebound, (2) billed for services not provided, and (3) billed
inappropriately for supplies. The Secretary of HHS recently
announced that Operation Restore Trust will be expanded to 12
additional states.
HCFA also sponsored pilot projects as part of a "Home Health
Initiative" that assessed the extent to which the detection of
abusive billing can be fostered by educating beneficiaries about home
health coverage and eligibility and by formally notifying
beneficiaries and physicians of benefits provided.
--------------------
\4 State certification surveys generally do not look at coverage and
eligibility issues, although state surveyors can identify patients
who are not homebound and services and supplies that are billed but
not provided.
MEDICARE'S EXISTING SAFEGUARD
APPARATUS PRESENTS OPPORTUNITY
TO EXERCISE GREATER
ACCOUNTABILITY
------------------------------------------------------------ Letter :5
HCFA's education initiatives may improve beneficiary and physician
awareness of improper billing practices, but HCFA needs to hold home
health agencies more directly accountable for submitting proper
claims. In the past, when seeking recovery of inappropriate
payments, intermediaries have used two approaches to assess
overpayment amounts. One is to audit a universe of claims submitted
by the provider and total the charges disallowed. However, the large
volume of claims submitted by the average provider and the time
involved in reviewing a claim make this approach impractical in most
cases. The second approach is to audit a statistically valid sample
of the provider's claims and estimate total charges disallowed by
projecting the sampling results. Because of the scarcity of funds to
audit claims, it has been difficult to pursue either approach in
recent years.
Currently, Medicare's intermediaries are responsible for focusing
medical reviews on claims from home health agencies that seem likely
to be billing inappropriately.\5 Given the funding provided under
HIPAA, the expectation is that HCFA will be better able to carry out
these focused medical reviews. However, this funding may not be
sufficient to do the follow-up audit work required once improper
billing identifies an agency as an abusive biller and to conduct
enough focused reviews for other home health agencies also deemed
likely to be billing improperly. Consequently, Medicare would be
prevented from taking the steps necessary to recover a greater
proportion of payments that have been made inappropriately.
One option to help finance Medicare's audits of claims would be to
assess home health agencies that are found to be abusive billers for
the costs of performing follow-up audit work. The home health agency
could choose whether to have a review based on the universe of its
claims for a particular period or a statistically valid sample. HCFA
would estimate the costs and withhold some percentage of the agency's
current Medicare payments, unless the agency negotiated an
alternative payment method, to ensure that the audit costs (as well
as any assessed overpayment) could be recovered from the agency. By
earmarking monies from the assessed audit costs for payment safeguard
activities, performing such claims audits could be made financially
feasible for HCFA. (Under current law, such assessments would be
returned to the general Treasury.)
This option, which would require authorizing legislation, would build
on HCFA's existing safeguard apparatus and should enable it to
broaden its claims reviews. The approach, which could be piloted in
one or more regions, would also require HCFA to establish procedures
for identifying abusive billers that would be required to reimburse
HCFA for the costs of additional claims reviews.
--------------------
\5 Under sec. 202 of HIPAA, the HHS Secretary is authorized to enter
into contracts with additional entities to perform payment safeguard
activities. Such activities would include, for example, medical
reviews on claims from home health agencies that seem likely to be
billing inappropriately. This authority became effective Aug. 21,
1996, but HCFA has not yet entered into any contracts of this type.
CONCLUSIONS
------------------------------------------------------------ Letter :6
Given the rapid growth in Medicare home health spending, the
importance of careful vigilance over payments for this benefit cannot
be overstated. Some home health agencies continue to abuse the
Medicare benefit by providing services that do not meet program
coverage requirements or are not medically necessary. Limited
oversight by HCFA allows abusive billings from these home health
agencies to go undetected.
Recent federal antifraud efforts illustrate the value of effective
claims oversight. Building on its current oversight efforts, HCFA
could implement an enforcement mechanism that would hold home health
providers accountable for meeting their responsibilities to provide
beneficiaries with only necessary and appropriate covered services.
Such a mechanism would include a means to recover from abusive
billers some of HCFA's costs in conducting this oversight. This
approach would not only help finance claims audits but also help
deter further abusive billing.
MATTERS FOR CONSIDERATION BY
THE CONGRESS
------------------------------------------------------------ Letter :7
To hold home health agencies more directly accountable for billing
Medicare appropriately, the Congress may wish to consider enacting
legislation directing HCFA to carry out a pilot demonstration to
address the issue of abusive billing practices by home health
agencies. Under such a demonstration, once improper billing has been
detected that identifies an agency as an abusive biller, follow-up
audit work would be conducted and the cost of this follow-up work
would be assessed against the home health agency. To make such
claims audits financially feasible, the Congress may wish to earmark
monies from the assessed audit costs for HCFA's payment safeguard
activities.
AGENCY COMMENTS
------------------------------------------------------------ Letter :8
On June 11, 1997, HCFA officials provided us with comments on a draft
of this report. Those officials agreed that the concept presented in
our report could be effective. On the basis of our discussion, it
appears that this concept would fit well with HCFA's current efforts
to strengthen program safeguards on the home health and skilled
nursing facility benefits. They noted that a number of details would
need to be worked out to increase the likelihood that the
demonstration project would be successful.
---------------------------------------------------------- Letter :8.1
As arranged with your office, unless you announce its contents
earlier, we plan no further distribution of this report until 10 days
after the date of this letter. At that time, we will send copies of
this report to the Secretary and the Inspector General of HHS, the
Administrator of HCFA, and other interested parties. We also will
make copies available to others upon request.
If you or your staff have any questions, please call me on (202)
512-6806 or William Scanlon, Director of our Health Financing and
Systems issue area, at (202) 512-4561. Other major contributors to
this report include Leslie Aronovitz, Lisanne Bradley, Marco Gomez,
Sam Mattes, Barry Tice, and Don Walthall.
Sincerely yours,
Richard L. Hembra
Assistant Comptroller General
SCOPE AND METHODOLOGY
=========================================================== Appendix I
To examine and compare Medicare controls over the home health benefit
with those used by private insurers and to identify Medicare
initiatives associated with appropriate payments for home health
services, we reviewed information obtained from officials at HCFA
headquarters, its San Francisco regional office, and the regional
home health intermediaries responsible for paying Medicare home
health claims.
We also reviewed information obtained from officials at the Office of
Personnel Management (OPM), which administers the Federal Employees
Health Benefits Program; five private health plans under contract
with OPM to provide health care services;\6 and three private
companies that perform utilization review and case management for
private health plans. Additionally, we reviewed relevant GAO, HHS
Office of the Inspector General, Operation Restore Trust, and
intermediary reports on controls over the use of Medicare's home
health benefit. We also reviewed manuals and criteria HCFA and
private insurers use to administer and control the home health
benefit.
To gain insight into Medicare controls over the home health benefit,
we visited two judgmentally selected home health intermediaries:
Blue Cross of California and Palmetto Government Benefits
Administrators. To supplement work performed at these locations and
to broaden our areas of analysis, we obtained additional information
on home health claims and controls from the remaining home health
intermediaries.
In addition, to determine whether the records supported the need for
services or items billed to Medicare, we requested that one
intermediary--Blue Cross of California--review the medical records,
an itemized list of supplies, and other documentation for 80
high-dollar claims. The intermediary requested this supporting
documentation from 26 home health agencies. We limited our request
to 80 claims so that we would not overburden the intermediary's
normal workload.
To select the 80 claims to be reviewed, the intermediary identified
the universe of home health claims processed from May 1 to May 31,
1995. From this universe, the intermediary identified the top 10
providers in terms of dollars billed, per beneficiary, for specific
home health benefit categories (medical supplies, surgical dressings,
physical therapy, and skilled nursing). For each of these providers,
the 20 largest claims in terms of dollars billed per service category
were identified. From the specific service categories, we
judgmentally selected 80 claims. In selecting the 80 claims for
intermediary review, we considered information on total charges,
average per-day charge, total days charged, and diagnosis.
For each selected claim, the intermediary reviewed the total charges
for all services on the claim. Consequently, even though we did not
specifically select any claims for four types of home health services
(speech therapy, occupational therapy, medical social worker, and
home health aide), many of our selected claims had these services.
Therefore, the intermediary also reviewed the appropriateness of
these services.
We performed our work between January 1996 and June 1997 in
accordance with generally accepted government auditing standards.
GAO RELATED PRODUCTS
Medicare Post-Acute Care: Cost Growth and Proposals to Manage It
Through Prospective Payment and Other Controls (GAO/T-HEHS-97-106,
Apr. 9, 1997).
Medicare: Home Health Utilization Expands While Program Controls
Deteriorate (GAO/HEHS-96-16, Mar. 27, 1996).
Medicare: Home Health Cost Growth and Administration's Proposal for
Prospective Payment (GAO/T-HEHS-97-92, Mar. 5, 1997).
Medicare Post-Acute Care: Home Health and Skilled Nursing Facility
Cost Growth and Proposals for Prospective Payment (GAO/T-HEHS-97-90,
Mar. 4, 1997).
--------------------
\6 The five private plans are the Blue Cross and Blue Shield Service
Benefit Plan, Mail Handlers, Government Employees Hospital
Association, National Association of Letter Carriers, and the
American Postal Workers Union plans.
*** End of document. ***