Medicare Home Health Agencies: Certification Process Is Ineffective in
Excluding Problem Agencies (Testimony, 07/28/97, GAO/T-HEHS-97-180).

Pursuant to a congressional request, GAO discussed how Medicare: (1)
controls the entry of home health agencies (HHA) into the Medicare
Program; and (2) ensures that HHAs in the program comply with Medicare's
conditions of participation and associated standards.

GAO noted that: (1) it is finding that Medicare's survey and
certification process imposes few requirements on HHAs seeking to serve
Medicare patients and bill the Medicare program; (2) the certification
of an HHA as a Medicare provider is based on an initial survey that
takes place so soon after the agency begins operating that there is
little assurance that the HHA is providing or capable of providing
quality care; and (3) moreover, once certified, HHAs are unlikely to be
terminated from the program or otherwise penalized, even when they have
been repeatedly cited for not meeting Medicare's conditions of
participation and for providing substandard care.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-97-180
     TITLE:  Medicare Home Health Agencies: Certification Process Is 
             Ineffective in Excluding Problem Agencies
      DATE:  07/28/97
   SUBJECT:  Health care programs
             Home health care services
             Quality assurance
             Institution accreditation
             Patient care services
             Noncompliance
IDENTIFIER:  Medicare Program
             HHS Operation Restore Trust
             California
             Texas
             Massachusetts
             
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Cover
================================================================ COVER


Before the Special Committee on Aging, U.S.  Senate

For Release on Delivery
Expected at 1:00 p.m.
Monday, July 28, 1997

MEDICARE HOME HEALTH AGENCIES -
CERTIFICATION PROCESS IS
INEFFECTIVE IN EXCLUDING PROBLEM
AGENCIES

Statement of Leslie G.  Aronovitz, Associate Director
Health Financing and Systems Issues
Health, Education, and Human Services Division

GAO/T-HEHS-97-180

GAO/HEHS-97-180T


(101501)


Abbreviations
=============================================================== ABBREV

  HCFA - Health Care Financing Administration
  HHA - home health agency
  HHS - Department of Health and Human Services
  ORT - Operation Restore Trust

MEDICARE HOME HEALTH AGENCIES: 
CERTIFICATION PROCESS IS
INEFFECTIVE IN EXCLUDING PROBLEM
AGENCIES
============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

I am pleased to be here today as the Committee examines fraud and
abuse associated with one of the fastest growing components of the
Medicare program--the home health benefit.  We believe the foundation
for protecting this benefit rests on controlling which home health
agencies (HHA) are allowed to bill Medicare and ensuring that they
provide quality services for each Medicare dollar they receive. 

Only HHAs that are surveyed and certified as meeting Medicare's
conditions of participation and associated standards may be paid by
Medicare for their services.  As a result of changes in Medicare law,
regulations, and policy in the 1980s, more people are receiving home
health services for longer periods of time.  This has led to rapid
growth in the number of certified HHAs--from 5,700 in 1989 to almost
10,000 at the beginning of 1997.  In some states, the number of HHAs
has more than doubled.  During this same period, Medicare payments
for home health care jumped from $2.7 billion to about $18 billion
and are estimated to reach $21.9 billion in fiscal year 1998. 

Because of this Committee's concerns about whether the rapid growth
of HHAs in the Medicare program has been effectively managed, you and
Senator Breaux asked us to determine how Medicare (1) controls the
entry of HHAs into the Medicare program and (2) ensures that HHAs in
the program comply with Medicare's conditions of participation and
associated standards.  Today, I will discuss the preliminary results
of our ongoing review of Medicare's survey and certification process
for HHAs.  In conducting our review, we obtained information from the
Health Care Financing Administration's (HCFA) central office and
regional offices in California, Illinois, Massachusetts, and Texas;
state survey agencies in California, Maine, Massachusetts, and Texas;
the offices of Medicare claims processing contractors, known as
regional home health intermediaries, located in California, Iowa,
Maine, and South Carolina; the Department of Health and Human
Services' (HHS) Office of the Inspector General; and several industry
groups.  Our final report to the Committee this fall will address in
greater detail the issues I am about to discuss. 

In summary, we are finding that Medicare's survey and certification
process imposes few requirements on HHAs seeking to serve Medicare
patients and bill the Medicare program.  The certification of an HHA
as a Medicare provider is based on an initial survey that takes place
so soon after the agency begins operating that there is little
assurance that the HHA is providing or is capable of providing
quality care.  Moreover, once certified, HHAs are unlikely to be
terminated from the program or otherwise penalized, even when they
have been repeatedly cited for not meeting Medicare's conditions of
participation and for providing substandard care. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

HHS is charged with ensuring that HHAs meet conditions of
participation in the Medicare program that are adequate to protect
the health and safety of beneficiaries.  As shown in table 1,
Medicare has 12 conditions of participation covering such areas as
patient rights; acceptance of patients, plans of care, and medical
supervision; and skilled nursing services.  Most conditions, in turn,
comprise more detailed standards; for example, the skilled nursing
condition has two standards--one addresses the duties of registered
nurses and the other the duties of licensed practical nurses.  The
conditions and standards are further clarified in interpretive
guidelines, which explain relevant statutes and regulations. 



                          Table 1
          
           Medicare's Conditions of Participation
             and Associated Standards for HHAs

Conditions of participation       Standards
--------------------------------  ------------------------
Patient rights\a                  --Notice of rights

                                  --Exercise of rights and
                                  respect for property and
                                  person

                                  --Right to be informed
                                  and to participate in
                                  planning care and
                                  treatment

                                  --Confidentiality of
                                  medical records

                                  --Patient liability for
                                  payment

                                  --Home health hotline

Compliance with federal, state,   --Compliance with
and local laws; disclosure and    federal, state, and
ownership information; and        local laws and
accepted professional standards   regulations
and principles\a                  --Disclosure of
                                  ownership and management
                                  information
                                  --Compliance with
                                  accepted professional
                                  standards and principles

Organization, services, and       --Services furnished
administration                    --Governing body
                                  --Administrator
                                  --Supervising physician
                                  or registered nurse
                                  --Personnel policies
                                  --Personnel under hourly
                                  or per-visit contracts
                                  --Coordination of
                                  patient services\a
                                  --Services under
                                  arrangements
                                  --Institutional
                                  planning
                                  --Laboratory services

Group of professional personnel   --Advisory and
                                  evaluation function

Acceptance of patients, plan of   --Plan of care
care, and medical supervision\a   --Periodic review of
                                  plan of care
                                  --Conformance with
                                  physician orders

Skilled nursing services          --Duties of the
                                  registered nurse
                                  --Duties of the licensed
                                  practical nurse

Therapy services                  --Supervision of
                                  physical therapy
                                  assistant and
                                  occupational therapy
                                  assistant
                                  --Supervision of speech
                                  therapy services

Medical social services

Home health aide services\a       --Home health aide
                                  training
                                  --Competency evaluation
                                  and in-service training
                                  --Assignment and duties
                                  of the home health aide
                                  --Supervision
                                  --Personal care
                                  attendant: evaluation
                                  requirements

Qualifying to furnish outpatient
physical therapy or speech
pathology services

Clinical records\a                --Retention of records
                                  --Protection of records

Evaluation of the agency's        --Policy and
program                           administrative review
                                  --Clinical record review
----------------------------------------------------------
\a Conditions and standards reviewed during a standard survey. 

Source:  42 C.F.R.  484. 

Medicare--as authorized by title XVIII of the Social Security
Act--can reimburse only those HHAs that have been surveyed and
certified as being in compliance with its conditions of
participation.  This survey and certification process is administered
by HCFA through state survey agencies--usually components of the
state health departments.  HCFA funds these survey agencies to assess
HHAs against Medicare's conditions of participation and associated
standards.  Surveys are conducted on-site at the HHA and involve
activities such as clinical records review and home visits with
patients.  HCFA's State Operations Manual provides guidance to state
surveyors on conducting their surveys. 

Once an HHA passes its initial survey and meets certain other
requirements, HCFA certifies it as a Medicare provider and issues a
provider number, which the agency uses to bill Medicare.  To retain
its certification, an HHA must remain in compliance with all of the
conditions of participation.  Each HHA is supposed to be recertified
every 12 to 36 months following the same process used in the initial
survey process, with the frequency depending upon factors such as
whether ownership changed and the results of prior surveys.  But
complaints about HHA services may trigger an earlier survey.  HHAs
can lose their certification and be terminated from the program if
they do not comply with one or more conditions; for example, an HHA
providing substandard skilled nursing care that threatens patient
health and safety can be terminated.  However, HHAs not complying
with a condition of participation can avoid termination by
implementing corrective actions. 


   HHAS EASILY OBTAIN MEDICARE
   CERTIFICATION
---------------------------------------------------------- Chapter 0:2

Practically anyone who meets state or local requirements to start an
HHA can be virtually assured of Medicare certification.  It is rare
that any new HHA is found not to meet Medicare's three fundamental
certification requirements:  (1) being financially solvent; (2)
complying with title VI of the Civil Rights Act of 1964, which
prohibits discrimination; and (3) meeting Medicare's conditions of
participation.  HHAs self-certify their solvency, agree to comply
with the act, and undergo a very limited initial certification survey
that few fail.  Currently, HCFA certifies about 100 new HHAs each
month. 

Once an HHA meets state and local laws, regulations, and licensing
requirements, Medicare imposes few additional restrictions to
becoming certified.  Title XVIII of the Social Security Act does not
require HHA owners to have prior health care experience.  For
example, we found one owner whose most recent work experience was
driving a taxi cab and another who owned and operated a pawn shop in
addition to his HHA.  Finally, there are no capitalization
requirements, and a criminal background is not a deterrent to agency
certification unless that criminal activity specifically prohibits
the individual from Medicare participation. 

Each certified HHA must provide skilled nursing services and one
other covered service--physical, speech, or occupational therapy;
medical social services; or home health aide services.  HHAs can
offer all of these services if they choose to do so.  Only one of an
HHA's services must be delivered exclusively by its staff; any
additional covered services the HHA offers can be provided either
directly or under contract with another health care organization that
does not have to be Medicare certified. 

During the initial certification process, surveyors conduct what is
called a standard survey; this survey is required by statute to
assess the quality of care and scope of services the HHA provides as
measured by indicators of medical, nursing, and rehabilitative care. 
The standard survey addresses an HHA's compliance with 5 of the 12
conditions of participation plus one of the standards associated with
a sixth condition that HCFA believes best evaluate patient care (see
table 1).  If surveyors identify substandard care during the standard
survey, they are to conduct a more in-depth review of the HHA's
compliance with the other conditions of participation. 

These initial surveys often take place so soon after an HHA begins
operating that surveyors have little information with which to judge
the quality of care an HHA provides or the HHA's potential for
providing such care.  We found that initial surveys frequently are
made when HHAs have served as few as one patient for less than 1
month and have not yet provided all the services for which they are
to be certified.  The surveyor may never see any patients or
otherwise assess the care the HHA is providing, even though visiting
patients is recognized by HCFA and state surveyors as the best way to
evaluate an HHA's care.  Furthermore, the HHAs are typically caring
for non-Medicare beneficiaries at the time of their initial survey;
these patients may have medical conditions that differ from those of
Medicare beneficiaries needing home health care. 

The fact that the law allows this ease of entry into Medicare has
probably contributed to the rapid growth in the number of
Medicare-certified HHAs; it has also allowed some questionable
agencies to participate in the program.  For example: 

  -- An individual with no experience in health care started her
     Texas HHA in the pantry of her husband's restaurant.  Within 4
     months of the HHA's certification, state surveyors started
     receiving complaints that the HHA had been (1) enrolling
     patients who were either ineligible for the Medicare home health
     benefit or who had been referred for care without a physician's
     orders and (2) hiring home health aides on the condition that
     they first recruit a patient.  Approximately 10 months following
     initial certification, state surveyors substantiated the
     complaints and also found that the HHA was not complying with
     four conditions and multiple standards, including four standards
     that the HHA had been cited for violating during its initial
     survey.  The surveyors also identified 13 cases in which they
     suspected the HHA provided unnecessary services or served
     ineligible beneficiaries; the surveyors referred these cases to
     the Medicare claims processing contractor.  One month later, the
     surveyors conducted a follow-up survey and found that the agency
     had implemented corrective actions, as it had following its
     initial survey.  No further surveys had been conducted at the
     time of our review. 

  -- Another individual with no home health care experience started a
     California HHA, which was Medicare certified in 1992.  Within 1
     year of certification, state surveyors and the Medicare claims
     processing contractor received numerous complaints alleging that
     the HHA had served patients ineligible for the Medicare benefit,
     falsified medical records, falsified the credentials of the
     director of nursing, and used staff inappropriately.  A
     recertification survey about 15 months after initial
     certification found that the HHA was not complying with multiple
     conditions of participation and had endangered patient health
     and safety.  By September 1993, after Medicare had paid the HHA
     over $6 million, the HHA closed.  The owner, a former drug
     felon, and an associate later pled guilty to defrauding Medicare
     of over $2.5 million. 

HCFA regional office and state survey officials have acknowledged
that the initial certification survey provides little assurance that
an HHA can and will provide quality care.  They believe that newly
certified HHAs should be resurveyed after they are fully operational
and that, at that time, they should also be assessed for compliance
with all of Medicare's conditions of participation for all of the
services the HHA provides.  HCFA central office officials told us
that, while they have the statutory authority to assess new HHAs
against all of the conditions of participation at any time and it
would be desirable to resurvey an agency several months after initial
certification, this would require additional funding for state survey
agencies--funding that they said is not available.  Another
alternative, also within HCFA's statutory authority, is to require
that HHAs seeking Medicare certification have treated a minimum
number of patients.  Several HCFA regional offices now suggest that
an HHA should have cared for at least 10 patients at the time of its
initial survey.  However, HCFA central office officials said that
this would not be a reasonable requirement for all HHAs seeking
certification.  In some rural states, 10 patients may represent an
entire year's patient workload.  Setting a 10-patient minimum on a
national basis could therefore result in denying beneficiaries access
to home health care services if they live in sparsely populated areas
of the county, according to the HCFA officials. 


   MEDICARE'S RECERTIFICATION
   PROCESS CONTAINS SERIOUS
   WEAKNESSES
---------------------------------------------------------- Chapter 0:3

Medicare's recertification process does not ensure that only those
HHAs that provide quality care in accordance with Medicare's
conditions of participation remain certified.  The primary problems
are that (1) HHAs do not have to periodically demonstrate compliance
with all of Medicare's conditions of participation; (2) surveyors do
not fully review an HHA's branch office operations; (3) rapidly
growing HHAs do not receive more frequent surveys, even though rapid
growth has been linked to difficulties in complying with Medicare's
conditions; and (4) HHAs repeatedly cited for serious deficiencies
identified during a standard survey are rarely terminated or
otherwise penalized. 


      HHAS ARE NOT ASSESSED
      AGAINST ALL CONDITIONS OF
      PARTICIPATION
-------------------------------------------------------- Chapter 0:3.1

HCFA initially certifies and then recertifies most HHAs without
requiring them to ever demonstrate compliance with all the conditions
of participation.  Instead, HCFA asks the surveyors to initially
limit their evaluation of HHAs to the standard survey and then expand
the survey to the other conditions only if they find problems.  As a
result, HCFA and Medicare patients usually do not know whether an HHA
is complying with conditions not included in the standard survey. 

A recent Operation Restore Trust (ORT) project in California targeted
44 HHAs that provided unusually high numbers of services to their
patients and received high levels of Medicare payments compared with
their peers.\1 HCFA and state surveyors evaluated these HHAs against
11 of the 12 conditions of participation, rather than initially
limiting their evaluation to the 5 conditions and 1 standard reviewed
during a standard survey.\2

HCFA and state surveyors identified a significant number of HHAs that
were noncompliant with conditions typically excluded from
review--conditions that address the HHA's operations and the care it
provides to Medicare beneficiaries.  Nearly three-quarters of the
HHAs failed to comply with at least one of the conditions not covered
in the standard survey, and 21 of the 44 HHAs either voluntarily
withdrew their certification or had their certification terminated by
HCFA.  Although this project targeted HHAs suspected of problems, it
does demonstrate that criteria other than those used in the limited
standard survey may be better predictors of compliance with all the
conditions of participation. 


--------------------
\1 ORT initially was a 2-year, multiagency effort in five states that
targeted fraud and abuse by three types of Medicare providers:  HHAs,
skilled nursing facilities, and durable medical equipment suppliers. 
In May 1997, the Secretary of HHS announced that ORT would continue
for another 2 years and include projects in 12 additional states. 

\2 This project did not cover HHA compliance with the condition
regarding qualifications to furnish outpatient physical therapy or
speech pathology services because none of the HHAs provided such
services on an outpatient basis at their parent or branch offices. 


      BRANCH OFFICES OF HHAS ARE
      FREQUENTLY NOT EVALUATED
-------------------------------------------------------- Chapter 0:3.2

HCFA defines a branch office of an HHA as a unit within the
geographic area served by the parent office that shares
administration, supervision, and services with the parent office. 
Since the mid-1980s, many HHAs have created branch offices.  As shown
in figure 1, about 2,200 HHAs operated nearly 5,500 branch offices in
January 1997--over four times the number in November 1993.  In Texas,
for example, we identified 106 HHAs with 3 or more branches, and 1
HHA had 25 branch offices. 

   Figure 1:  Growth in the Number
   of HHA Branch Offices

   (See figure in printed
   edition.)

Source:  HCFA's On-line Survey Certification and Retrieval System. 

Since they are considered to be an integral part of an HHA, branches
are not required to independently meet the conditions of
participation.  Further, HCFA does not require surveyors to visit
patients served by each branch office.  Since new branch offices do
not undergo an initial certification survey, HCFA cannot be assured
that they meet Medicare's definition of a branch office.  And, most
importantly, not directly surveying branch operations means that
quality-of-care issues within an HHA's overall operations may be
missed.  When branches have been surveyed because the HHA wanted to
convert them to parent offices, significant problems have been found. 
Several examples follow: 

  -- In California, surveyers found that one branch of an HHA cared
     for 581 patients over the 12 months ending September 1996--more
     than the average number of patients cared for by an HHA in the
     state during that time.  Moreover, the branch was not complying
     with one condition of participation, and the surveyers
     recommended denial of the HHA's initial certification.  Among
     its problems was that the branch had no system in place to
     ensure that its contractor staff had the appropriate
     qualifications and licenses. 

  -- Similarly, a branch office of a Massachusetts HHA had cared for
     69 patients since the HHA's last survey.  The branch was denied
     initial certification as a parent office because it failed to
     meet nine standards associated with several conditions of
     participation.  For example, the surveyors found that the branch
     office, in 10 of 12 cases examined, did not follow the plan of
     care and provide services as frequently as ordered by a
     physician.  At the time of our review, the HHA had not yet
     submitted its correction plan and had not been certified as a
     parent office. 

While HCFA's guidance allows surveyors to conduct the entire
recertification survey of an HHA at a branch office, state surveyors
told us that this is seldom, if ever, done.  Branch offices typically
do not maintain all the personnel files or clinical information that
surveyors need in their evaluation.  As a practical matter, surveyors
told us that they may not have time to conduct home visits with
branch office patients and still finish the survey within their
allotted time and resources. 


      NO THRESHOLDS EXIST TO
      TRIGGER MORE FREQUENT
      SURVEYS OF RAPIDLY GROWING
      AGENCIES
-------------------------------------------------------- Chapter 0:3.3

Increasing workload may necessitate changes in an HHA's operations;
this, in turn, can affect its compliance with Medicare's
participation requirements.  While HCFA's criteria for setting survey
frequency include many factors, they do not include consideration of
whether an HHA is growing rapidly or maintaining a stable level of
operations--information state surveyors generally would not have
before conducting their survey. 

New HHAs have the potential for rapid growth and, as a result, are
more likely to have difficulties complying with Medicare's conditions
of participation.  As shown in table 2, we found that nearly
one-fourth of the HHAs initially certified in 1993 in California and
Texas received Medicare payments exceeding $1 million in 1994--their
first full year of Medicare certification--and the average number of
patients they treated in a year at least tripled between 1993 and
1995.  For example, in 1993, one California HHA treated 11 patients
and received $33,000 from Medicare; in 1995, the HHA treated 1,810
patients and received $12.7 million in Medicare payments.  Also, the
percentage of these rapidly growing HHAs cited for noncompliance with
the conditions of participation exceeded the national norm. 
Nationwide, about 3 percent of all HHAs each year are cited for
failing to meet Medicare's conditions of participation.  In contrast,
40 percent of the high-growth HHAs in California and 11 percent of
the high-growth Texas HHAs did not meet the conditions in their most
recent surveys. 



                          Table 2
          
           Characteristics of High-Growth HHAs in
          California and Texas That Were Initially
                     Certified in 1993

                              California     Texas
----------------------------  -------------  -------------
Number of HHAs initially      116            174
certified in 1993

Number of these HHAs that     30             44
received more than $1
million in Medicare payments
in 1994

Average Medicare payments to  $2.9 million   $3 million
these HHAs in 1995

Change in average number of   Quadrupled     Tripled
patients treated between
1993 and 1995 by these HHAs

Percentage of these HHAs      40             11
that did not meet conditions
of participation in latest
survey
----------------------------------------------------------
HCFA issued its survey frequency criteria in May 1996, after
legislation authorized it to increase the maximum interval between
surveys from 15 months to 3 years.  As previously noted, HCFA's
criteria consider factors such as an HHA's prior survey results,
changes in ownership, and complaints.  By not considering an HHA's
rate of growth when setting survey frequency, however, HCFA is
missing an opportunity to more quickly identify and correct
compliance deficiencies.  Such information is available from Medicare
contractors and HCFA. 


      FEW HHAS ARE INVOLUNTARILY
      TERMINATED
-------------------------------------------------------- Chapter 0:3.4

Once certified as a Medicare provider, an HHA is virtually assured of
remaining in the program even if repeatedly found to be violating
Medicare's conditions of participation and associated standards. 
There are no penalties short of termination because HCFA has not
developed intermediate sanctions as it was authorized by the Congress
to do a decade ago.  HCFA officials told us that they wanted
experience with the skilled nursing facility intermediate sanctions,
which became effective in July 1995, before implementing intermediate
sanctions against HHAs. 

Until the advent of ORT, the likelihood of an HHA's being terminated
from the Medicare program was remote.  In fiscal years 1994, 1995,
and 1996, about 3 percent of all certified HHAs were terminated, and
most of these were voluntary terminations arising from either mergers
or closures.  Only about 0.1 percent of all certified HHAs in fiscal
years 1994 and 1995 and 0.3 percent in fiscal year 1996 were
involuntarily terminated as a result of noncompliance with the
conditions of participation.  California accounted for almost half of
the 32 involuntary terminations nationwide in 1996, with 8 of its 15
involuntary terminations that year stemming from the ORT project. 

To terminate an HHA, the surveyors must find that it did not comply
with one or more conditions and remained out of compliance 90 days
after a survey first identified the noncompliance.\3 If an HHA
threatened with termination takes corrective action and state
surveyors verify through site visits that this action has brought the
HHA back into compliance, HCFA will cancel the termination process. 

Under Medicare's termination procedures, HHAs remain in the program,
to the potential detriment of beneficiaries, even if they repeatedly
fail to comply with Medicare's conditions of participation. 

  -- In California, for example, an HHA's second recertification
     survey revealed that the HHA was deficient in meeting five
     standards, three of which had been identified in the previous
     year's survey and supposedly corrected.  Several months later,
     at this same HHA, an ORT survey team found eight conditions and
     numerous standards not met.  When this HHA was resurveyed 5
     months later, the surveyors found that it was back in compliance
     with all conditions but that it had yet to meet seven standards. 
     Most of these deficiencies in meeting standards had been cited
     in the preceding surveys, and some had existed for a long time. 
     For example, for the three most recent surveys, this HHA had
     been cited for not following physicians' orders in the written
     plan of care.  The HHA remains certified despite its repeated
     problems. 

  -- Moreover, on a Texas HHA's first recertification survey, 1 year
     after initial certification, the state surveyor found four
     standards not met and referred several cases of possible fraud
     to the Medicare contractor.  Within 10 months of that survey,
     state surveyors resurveyed the HHA and found it was not in
     compliance with seven conditions of participation, and the
     previously cited deficiencies in meeting standards had not been
     corrected.  HCFA issued a termination letter, but within 2
     months of the last survey the HHA had corrected the
     deficiencies, and the termination process was halted.  On a
     complaint investigation 6 months after the deficiencies had been
     corrected, the surveyors found the HHA was again out of
     compliance with three of the same seven conditions.  On this
     most recent survey, the surveyors attributed the death of one
     patient directly to this HHA.  At the time her attorney advised
     her to surrender her state license and Medicare certification,
     the owner/operator of this HHA had already hired a nurse
     consultant to bring the HHA back into compliance. 

HHAs are not threatened with termination if they are complying with
the conditions of participation but are violating one or more
standards and subsequently submit a corrective action plan.  But
surveyors often do not revisit the HHA to verify that it has
implemented the plan and actually corrected the deficiencies.  For
example, Illinois surveyors did not revisit 13 of 21 HHAs that had
submitted plans to correct their violations of Medicare's standards. 

Because of circumstances such as those discussed above, the threat of
termination has little, if any, deterrent value.  The Congress,
recognizing that HCFA should have more enforcement options than that
of terminating an HHA, enacted provisions in the Omnibus Budget
Reconciliation Act of 1987 to address this issue.  These provisions
authorized the Secretary of HHS to impose intermediate sanctions for
a period not to exceed 6 months on HHAs violating Medicare's
conditions of participation.  If the HHA continued to violate
conditions after that 6-month period, it was to be terminated from
the program.  The act required the Secretary of HHS to develop and
implement, not later than April 1, 1989, a range of intermediate
sanctions that were to include civil monetary penalties for each day
of noncompliance, suspension of Medicare payments to the HHA, and
HCFA's appointment of a temporary manager to manage the HHA.  HCFA
proposed alternative sanctions for HHAs in August 1991 but never
finalized its implementing regulations.  Therefore, the only
alternative currently available to HCFA to penalize deficient HHAs is
to terminate them from the program. 


--------------------
\3 If the deficiency jeopardizes patient health and safety and is
considered immediate and serious, HCFA places the HHA on an
accelerated termination timetable. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 0:4

HHAs provide valuable services that enable a growing number of
beneficiaries to continue living at home.  Accompanying this increase
in beneficiaries have been sharply increasing Medicare payments and
rapidly rising numbers of certified HHAs.  HCFA's HHA survey and
certification process, however, fails to provide beneficiaries with
reasonable assurance that their HHA meets Medicare's conditions of
participation and provides quality care.  Yet, certification
represents Medicare's "seal of approval" on the services provided by
an HHA. 

Our ongoing work suggests that it is simply too easy to become
Medicare certified.  Before they are certified, HHAs do not have to
demonstrate a sustained capability to provide quality care to a
minimum number of patients for all types of services.  And because
the requirements are minimal, HCFA certifies nearly all HHAs seeking
certification.  While many HHAs are drawn to the program with the
intent of providing quality care, some are attracted by the relative
ease with which they can become certified and participate in this
lucrative, growing industry.  HHAs can remain in the program with
little fear of losing their certification.  Most will never have to
demonstrate compliance with all of the participation conditions, and,
even if they are found out of compliance, temporary corrective
actions are sufficient to allow them to continue to operate. 

These problems suggest that HCFA needs to pay closer attention to how
it surveys and certifies HHAs.  We expect that our upcoming report
will contain specific recommendations on how HCFA can strengthen the
survey and certification process so that it provides greater
assurance that only those HHAs that provide quality care in
accordance with requirements participate in Medicare. 


-------------------------------------------------------- Chapter 0:4.1

Mr.  Chairman, this concludes my prepared statement.  I would be
pleased to respond to any questions you or Members of the Committee
may have. 


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