Department of Health and Human Services
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
A M H H
BERRANT  EDICARE  OME  EALTH 
 
O P P
UTLIE  R  AYMENT  ATTERNS IN 
 
M -D C O
IAMI ADE  OUNTY AND  THER 
 
G A 2008 
EOG  RAPHIC  REAS IN 
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
December 2009 
OEI-04-08-00570   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.   
 
 E X E C U T I V E   S U M M A R Y  
OBJECTIVE
 
To identify geographic areas that exhibited aberrant Medicare home 
health outlier payment patterns in 2008.  
BACKGROUND 
In December 2008, the Centers for Medicare & Medicaid Services (CMS) 
announced its continuing efforts to fight Medicare fraud, waste, and 
abuse by home health providers in the Miami-Dade County area by 
suspending provider payments and taking other payment and review 
actions.  To date, CMS has placed 33 Miami-Dade home health agencies 
on payment suspension.  In May 2009, the Department of Health and 
Human Services and the Department of Justice created an interagency 
Health Care Fraud Prevention and Enforcement Action Team (HEAT) 
to combat health care fraud nationwide.   
In 2008, Medicare paid approximately $15 billion for home health 
services.  Home health care has grown in recent years for reasons 
including advances in medicine and technology as well as beneficiaries 
preference to receive treatment at home rather than in a hospital or 
nursing home.  However, the recent growth in home health care services 
relative to the number of eligible beneficiaries indicates that it may be 
subject to fraud.   
In October 2000, CMS instituted a prospective payment system (PPS) 
that pays a predetermined rate for 60-day episodes of home health care.  
The payments are adjusted for beneficiaries health conditions and care 
needs, as well as geographical wage differences.  There are no limits to 
the number of 60-day episodes eligible beneficiaries may receive.   
Medicare makes additional payments, known as outlier payments, to 
home health providers that supply services to beneficiaries who incur 
unusually large costs.  Although CMS does not limit, or cap, outlier 
payments to individual providers, total outlier payments for home 
health services may not exceed 5 percent of annual projected total home 
health payments.  In August 2009, CMS issued a home health PPS 
proposed rule for 2010.  Among other things, the proposed rule would 
cap outlier payments to individual home health providers at 10 percent.  
CMS estimates that an individual provider cap will reduce national 
outlier payments to no more than 2.5 percent of total home health 
payments.   
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  i   
 
EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY   
We analyzed all Medicare home health claims that were submitted and 
fully paid in 2008 to identify geographic areas that exhibited aberrant 
Medicare home health outlier payment patterns.  We define aberrant to 
be at least twice the national average for three or more of the five 
payment characteristics we reviewed.  
FINDINGS 
Miami-Dade County accounted for more home health outlier payments 
in 2008 than the rest of the Nation combined.  In 2008, Miami-Dade 
County accounted for 52 percent of the approximately $1 billion Medicare 
paid nationally in home health outlier payments, while only 2 percent of 
all Medicare beneficiaries receiving home health services resided there.  In 
addition, 86 percent (25 of 29) of home health providers that received 
outlier payments over $100,000 per beneficiary in 2008 were located in  
Miami-Dade County.  Further, 67 percent (174 of 259) of home health 
providers that received total outlier payments over $1 million in 2008 were 
located in Miami-Dade County. 
In Miami-Dade County, Medicare outlier payments for home health 
claims with a primary diagnosis related to diabetes were eight times 
the national average.  Medicare outlier payments for claims with a 
primary diagnosis related to diabetes accounted for 6 percent of all home 
health payments.  In Miami-Dade County, Medicare outlier payments for 
home health visits with a primary diagnosis related to diabetes accounted 
for 50 percentor eight times the national averageof total home health 
payments.  Further, the percentage of outlier payments in Miami-Dade 
County exceeded that of other Florida counties with higher rates of 
diabetes. 
Twenty-three counties nationwide exhibited aberrant home health 
outlier payment patterns similar to that of Miami-Dade County but to 
a lesser extent.  Medicare payments in Miami-Dade County were at 
least twice the national average for all five home health outlier payment 
characteristics we reviewed.  An additional 23 counties nationwide had 
payments that were at least twice the national average for three or 
more of the five characteristics.  In addition, 59 percent (850 of 1,432) of 
the total home health providers in Miami-Dade County and the 23 other 
counties with similar characteristics were paid at least twice the 
national average for three or more of the five outlier payment 
characteristics we reviewed. 
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E X E C U T I V E   S U M M A R Y  
RECOMMENDATIONS 
Our findings demonstrate that home health services in Miami-Dade 
County, as well as 23 additional counties nationwide, warrant additional 
review as part of ongoing antifraud activities, such as HEAT, in the 
Medicare program.  
To address our findings, we recommend that CMS: 
Continue with efforts to institute a cap on the total outlier payments 
an individual home health provider may receive annually. 
Review home health providers that exhibit aberrant outlier payment 
patterns and respond appropriately based on the findings. 
Continue with efforts to strengthen enrollment standards for home 
health providers to prevent illegitimate home health agencies from 
obtaining billing privileges.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with all three recommendations.  At the time of its 
comments, CMS was analyzing public comments on the home health 
PPS proposed rule which would, among other things, cap outlier 
payments at 10 percent per agency. The final rule was published in the 
Federal Register on November 10, 2009, and is effective January 1, 
2010.  CMS has also taken steps to address widespread abuse of 
Medicare outlier payments to home health agencies in Miami-Dade 
County.   
We support CMSs efforts to address these issues and encourage it to 
continue making progress in these areas.  We made technical changes to 
the report based on CMSs comments. 
 
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 T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
 
I N T RO DUC T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
 
 
F I N D IN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
  Miami-Dade County accounted for more home health outlier 
         payments in 2008 than the rest of the Nation combined. . . . . . . . . 8 
  In Miami-Dade County, Medicare outlier payments for 
         home health claims with a primary diagnosis related to 
         diabetes were eight times the national average  . . . . . . . . . . . . . . 10 
  Twenty-three counties nationwide exhibited aberrant home  
         health outlier payment patterns similar to that of Miami-Dade  
         County but to a lesser extent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 
 
R E C O MMEN D A T ION S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 
Agency Comments and Office of Inspector General Response . . . 14 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 
  A:  Counties in Which Medicare Home Health Payments  
               Were At Least Twice the National Average for Three   
               or More of the Five Characteristics We Reviewed. . . . . . . . . . 16 
  B:  Home Health Providers in the Miami-Dade County and  
               the 23 Counties That Were Paid At Least Twice the  
               National Average for Three or More of the Five Payment 
               Characteristics We Reviewed . . . . . . . . . . . . . . . . . . . . . . . . . . 17 
  C:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 
 
 
A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22   
 
 I N T R O D U C T I O N  
OBJECTIVE 
To identify geographic areas that exhibited aberrant Medicare home 
health outlier payment patterns in 2008.  
BACKGROUND 
In December 2008, the Centers for Medicare & Medicaid Services 
(CMS) announced its continuing efforts to fight Medicare fraud, 
waste, and abuse by home health providers in the Miami-Dade 
County area by suspending provider payments and taking other 
payment and review actions.1  To date, CMS has placed 33 Miami-
Dade home health agencies on payment suspension.   
In addition to suspending payments, CMS has visited Medicare 
beneficiaries to investigate the medical necessity of home health 
services they received.2  These visits indicated, among other things, 
that services related to diabetes may represent a payment 
vulnerability in the Medicare program.  For example, some home 
health providers received Medicare payments for reportedly providing 
insulin injections to beneficiaries who did not qualify for home health 
services because they were not confined to their home.   
Medicare Home Health Services 
In 2008, Medicare paid approximately $15 billion for home health 
services.3  Home health care has grown in recent years for reasons 
including medical and technological advances.  Growth in home health 
care can also be attributed to beneficiaries preference to stay at home 
rather than seek treatment in a hospital or nursing home.  However, 
the recent growth in home health care services relative to the number of 
eligible beneficiaries indicates that these services may be subject to 
increased fraud.   
 
1 CMS, CMS Strengthens Efforts to Fight Medicare Waste, Fraud and Abuse.  Press 
Release, December 29, 2008.  Available online at 
http://www.cms.hhs.gov/apps/media/press_releases.asp.  Accessed on June 22, 2009.  
2 USA Today, Sleuths go door to door to sniff out Medicare fraud.  Available online at 
http://www.usatoday.com/news/health/2008-10-05-fraud-inside_N.htm.  Accessed on  
May 14, 2009. 
3 Office of Inspector General (OIG) analysis of 2008 Medicare home health claims.  This 
figure reflects all claims that were submitted and fully paid in 2008.  We consider a claim to 
be fully paid if both the initial partial payment of the estimated rate for a full 60-day 
episode of care and remaining payment, including any outlier payments, at the end of the 
60-day episode have been made on the claim.  
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I N T R O D U C T I O N  
To qualify for home health services, Medicare beneficiaries must  
(1) be confined to the home; (2) need intermittent skilled nursing 
services, physical or speech therapy, or continuing occupational therapy; 
(3) be under the care of a physician; and (4) be under a plan of care 
prescribed and periodically reviewed by a physician.4   
Medicare Home Health Billing Requirements 
To obtain Medicare billing privileges, home health providers must 
submit a completed application and supporting documentation to CMS.5  
The application requires information such as personal details about the 
provider (e.g., adverse legal actions and convictions); the providers 
practice location; and the names of individuals having ownership or 
managing control of the providers business.  By signing and submitting 
the application, the provider agrees to follow all Medicare laws, 
regulations, and program instructions.  Further, providers are required 
to provide documentation demonstrating that they have sufficient 
reserve funds to operate for their first 3 months as Medicare providers.   
Once approved, home health providers may bill for all home health 
services excluding durable medical equipment.6 7  Providers must 
include beneficiaries diagnosis codes on all claims.  The primary 
diagnosis is based on a beneficiarys condition most related to the 
current plan of care.8  This code must relate to home health services 
rendered by the provider.  For example, if a provider assists a 
beneficiary with administering insulin only, a diabetes-related diagnosis 
code should be listed as the primary diagnosis code on the claim.   
Medicare Payment System for Home Health Services 
In October 2000, CMS instituted a prospective payment system (PPS) 
that pays a predetermined rate for 60-day episodes of home health 
 
4 42 CFR  409.42. 
5 CMS, Medicare Enrollment Application:  Institutional Providers.  Available online at 
http://www.cms.hhs.gov/cmsforms/downloads/cms855a.pdf.  Accessed on June 16, 2009. 
6 CMS, Home Health PPS:  Overview.  Available online at 
http://www.cms.hhs.gov/HomeHealthPPS/.  Accessed on June 16, 2009. 
7 Some home health providers may also be certified to bill Medicare for durable medical 
equipment.  Durable medical equipment includes items such as canes, knee braces, and 
wheelchairs. 
8 CMS, Medicare Home Health Diagnosis Coding.  Available online at 
http://www.cms.hhs.gov/HomeHealthPPS/Downloads/v_code_rev_stmt2.pdf.  Accessed on 
June 16, 2009. 
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I N T R O D U C T I O N  
care.9  The payments are adjusted for beneficiaries health conditions 
and care needs, as well as geographical wage differences.   
There are no limits to the number of 60-day episodes eligible 
beneficiaries may receive.10   
Home health providers receive an initial partial payment of the 
estimated rate for a full 60-day episode of care when the CMS 
contractor servicing their area receives their claims.11 12  Providers 
receive the remaining payment at the end of the 60-day episode.  The 
total payment is the sum of the initial and remaining payments, unless 
there is an applicable adjustment.13 14  Beneficiaries do not make 
copayments for home health services. 
Medicare makes additional payments, known as outlier payments, to 
home health providers that supply services to beneficiaries who incur 
unusually high costs.15  There is currently no limit, or cap, on outlier 
payments an individual home health provider may receive.  However, 
total outlier payments for home health services may not exceed                      
5 percent of annual projected total home health payments.16 17   
In August 2009, CMS issued a home health PPS proposed rule for 2010.  
Among other things, the proposed rule would cap outlier payments to 
individual home health providers at 10 percent.18  CMS estimates that 
an individual provider cap will reduce national outlier payments to no 
more than 2.5 percent of total home health payments.   
 
9 CMS, Home Health PPS:  Overview.  Available online at 
http://www.cms.hhs.gov/HomeHealthPPS/.  Accessed on June 16, 2009. 
10 Ibid. 
11 Ibid. 
12 CMS contracts with regional home health intermediaries to pay claims submitted by 
home health providers. 
13 CMS, Home Health PPS:  Overview.  Available online at 
http://www.cms.hhs.gov/HomeHealthPPS/.  Accessed on June 16, 2009. 
14 An example of a payment adjustment is a partial episode payment adjustment that 
occurs when a beneficiary transfers to another home health provider during a 60-day 
episode. 
15 CMS, Home Health PPS:  Overview.  Available online at 
http://www.cms.hhs.gov/HomeHealthPPS/.  Accessed on June 16, 2009. 
16 The Balanced Budget Act of 1997, P.L. No. 105-33, 42 U.S.C. 1395fff(b)(5).   
17 If total outlier payments exceed 5 percent in a given year, CMS may adjust its cost-
payment variables (e.g., fixed-dollar loss ratio) to meet the 5-percent requirement for the 
subsequent year. 
18 74 Fed. Reg. 40947 (Aug. 13, 2009). 
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I N T R O D U C T I O N  
Health Care Fraud Prevention and Enforcement Action Team  
In 2007, the Department of Health and Human Services (HHS) and 
the Department of Justice (DOJ) established joint Medicare Fraud 
Strike Force teams in South Florida and Los Angeles to combat 
Medicare fraud.19  As of May 2009, the team operating in South 
Florida has convicted 146 people and secured $186 million in criminal 
fines and civil recoveries.20  The Medicare Fraud Strike Force was 
designed to combat fraud through the use of Medicare data analysis 
and an increased focus on community policing.21  HHS and DOJ 
recently announced the establishment of an interagency Health Care 
Fraud Prevention and Enforcement Action Team (HEAT) to combat 
health care fraud nationwide.22   
The HEAT team is focusing on fraud prevention and building on prior 
OIG and CMS reviews of durable medical equipment providers.23  The 
HEAT team will also undertake initiatives including increased 
training for providers on Medicare compliance, improving data 
sharing between CMS and law enforcement, and strengthening 
program integrity monitoring.  In June 2009, HHS announced that as 
part of the HEAT initiative, 53 people in Miami, Detroit, and Denver 
were indicted for schemes to submit more than $50 million in false 
Medicare claims.24  
Related Work 
OIG has issued several reports related to home health care.  These 
reports have addressed various topics, including variation in Medicare 
 
19 HHS, Attorney General Holder and HHS Secretary Sebelius Announce New 
Interagency Health Care Fraud Prevention and Enforcement Action Team.  News Release, 
May 20, 2009.  Available online at 
http://www.hhs.gov/news/press/2009pres/05/20090520a.html.  Accessed on June 19, 2009.    
20 Ibid. 
21 HHS, Medicare Fraud Strike Force Operations Lead to Charges Against 53 Doctors, 
Health Care Executives and Beneficiaries for More than $50 Million in Alleged False Billing 
in Detroit.  News Release, June 24, 2009.  Available online at 
http://www.hhs.gov/news/press/2009pres/06/20090624a.html.  Accessed on June 25, 2009.  
22 HHS, Attorney General Holder and HHS Secretary Sebelius Announce New 
Interagency Health Care Fraud Prevention and Enforcement Action Team.  News Release, 
May 20, 2009.  Available online at 
http://www.hhs.gov/news/press/2009pres/05/20090520a.html.  Accessed on June 19, 2009.  
23 Ibid. 
24 HHS, Medicare Fraud Strike Force Operations Lead to Charges Against 53 Doctors, 
Health Care Executives and Beneficiaries for More than $50 Million in Alleged False Billing 
in Detroit.  News Release, June 24, 2009.  Available online at 
http://www.hhs.gov/news/press/2009pres/06/20090624a.html.  Accessed on June 25, 2009. 
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I N T R O D U C T I O N  
payments for home health services,25 problem providers and their 
impact on Medicare,26 and geographical variation in the average 
number of visits provided by home health agencies.27  In addition, other 
OIG work has uncovered potential health care fraud in South Florida, 
specifically in Miami-Dade County.28 29 30 
In February 2009, the Government Accountability Office (GAO) issued a 
report on improvements needed to address improper payments in home 
health.31  GAO determined that compared to the rest of the country, a 
large percentage of home health cases in Miami-Dade County involved 
diabetic beneficiaries.  Specifically, 50 percent of all Medicare 
beneficiaries in Miami-Dade County who received home health services 
had a diagnosis of diabetes compared to an average of 16 percent for all 
other counties included in the analysis.  
METHODOLOGY 
Scope  
We reviewed all Medicare home health claims that were submitted and 
fully paid in 2008.32   
Data Source, Collection, and Analysis 
We obtained the National Claims History file containing the home 
health claims included in this study from CMS.  We used the home 
health provider identification numbers on the claims and information in 
CMSs Online Survey, Certification, and Reporting database to 
determine the providers ZIP Codes.  Next, we matched the providers 
 
25 OEI-04-93-00260, Variation Among Home Health Agencies in Medicare Payments for 
Home Health Services, July 1995. 
26 OEI-09-96-00110, Home Health:  Problem Providers and Their Impact on Medicare, 
July 1997. 
27 OEI-04-93-00262, Geographical Variation in Visits Provided by Home Health 
Agencies, September 1995. 
28 OEI-01-08-00100, Medicare Part B Billing for Ultrasound, July 2009. 
29 OEI-09-07-00030, Aberrant Billing in South Florida for Beneficiaries with 
HIV/AIDS, September 2007. 
30 OEI-03-07-00150, South Florida Suppliers Compliance With Medicare Standards:  
Results From Unannounced Visits, March 2007. 
31 GAO-09-185, Medicare:  Improvements Needed to Address Improper Payments in 
Home Health. 
32 We consider a claim to be fully paid if both the initial partial payment of the estimated 
rate for a full 60-day episode of care and remaining payment, including any outlier 
payments, at the end of the 60-day episode have been made on the claim.  
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I N T R O D U C T I O N  
ZIP Codes to the corresponding counties using SAS computer software 
and determined the total number of home health providers in each 
county.33  Similarly, we repeated the matching process using 
beneficiaries ZIP Codes listed on the claims to determine the total 
number of beneficiaries who received home health services in each 
county.34  We also determined the total number of claims submitted 
from each county where home health providers were located.  
For each county, we calculated the total amount Medicare paid for the 
home health claims and determined the outlier paid amounts included 
in those payments.  For each provider, we also calculated the total 
outlier amount Medicare paid per beneficiary.  In addition, we 
calculated the total outlier amount Medicare paid in each county for 
claims with a primary diagnosis related to diabetes.35  Using this 
information, we calculated the following five payment characteristics 
nationally, as well as for each county and home health provider listed on 
the claims:36  
1.  average outlier payment per provider;37 
2.  average outlier payment per beneficiary;38 
3.  average outlier payment per claim; 
4.  outlier payment rates (i.e., outlier payments as a percentage of total 
home health payments); and 
5.  outlier payment rates for claims with a primary diagnosis related to 
diabetes (i.e., outlier payments for claims with a primary diagnosis 
related to diabetes as a percentage of total home health payments). 
 
33 SAS uses a ZIP Codes geographic center to match the ZIP Code to its corresponding 
county.  
34 We counted each beneficiary only once. 
35 We considered all services with a Common Procedure Terminology (CPT) code with a 
prefix of 250 to be diabetes related.  CPT codes are used to categorize medical procedures 
and services.  
36 According to the U.S. Census Bureau, there were 3,141 counties or county equivalents 
in the United States in 2007.  There were 2,158 counties or county equivalents listed on the 
claims we reviewed.  
37 This value is the equivalent of total outlier payments for an individual home health 
provider.  
38 Some beneficiaries received services from more than one home health provider.  These 
beneficiaries were counted more than once when calculating the average outlier payment 
per beneficiary for each home health provider. 
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I N T R O D U C T I O N  
We define payments as aberrant if they are at least twice the national 
average for three or more of the above five payment characteristics.  
Limitations 
Some ZIP Codes span multiple counties.  However, in this study,  
ZIP Codes were matched to only one corresponding county.  Therefore, 
some providers, beneficiaries, and claims associated with a particular 
county in our analysis may have actually been associated with a 
neighboring county. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections approved by the Council of the Inspectors General on 
Integrity and Efficiency.
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 F I N D I N G S  
 
Miami-Dade County accounted for more home  In 2008, Miami-Dade County 
health outlier payments in 2008 than the rest of  accounted for 52 percent of the 
approximately $1 billion Medicare 
the Nation combined   
paid nationally in home health 
outlier payments, while only 2 percent of all Medicare beneficiaries 
receiving home health services resided there.  In addition, outlier 
payments constituted 59 percent of total home health payments in 
Miami-Dade County, but constituted only 7 percent of total home health 
payments, on average, nationally. 
As shown in Table 1, the average outlier payment per beneficiary for 
home health providers located in Miami-Dade County was 32 times the 
corresponding 2008 national average.  The average outlier payment per 
claim in Miami-Dade County was 22 times the national average.  
Further, the average payment per provider in Miami-Dade County was 
14 times the national average.  
 
Table 1:  Summary of 2008 Medicare Home Health Outlier Payments 
Ratio of Miami-Dade 
National  Miami-Dade  County Average  to 
Home Health Outlier Payments  Average  County Average  National Average* 
Payment per beneficiary  $378  $11,928  32:1 
Payment per claim  $190  $4,100  22:1 
Payment per provider  $110,785  $1,581,608  14:1 
Outlier payment rate**  7%  59%  8:1 
* Rounded to the closest whole number. 
** Based on total 2008 Medicare home health payments. 
Source:  OIG analysis of 2008 Medicare home health claims. 
 
Over 85 percent of home health providers that received outlier payments 
over $100,000 per beneficiary in 2008 were located in Miami-Dade County 
In 2008, Medicare paid over $100,000 each for home health services 
provided to 33 beneficiaries nationally.  The total payment for these 
services exceeded $3 million.  Services for the 33 beneficiaries were 
provided by 29 home health providers.  Of these providers, 86 percent 
(25 of 29) were located in Miami-Dade County.   
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F I N D I N G S  
Home health providers in Miami-Dade County also represented the 
majority of providers that received Medicare payments per beneficiary at 
amounts over $75,000.  Providers in Miami-Dade County accounted for  
70 percent (111 of 158) of home health providers nationwide that received 
Medicare payments from $75,001 to $100,000 per beneficiary. 
Table 2 shows total outlier payments per beneficiary, the number of 
home health providers receiving those payments in the entire Nation 
and Miami-Dade County, and the percentage of providers in  
Miami-Dade County receiving those payments.   
 
Table 2:  Home Health Outlier Payments Per Beneficiary in 2008 
Number of Providers in  Miami-Dade Providers as a 
Total Outlier Payment Amount  All Counties (including  Number of Providers in  Percentage of Providers in 
Per Beneficiary  Miami-Dade County)*  Miami-Dade County*  All Counties** 
Up to $25,000  5,782  327  6% 
$25,001 to $50,000  1,400  280  20% 
$50,001 to $75,000  468  232  50% 
$75,001 to $100,000  158  111  70% 
Over $100,000  29  25  86% 
Total  7,837  975  12% 
* Some providers may be included in more than one category. 
** Rounded to the closest whole number. 
Source:  OIG analysis of 2008 Medicare home health claims. 
 
 
Sixty-seven percent of home health providers that received total outlier 
payments over $1 million in 2008 were located in Miami-Dade County 
In 2008, a total of 829 providers nationwide received Medicare home 
health outlier payments.  Of the providers that received outlier 
payments over $1 million, 67 percent (174 of 259) were located in  
Miami-Dade County.  Twenty-two providers nationwide received outlier 
payments over $5 million in 2008.  Of these providers, 91 percent  
(20 of 22) were located in Miami-Dade County. 
 
  
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  9  F  N  D  N  G  S 
Table 3 shows the number of home health providers receiving total 
outlier payments over $1 million in the entire Nation and Miami-Dade 
County and the percentage ofproviders in Miami-Dade County 
receiving those payments in 2008. 
Table 3:  Total Home Health Outlier Payments Over $1 Million in 2008 
Miami-Dade Providers 
Number of Providers in  as a Percentage of 
All Counties (including  Number of Providers in  Providers in All 
Total Outlier Payment Amount  Miami-Dade County)  Miami-Dade County  Counties' 
Over $1 million to $5 million  237  154  65% 
Over $5 million to $10 million  21  19  90% 
Over $10 million  1  1  100% 
Total  259  174  67% 
 Rounded to the closest whole number. 

Source: OIG analysis of 2008 Medicare home health claims. 

In Miami-Dade County, Medicare outlier  The primary diagnosis associated 
payments for home health claims with a primary  with almost one-quarter of all 
home health visits nationally in 
diagnosis related to diabetes were eight times 
2008 was related to diabetes.39 
the national average 
Medicare outlier payments for 
these visits accounted for 6 percent of all home health payments.  In 
Miami-Dade County, Medicare outlier payments for home health visits 
with a primary diagnosis related to diabetes accounted for 50 percent
or eight times the national average-oftotal home health payments. 
Further, the percentage of outlier payments in Miami-Dade County 
exceeded that of other Florida counties with higher rates of diabetes.4o 41 
39 The beneficiaries may have also received other services for conditions unrelated to 
diabetes during these visits. 
40 We obtained diabetes rates among Florida adults over the age of 20 years from the 
Centers for Disease Control and Prevention. These rates were for 2005, the most recent 
year available at the time ofour review. Available online at 
http://apps.nccd.cdc.govillDT STRS2/CountyPrevalenceData.aspx?Stateld=12. Accessed on 
June 16, 2009. 
41 We ranked Florida counties according to the number of adults with diabetes and 
selected the four counties with the largest populations of adults with diabetes as well as a 
diabetes rate exceeding that in Miami-Dade County. 
OEI040800570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  10  F  N  D  N  G  S 
Table 4 shows a comparison of the most recently available rates of 
diabetes among adults over age 20 in Miami-Dade County and four 
other Florida counties and the corresponding outlier payment rates for 
home health claims with a primary diagnosis related to diabetes in each 
county in 2008. 
Table 4:  Comparison of Adult Diabetes Rates and Medicare Outlier 
Payments for Home Health Claims With a Primary Diagnosis Related to 
Diabetes in Five Florida Counties 
Medicare Outlier Payment 
Rate for Claims With a 
Number of Adults  Adult Diabetes  Primary Diagnosis 
County  With Diabetes*  Rate* t  Related to Diabetes" 
Miami-Dade  129,100  7.5%  50% 
Hillsborough  73,810  9.1%  4% 
Duval  50,260  8.6%  1% 
Pinellas  66,280  9.1%  1% 
Palm Beach  84,500  8.8%  1% 
 Source: The Centers for Disease Control and Prevention. The data were for 2005. the most recent year 

available at the time of our review. 

tin 2005, the rate of diabetes in Florida was 17.1 percent in adults aged 65-74 years and 15.7 percent in 

adults aged 75 or older. Rates were based on the total population of adults aged 18 years or older. 

 Source: OIG analysis of 2008 Medicare home health claims. 

Twenty-three counties nationwide exhibited  Medicare payments in 
Miami-Dade County were at least 
aberrant home health outlier payment patterns 
twice the national average for all 
similar to that of Miami-Dade County but to a 
five home health outlier payment 
lesser extent 
characteristics we reviewed. An 
additional 23 counties nationwide had payments that were at least 
twice the national average for three or more of the five characteristics.42 
See Appendix A for a summary of the Medicare home health outlier 
payments for each of the five payment characteristics we reviewed in 
Miami-Dade County and the other 23 counties. 
42 We do not identify the 23 counties because they may be subject to future OIG and 
HEAT reviews. 
OEI04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  11  FINDINGS 
Of the total home health providers in Miami-Dade County and the other 
23 counties, 59 percent (850 of 1,432) were paid at least twice the 
national average for three or more of the five payment characteristics 
we reviewed.  See Appendix B for additional details on the number of 
providers that were paid at least twice the national average for three or 
more payment characteristics, as well as the total number of providers 
in each county. 
OEI-040800570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  12   
 
 R E C O M M E N D A T I O N S  
 
South Florida has been the focus of efforts to combat Medicare fraud, 
waste, and abuse in recent years.  In addition, in May 2009, HHS and 
DOJ established an interagency HEAT team to combat health care 
fraud nationwide.  Our findings demonstrate that home health services 
in Miami-Dade County, as well as in 23 additional counties nationwide, 
warrant additional review as a part of ongoing antifraud activities in 
the Medicare program.  
We found that Miami-Dade County accounted for more home health 
outlier payments in 2008 than the rest of the Nation combined.  Over  
85 percent of home health providers that received outlier payments over 
$100,000 per beneficiary were located in Miami-Dade County.  In 
addition, 67 percent of home health providers that received total outlier 
payments over $1 million were located in Miami-Dade County.  We also 
found that in Miami-Dade County, Medicare outlier payments for home 
health claims with a primary diagnosis related to diabetes were eight 
times the national average.   
In addition, we found that 23 other counties exhibited aberrant home 
health payment patterns similar to that of Miami-Dade County but to a 
lesser extent.  Over half of the total home health providers in Miami-
Dade County and the 23 other counties we identified were paid at least 
twice the national average for three or more of the five payment 
characteristics we reviewed.  
To address our findings, we recommend that CMS: 
Continue With Efforts To Institute a Cap on the Total Outlier Payments an 
Individual Home Health Provider May Receive Annually 
In August 2009, CMS issued a home health PPS proposed rule for 2010 
to cap outlier payments to individual home health providers at 10 
percent, thus reducing national outlier payments to an estimated 2.5 
percent of total home health payments.  Capping outlier payments to 
individual home health providers may make the area of home health 
services less prone to fraudulent activity by mitigating potential 
inappropriate billing vulnerabilities.  Currently, CMS imposes a cap on 
the payments a hospice agency may receive based on the number of 
Medicare beneficiaries the agency serves.   
 
 
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  13   
 
RR EE CC OO MM MM EE NN DD AA TT II OO NN SS   
Review Home Health Providers That Exhibit Aberrant Outlier Payment 
Patterns and Respond Appropriately Based on the Findings  
For example, CMS could develop a method of determining thresholds for 
a number of characteristics that would trigger an immediate,             
prepayment review.  These characteristics may include the factor by 
which a providers average outlier payment exceeds the national 
average.   
To assist CMS, we provided information under separate cover on the 
specific providers in this report that were paid at least twice the 
national average for three or more of the five payment characteristics 
we reviewed. 
Continue With Efforts To Strengthen Enrollment Standards for Home 
Health Providers To Prevent Illegitimate Home Health Agencies From 
Obtaining Billing Privileges  
In its August 2009 home health PPS proposed rule, CMS described 
methods for limiting enrollment of home health agencies having 
characteristics associated with fraudulent activity (e.g., sharing the 
same practice location, selling or transferring ownership of the agency 
within 3 years of enrollment).  We encourage CMS to continue to pursue 
these methods for limiting the enrollment of home health providers.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with all three recommendations.  At the time of its 
comments, CMS was analyzing public comments on the home health 
PPS proposed rule which would, among other things, cap outlier 
payments at 10 percent per agency.  The final rule was published in the 
Federal Register on November 10, 2009, and is effective January 1, 
2010.  CMS has also taken steps to address widespread abuse of 
Medicare outlier payments to home health agencies in Miami-Dade 
County.  Specifically, CMS is (1) suspending home health agencies with 
high amounts of outlier payments, (2) enhancing visits to beneficiaries 
in their homes to verify that they qualify for home health services, and 
(3) utilizing auto-denial edits for beneficiaries who do not qualify for 
home health services.   
Further, CMS initiated a new process in January 2009 to deny the 
enrollment of a home health agency if the owner has an existing 
overpayment that has not been fully repaid or has been placed under 
Medicare payment suspension.  As of January 2009, CMS contractors 
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  14   
 
R E C O M M E N D A T I O N S  
are required to perform additional verification of home health agencies 
having certain characteristics (i.e., agencies that change their practice 
locations, banking information, special payment addresses, or reactivate 
their Medicare billing privileges).  In the home health PPS final rule, 
effective January 1, 2010, CMS also established methods for limiting 
enrollment of home health agencies based on certain characteristics.   
We support CMSs efforts to address these issues and encourage it to 
continue making progress in these areas.  We made technical changes to 
the report based on CMSs comments.  For the full text of CMSs 
comments, see Appendix C.   
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  15      A P P E N D I X   A 
 
Counties in Which Medicare Home Health Payments Were At Least Twice the National Average for Three or More of the Five Characteristics We Reviewed 
Average Outlier  Outlier Payment Rates for  Total Number of Payment 
Payment Per  Average Outlier Payment  Average Outlier Payment  Claims With a Primary  Characteristics At Least 
County  Provider  Per Beneficiary  Per Claims  Outlier Payment Rates *  Diagnosis Related to Diabetes*  Twice the National Average 
All counties 
(National Average)  $110,785  $378  $190  7%  6%   
Miami-Dade  $1,581,608  $11,928  $4,100  59%  50%  5 
1  $295,223  $1,617  $807  22%  20%  5 
2  $355,417  $1,379  $682  19%  15%  5 
3  $267,941  $1,396  $575  26%  21%  5 
4  $233,407  $1,496  $538  17%  14%  5 
5  $541,411  $785  $490  15%  14%  5 
6  $628,018  $10,129  $2,166  53%  52%  5 
7  $245,482  $1,504  $644  18%  17%  5 
8  $416,053  $2,057  $1,117  25%  23%  5 
9  $143,841  $812  $453  14%  13%  4 
10  $307,569  $1,728  $559  14%  10%  4 
11  $945,903  $736  $709  20%  16%  4 
12  $176,877  $1,961  $605  19%  18%  4 
13  $334,637  $1,949  $348  16%  12%  4 
14  $415,415  $751  $463  17%  15%  4 
15  $359,730  $590  $440  18%  15%  4 
16  $200,225  $1,267  $448  17%  16%  4 
17  $258,952  $494  $646  18%  18%  4 
18  $201,032  $1,369  $420  13%  12%  3 
19  $24,416  $1,436  $740  29%  --  3 
20  $26,399  $89  $471  14%  14%  3 
21  $199,801  $776  $487  21%  11%  3 
22  $196,123  $805  $372  14%  13%  3 
23  $98,316  $603  $557  16%  15%  3 
* Rates are based on total 2008 Medicare home health payments. 
** Characters in bold indicate payment characteristics at least twice the national average. 
Source:  Office of Inspector General analysis of 2008 Medicare home health claims. 
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS    16   
 
   A P P E N D I X   B  
 
Home Health Providers in the Miami-Dade County and the 23 Counties That Were Paid At Least Twice 
the National Average for Three or More of the Five Payment Characteristics We Reviewed 
Total Number of Providers 
Number of Providers With Three or More Payment 
With Three or More 
Characteristics At Least Twice the National Average 
Payment Characteristics At 
Three  Four  Five  Least Twice the National  Total Number of 
County  Characteristics  Characteristics  Characteristics  Average  Providers 
Miami-Dade  4  56  248  308  335 
1  12  60  164  236  399 
2  7  13  18  38  87 
3  0  0  1  1  1 
4  2  7  22  31  98 
5  0  0  1  1  2 
6  0  0  1  1  1 
7  1  2  5  8  36 
8  1  0  5  6  11 
9  1  6  10  17  46 
10  1  0  0  1  1 
11  0  1  6  7  14 
12  10  74  81  165  328 
13  0  0  1  1  3 
14  0  0  1  1  3 
15  0  0  1  1  3 
16  1  1  1  3  6 
17  0  0  1  1  6 
18  0  0  1  1  5 
19  1  0  0  1  1 
20  1  0  0  1  1 
21  0  0  1  1  3 
22  1  8  9  18  39 
23  0  0  1  1  3 
Total  
(24 Counties)  43  228  579  850  1,432 
Source:  Office of Inspector General analysis of 2008 Medicare home health claims. 
 
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  17  .. 
A P PEN 0 
x .. C 
~~',R\'ICes,~ 
Centers for Medicare & Medicaid Seivices 
(L DElAJT OF HEALTH & UllAN SERVICES
 
Administrator 
Washington, DC  20201 
DATE:  OCT 2 7 2009

TO:	  Daniel R. Levinson
 
Inspector General
 
FROM:	  Charlene Frizzera 
AcUng Administrator 
SUBJECT:	  Officeof Inspector General Draft Report: "Aberrant Medicate Home Health 
Outlier. Payment Patterns in Miami-Dade County  and Other Geographic Areas in 
2008," (OEI-04-08-00570) 
Thank you for the opportunity to review and coml1ent on the above referenced Ofnce of 
InspectorGeiieral (OlG) draft  report. The Centers forMedicare & Medicaid  Services (CMS) 
invested to research and report on Medicare's 
appreciates the 	 effort and resources the OlG has 
home health benefit. CMS has been closely monitoring this issue. 
The eMS has taken steps to address widespread abuse of outlier payments to Medicare certified 
home health agencies (HHAs) in Miami-Dade Cowity, Florida. CMS allows outlier payments 
case-mix. However, there are more than 
for situations thatoeciir infi'eqliently within a normal 
300 HHAs in South Florida that haVe come to rely upoiioiitlier payments  as  a predominant part 
payments in Miami are approximately 58 percent 
of  their overall reimbursement. 'I'he outlier 
(2007 data) of the HHAs overall reimbursement, the highest percentage of outlier payments in 
the country, compared to a national outlier payment of6 percent. 
The outlier payment  was never intended. to be such a large.partofHHA reIJl1butsenient. To 
address this problem,CMShas taken a number of steps:. (1) Suspending FIHAs with high 
outlier payments; (2) E,nhancjng vis.is tobenef;cia1'es in their homes to verify that 
amounts of 
the beneficiaries aualify forthe benef1;.and (3) Utilzing auto"deniaI edits for beneficiaries who 
eMS will c.ontinue tperforl1 ongoing beneficiary 
do not qualify for the hOl1e health benefit. 

and physician interviews, as weLl as onsIte visIts to HEAs in Miami-Dade, which 	 can re.$ultin 
edits, revocation, deaotivation, and other actions. 
in 2007, CMS developed an enrollment demonstration pro.jeet for HIIAs in other 
Additionally, 
geographically.high-risk areas of the country (California  and Texas) to  address high-risk services 
and providers. This demonstration involved strengthenI1lg initial provider and supplier 
ehrollmentand revalidation of enrollm~nt to prevent potentially fraudulent providers from 
entering the Medicare program. The demonstration also incorporated criminal background 
checks of owners and managing employees into the providerenrollmetlt process, Although 
criminal background checks have not yet produced substantial results, mandatory reenroLlment 
OEI.04.08.00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI.DADE COUNTY AND OTHER AREAS 18   
 
A P P E N D I X ~ C  
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  19   
 
A P P E N D I X ~ C  
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  20   
 
A P P E N D I X ~ C  
 
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  21   
 
 A C K N O W L E D G M E N T S  
This report was prepared under the direction of Dwayne F. Grant, 
Regional Inspector General for Evaluation and Inspections in the 
Atlanta regional office.   
Mary-Elizabeth Harmon served as the team leader for this study, and 
Gerius Patterson served as the Lead Analyst.  Other principal Office of 
Evaluation and Inspections staff from the Atlanta regional office who 
contributed to the report include Jaime Durley.  Central office staff who 
contributed include Rita Wurm; Robert A. Vito from the Philadelphia 
regional office also contributed.   
 
  OEI-04-08-00570  ABERRANT HOME HEALTH OUTLIER PAYMENT PATTERNS IN MIAMI-DADE COUNTY AND OTHER AREAS  22