DEPARTMENT OF HEALTH AND HUlvIAN SERVICES
OFFICE OF INSPECTOR GENERAL
WASHINGTON, DC 20201
-
MAR 0.2 2012
TO: Marilyn Tavenner
Acting Administrator
Centers for Medicaid & Medicare Services
r~(,;~~-
FROM: Stuart WrigiJ '
Deputy Inspector General
for Evaluation and Inspections
SUBJECT: Early Alert Memorandum Report: Intermediate Sanctions for
Noncompliant Home Health Agencies, OEI-06-11-00401
This early alert memorandum report provides information related to our ongoing study
Survey and Certification of Home Health Agencies (OEI-06-11-00400)1 and alerts the
Centers for Medicaid & Medicare Services (CMS) regarding Federal statutory
requirements to implement intermediate sanctions for noncompliant home health
agencies (HHAs).
SUMMARY
CMS has not implemented intermediate sanctions for noncompliant HHAs as directed by
the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) and as recommended in a
2008 Office ofInspector General (OIG) report.2, 3 Intermediate sanctions would allow
CMS to penalize HHAs found to be out of compliance with the Medicare conditions of
participation, and give noncompliant HHAs an incentive to improve their practices.
Without intermediate sanctions, the only option available to CMS to penalize
noncompliant HHAs is to terminate their Medicare participation, an option that the
2008 OIG study found CMS rarely exercised Each year since the 2008 report, CMS
indicated activities toward promulgating regulations to implement HHA intermediate
sanctions, but it has not yet issued a proposed rule. Given the length of time since the
passage of OBRA 1987 and since the 2008 OIG recommendation, CMS should make
1 Department of  Health and Human Services (HHS), OIG, Work Plan, Fiscal Year 2012. Available online
at http://oig.hhs.gov/reports-and-publications/archives/workplan/20i2/Work-Plan-2012.pdf.This study
will examine recertification surveys, complaints, and eMS enforcement actions taken in recent years to
address HHAs found to be out of compliance with the Medicare conditions of participation.
20BRA 1987, P.L. 100-203,  4023 (adding Social Security Act IS91(e) and (f)).
3 HHS, OIG, Deficiency History and Recertification of Medicare Home Health Agencies,
OEI-09-06-00040, August 200S. Page 2 - Marilyn Tavenner
HHA intermediate sanctions a high priority and complete their implementation as soon as
possible.
BACKGROUND
HHAs provide home health services for Medicare beneficiaries with short- or long-term
illnesses or injuries who are confined to their homes and need skilled nursing care on an
intermittent basis, physical therapy, speech therapy, or continuing occupational therapy.4
home health services has grown. From 2002 to 2009, the
In recent years, the use of 
Medicare beneficiaries receiving home health services increased by nearly
number of 
Medicare-certified
29 percent (from 2.6 to 3.3 million beneficiaries) and the number of 
HHAs increased by 59 percent (from 6,813 to 10,821 HHAs).5
All HHAs participating in Medicare must meet Federal requirements. CMS is
responsible for ensuring HHAs' compliance with Federal requirements, including the
Medicare conditions of participation, through the survey and certification process.6 If a
surveyor determines that an HHA is out of compliance, the surveyor can cite the HHA
with a deficiency. To continue in Medicare, the HHA must correct the deficiency, which
may include submitting a plan of correction and undergoing additional inspections by
surveyors.7 To incentivize an HHA to complete a plan of correction and return to
compliance, CMS can place the HHA on a termination track from Medicare.
Federal Statutory Requirements for Intermediate Sanctions for Noncompliant
HHAs
Section 4023 of OBRA 1987 directed CMS to develop and implement, by no later than
1, 1989, intermediate sanctions to apply to certain HHAs found to no longer be in
April 
compliance with the Medicare conditions of participation. 8 These intermediate sanctions
must include civil money penalties, payment suspension, and appointment of temporary
Proposed
management.9 In response to OBRA 1987, CMS issued a Notice of 
Rulemaking (NPRM) in 1991, proposing intermediate sanctions to apply to noncompliant
HHAs.10
OIG Recommendation to Implement HHA Intermediate Sanctions
1 We
1 
In 2008, OIG issued a report regarding HHAs with repeat deficiency citations. 
found that 15 percent of HHAs received the same deficiency citation during three
consecutive surveys. We also found that CMS's sanction options for HHAs with
deficiency citations were limited because CMS had not implemented intermediate
4 Social Security Act  l8l2(a)(3), l8l4(a)(2)(C), 1  832(a)(2)(A), and 1  835(a)(2)(A).
5 eMS, Data Compendium, 2002, 2010. Accessed at https://www.cms.gov on August 8, 2011. In 2009,
Medicare paid $18.9 billion for home health services, compared to $9.6 billion in 2002.
6 Social Security Act  1891.
7 eMS, State Operations Manual Pub. No. 100-07, ch. 2,  2728, 2728A, and 2728B.
80BRA 1987, P.L. 100-203,  4023 (adding Social Security Act l89l(e) and (f)).
9 Social Security Act 189l(f)(2)(A).
10 56 Fed. Reg. 37054 (Aug. 2, 1991).
ii HHS, OIG, Deficiency History and Recertification of Medicare Home Health Agencies,
OEI-09-06-00040, August 2008.
OEI-06-11-00401 Intermediate Sanctions for Noncompliant Home Health Agencies Page 3 - Marilyn Tavenner
sanctions, leaving termination from Medicare as the only Federal sanction for
noncompliant HHAs. Further, we found that CMS rarely used the termination sanction;
in 2006, CMS terminated only 21 HHAs. In the 2008 report, we recommended that CMS
implement the intermediate sanctions as directed by OBRA 1987. CMS concurred with
the recommendation.
METHODOLOGY
We reviewed the 1991 NPRM and related material in the Federal Register. We also
Unimplemented Recommendations
reviewed CMS's response for OIG's Compendium of 
(Compendium) related to the 2008 OIG recommendation for each year during
2010-2012. Additionally, during a meeting with CMS officials in December 2011, we
discussed the status of HHA intermediate sanctions.
This study was conducted in accordance with the Quality Standards for Inspection and
the Inspectors General on Integrity and Efficiency.
Evaluation issued by the Council of 
RESULT
CMS Has Not Implemented Intermediate Sanctions as Required by Law and
Recommended by OIG
More than 20 years after Congress directed CMS to implement intermediate sanctions for
HHAs found to be out of compliance with the Medicare conditions of participation, CMS
has not implemented such sanctions. More specifically, CMS never issued a final rule for
the 1991 NPRM, withdrawing it in August 2000.12 Although CMS did not explain at the
time why it withdrew the NPRM, it indicated in its concurrence to the 2008 OIG
recommendation that legislative changes and other demands impeded promulgation of a
13
final rule. 
Each year since the 2008 OIG report, CMS provided written updates on its progress
toward developing a proposed rule for HHA intermediate sanctions in its written response
to OIG's upcoming Compendium. In the 2010 Compendium, CMS stated that it had
"drafted an alternative sanction that was under review.,,14 In the 2011 Compendium,
CMS stated that it was developing a new proposed rule for intermediate sanctions that it
anticipated publishing in 2011.15 In its written response to OIG for the forthcoming
2012 Compendium, CMS stated that a draft proposed rule containing alternative
sanctions would be sent for clearance within CMS and that it anticipated publishing a
new NPRM by September 2012.16
1265 Fed. Reg. 73782, 73858 (Nov. 30, 2000). Available at
http://www.gpo.gov/fdsys/pkg/GPO-UA-2000-ll-30/pdf/GPO-UA-2000-ll-30-9.pdf.
13 HHS, OIG, Deficiency History and Recertification of Medicare Home Health Agencies,
OEI-09-06-00040, August 2008.
14 HHS, OIG, Compendium of  Unimplemented Recommendations, 2010. Available at
http:// oi g.hhs. gov /pub i i cati ons/ docs/ compendium/ compendium20 i O. pdf.
15 HHS, OIG, Compendium of  Unimplemented Recommendations, 2011. Available at
http://oig.hhs. gov/reports-and-publications/compendium/20 ll.asp.
16 eMS update transmitted to OIG in January 2012.
OEI-06-11-00401 Intermediate Sanctions for Noncompliant Home Health Agencies Page 4 - Marilyn Tavenner
CONCLUSION
Although CMS indicated activities toward promulgating regulations to implement HHA
intermediate sanctions, it has not yet issued a prupmit:u rule. Given the length of time
since the passage of the original statute, CMS should make HHA intermediate sanctions a
high priority and should complete their implementation as soon as possible. Intermediate
sanctions would allow CMS to penalize HHAs found to be out of compliance with the
Medicare conditions of participation and would give noncompliant HHAs an incentive to
improve their practices. Without such sanctions, HHAs may face few consequences for
noncompliance, other than possible termination, an option that our 2008 report found
CMS rarely exercised.
This report is being issued directly in final form. If you have comments or questions
about this report, please provide them within 60 days. Please refer to report number
OEI-06-11-00401 in all correspondence.
OEI-06-11-00401 Intermediate Sanctions for Noncompliant Home Health Agencies