Department of Health and Human Services 

OFFICE OF 

 
INSPECTOR GENERAL 

 
 
 
 
 
 
I
  NAPPROPRIATE AND 

 
Q B
U ESTIONABLE  ILLING BY 

 
M H H
EDICARE  OME  EALTH 

 
A  
GENCIES
 
 
Daniel R. Levinson 
  
Inspector General
  
 
August 2012 

OEI-04-11-00240 
  
   
EXECUTIVE SUMMARY:  INAPPROPRIATE AND QUESTIONABLE BILLING 
BY MEDICARE HOME HEALTH AGENCIES  
OEI-04-11-00240 
 
WHY WE DID THIS STUDY 
 
In 2010, Medicare paid $19.5 billion to 11,203 home health agencies (HHA) for services 
provided to 3.4 million beneficiaries.  Recent investigations and prior Office of Inspector 
General studies have found that home health services are vulnerable to fraud, waste, and 
abuse. 
 
HOW WE DID THIS STUDY  
 
We analyzed data from home health, inpatient hospital, and skilled nursing facility claims  
from 2010 to identify inappropriate home health payments.  In addition, we identified 
HHAs that billed unusually high amounts according to at least one of our six measures of 
questionable billing. Although these six measures indicate potential fraud, there may be 
legitimate reasons for an HHA to exceed the threshold for unusually high billing on any 
of the six measures. We also determined the geographic locations of HHAs that had 
questionable billing. 
 
WHAT WE FOUND 
 
In 2010, Medicare inappropriately paid $5 million for home health claims with three 
specific errors:  overlapping with claims for inpatient hospital stays, overlapping with 
claims for skilled nursing facility stays, or billing for services on dates after beneficiaries 
deaths. Further, we found that approximately one in every four HHAs exceeded the 
threshold that indicated unusually high billing for at least one of our six measures of 
questionable billing. Overall, HHAs with questionable billing were located mostly in 
Texas, Florida, California, and Michigan. 
 
WHAT WE RECOMMEND 
 
We recommend that the Centers for Medicare & Medicaid Services (CMS) (1) implement 
claims processing edits or improve existing edits to prevent inappropriate payments for 
the three specific errors we reviewed, (2) increase monitoring of billing for home health 
services, (3) enforce and consider lowering the 10percent cap on the total outlier 
payments an HHA may receive annually, (4) consider imposing a temporary moratorium  
on new HHA enrollments in Florida and Texas, and (5) take appropriate action regarding 
the inappropriate payments we identified and HHAs with questionable billing.  CMS 
concurred with all five recommendations; however, it disagreed with our estimate of the 
inappropriate payments for home health claims overlapping with claims for inpatient 
hospital stays and skilled nursing facility stays.  
 
 
 
 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................8 

Findings......................................................................................................12 

In 2010, Medicare inappropriately paid approximately 
$5 million for home health claims with three specific errors  ........12 

Approximately one in every four HHAs had questionable  
billing .............................................................................................14 

Eighty percent of HHAs with questionable billing were located 
in four States ..................................................................................17 

Conclusion and Recommendations ............................................................20 

Agency Comments and Office of Inspector General Response .....22 

Appendix....................................................................................................24 

A: Number and Percentage of Home Health Agencies With 

Questionable Billing by State, 2010 ..............................................24 

B: Agency Comments  ...................................................................26 

Acknowledgments......................................................................................32 

 
   
   
OBJECTIVES 
1. 	  To determine the extent to which home health agencies (HHA) 
submitted Medicare claims that inappropriately overlapped with 
claims for inpatient hospital stays, overlapped with claims for skilled 
nursing facility stays, or were billed for services on dates after 
beneficiaries deaths. 
2.	   To identify and describe HHAs that exhibited questionable billing. 
BACKGROUND 
Medicare Parts A and B cover home health services furnished by HHAs to 
Medicare beneficiaries.1, 2  In 2010, Medicare paid $19.5 billion to 
11,203 HHAs for home health services provided to 3.4 million 
beneficiaries.3  Home health services include part-time or intermittent 
skilled nursing services, physical therapy, occupational therapy,  
speech-language pathology services, part-time or intermittent home health 
aide services, medical social services, and medical supplies and durable 
medical equipment.4, 5    
Home health services are vulnerable to fraud, waste, and abuse.  In past 
years, OIG has raised concerns about HHAs and the billing of home health 
services.6   Additionally, recent investigations have illustrated a variety of 
fraud schemes involving HHAs. For example, a Texas physician was 
 
1
 Social Security Act,  1814(a)(2)(C) and 1835(a)(2)(A), 42 U.S.C.  1395f(a)(2)(C) and 
1395n(a)(2)(A).  
2
 Part A covers home health services beginning within 14 days of a discharge from a hospital 
or skilled nursing facility.  Social Security Act,  1861(tt), 42 U.S.C.  1395x(tt), and the 
Centers for Medicare & Medicaid Services (CMS), Medicare Benefit Policy Manual, 
Pub. 100-02, ch.7,  60.1.  Part B covers home  health services not related to an inpatient stay.  
Social Security Act,  1832(a), 42 U.S.C.  1395f(a), and CMS, Medicare Benefit Policy 
Manual, Pub. 100-02, ch. 7,  60.3. 
3
 Office of Inspector General (OIG) analysis of 2010 National Claims  History Part A Standard 
Analytical File. 
4
 Social Security Act,  1861(m), 42 U.S.C.  1395x(m).   
5
 Part-time or intermittent skilled nursing or home health aide services are services furnished 
for a total of fewer than 8 hours each day and 28 or fewer hours each week (or, subject to 
review on a case-by-case basis as to the need for care, fewer than 8 hours each day and 35 or 
fewer hours per week). Social Security Act,  1861(m), 42 U.S.C.  1395x(m). 
6
 OIG, Review of Compliance with Billing Provisions Under the Prospective Payment System 
for Home Health Agencies Therapy Services at Connecticut Home Health Care, Inc., 
A-01-04-00507, May 2005. See also OIG, Review of Selected Paid Claims With Therapy 
Services Submitted to Medicare by Red Oak Home Health Services for the Period October 1, 
2002, Through September 30, 2003, A-09-04-00050, July 2005, and OIG, Review of Selected  
Paid Claims with Therapy Services Submitted to Medicare by Total Patient Care Home  
Health, LLC for the Period October 1, 2002, Through September 30, 2003, A-04-05-02000, 
September 2005. 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   1 
   
   
indicted in February 2012 for allegedly certifying or directing the 
certification of beneficiaries plans of care so that HHAs were able to bill 
Medicare for home health services that were not medically necessary or 
were not provided.7   This physician also allegedly performed unnecessary 
home visits and ordered unnecessary medical services.  This is the largest 
alleged home health fraud scheme in U.S. history; HHAs allegedly 
fraudulently billed more than $350 million to Medicare.  Another alleged 
home health fraud scheme involved beneficiary sharinga situation in 
which multiple HHAs fraudulently bill Medicare for the same  
beneficiaries. According to a September 2011 indictment, an individual 
allegedly sold beneficiary information to 100 different HHAs in Houston, 
Texas.8   These HHAs then allegedly used this beneficiary information to 
bill Medicare for services that were unnecessary or were never provided.  
Medicare Home Health Services 
To qualify for home health services, Medicare beneficiaries must (1) be 
confined to the home (i.e., homebound); (2) be in need of intermittent 
skilled nursing care or physical, speech, or continuing occupational 
therapy; (3) be under the care of a physician; and (4) be under a plan of 
care established and periodically reviewed by a physician.9, 10, 11  For home 
health care starting on or after January 1, 2011, the certifying physician 
must documentprior to certifying the beneficiarys eligibilitythat he 
or she (or an allowed nonphysician practitioner) had a face-to-face 
 
7
 Department of Justice (DOJ) news release, Dallas Doctor Arrested for Alleged Role in 
Nearly $375 Million Health Care Fraud Scheme, February 28, 2012.  Accessed at 
http://www.justice.gov/opa/pr/2012/February/12-crm-260.html on March 12, 2012.  
Additionally, these certifications allegedly resulted in the fraudulent billing of more than 
$24 million to Medicaid.  
8
 OIG news release, Medicare Fraud Strike Force Charges 91 Individuals for Approximately 
$295 Million in False Billing, September 7, 2011.  Accessed at 
http://www.hhs.gov/news/press/2011pres/09/20110907c.html on September 7, 2011.   
9
 Social Security Act,  1814(a)(2)(C) and 1835(a)(2)(A), 42 U.S.C.  1395f(a)(2)(C) and 
1395n(a)(2)(A).
10
 A beneficiary is considered to be confined to the home (or homebound) when he or she 
has a condition due to an illness or injury that restricts his or her ability to leave his or her 
residence except with the aid of supportive devices, the use of special transportation, or the 
assistance of another person or if leaving home is medically contraindicated.  CMS, Medicare  
Benefit Policy Manual, Pub. 100-02, ch. 7,  30.1.1. 
11
 For purposes of benefit eligibility, intermittent skilled nursing care means care that is 
provided or needed fewer than 7 days each week, or less than 8 hours of each day for periods 
of 21 days or less (with extensions in exceptional circumstances when the need for additional 
care is finite and predictable). Social Security Act,  1861(m), 42 U.S.C.  1395x(m).  
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   2 
   
   
encounter with the beneficiary.12   This documentation must include a brief 
narrative explaining how the patients clinical condition during that  
encounter supports the patients homebound status and need for skilled 
services.13  
A beneficiary cannot simultaneously receive home health services and 
care at an inpatient hospital or skilled nursing facility.14, 15  However, an 
HHA may arrange with a hospital, skilled nursing facility, or rehabilitation 
center to provide home health services on an outpatient basis if the 
services require use of equipment that cannot be made available in the 
home.16  
Medicare Payment System for Home Health Services 
CMS uses a prospective payment system that establishes a predetermined 
rate for each 60-day episode of home health care.17   The payment rate is 
adjusted for beneficiaries health conditions and care needs, as well as for 
the geographical region.18  HHAs with beneficiaries who require a greater 
number of services receive a higher payment rate per 60-day episode.19   
There are no limits to the number of 60-day episodes that eligible 
beneficiaries may receive; however, the home health services provided  
 
 
12
 CMS,  Medicare Benefit Policy Manual, Pub. 100-02, ch. 7,  30.5.1.  For home health care 

starting on or after January 1, 2012, for patients admitted to home health agencies 

immediately after an acute or postacute stay, a physician who cared for the patient in an acute
  
or postacute facility can inform the certifying physician regarding his or her  

face-to-face encounters with the patient.  42 CFR  424.22(a)(1)(v), as amended by  final rule 

Medicare Program; Home Health Prospective Payment System Rate Update for Calendar 

Year 2012 (76 Fed. Reg. 68526 (Nov. 4, 2011)), effective January 1, 2012. 

13
 CMS,  Medicare Benefit Policy Manual, Pub. 100-02, ch. 7,  30.5.1.1.  This encounter 

must occur no more than 90 days prior to the start of home health care or within 30 days after 

the start of care. 

14  CMS,  Medicare Claims Processing Manual, Pub. 100-04, ch. 10,  30.9. 

15
 Ibid.  A beneficiary can receive home health services on the day of admission to or on the 

day of discharge from an inpatient hospital or skilled nursing facility.  However, Medicare 

systems will reject a home health claim containing dates for services provided during a 

beneficiarys inpatient hospital stay or skilled nursing facility stay.  If a beneficiary has a 

leave of absence from an inpatient stay, then he or she can receive home health services 
 
during that leave of absence.  CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 3,
  
 40.2.6, and ch. 6,  40.3.5.2. 

16
 CMS,  Medicare Benefit Policy Manual, Pub. 100-02, ch. 7,  30.1.1.   

17
 Social Security Act,  1895(a), 42 U.S.C.  1395fff(a).  

18
 Social Security Act,  1895(b)(4)(B) and 1895(b)(4)(C), 42 U.S.C.  1395fff(b)(4)(B) 

and 1395fff(b)(4)(C). 

19
 Medicare Payment Advisory  Commission (MedPAC), Home Health Care Services  

Payment System, October 2011. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   3 
   
   
must be reasonable and necessary.20, 21  Beneficiaries generally do not 
make copayments for home health services.22  
Under the Medicare prospective payment system, at the time that the CMS 
contractor servicing an HHAs area receives the HHAs claim for a 60-day 
episode of care, the HHA receives an initial partial payment of the 
estimated rate for the full episode.23   The HHA receives 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 adjustment.24   An 
example of a payment adjustment is a partial episode payment that occurs 
when a beneficiary transfers to another home health provider during a 
60-day episode. 
Medicare makes additional payments, known as outlier payments, to 
HHAs that provide services to beneficiaries who incur unusually high 
costs.25  Beginning in January 2010, CMS implemented an agency-level 
outlier cap limiting total outlier payments for an individual HHA to a 
maximum of 10 percent of the HHAs  annual total Medicare home health 
payments.26    
Additionally, Medicare adjusts the 60-day episode payment rate depending 
on whether the episode is an early episode (i.e., first or second) or a late 
episode (i.e., third or subsequent) in a sequence of episodes.27  For 
episodes to be considered sequential, the next episode must begin within 
 
20
 CMS,  Home Health PPS: Overview. Accessed at http://www.cms.gov/HomeHealthPPS/ on 
July 21, 2011.   
21
 Social Security Act,  1862(a)(1)(A), 42 U.S.C.  1395y(a)(1)(A). 
22
 CMS,  Medicare Benefit Policy Manual, Pub. 100-02, ch. 7,  60.4.  There is no 
coinsurance, copayment, or deductible for home health services and supplies other than 
(1) coinsurance for durable medical equipment (DME) covered as a home health service and 
(2) deductible and coinsurance for osteoporosis  drugs, which are part of the home health 

benefit paid only under Part B.  The coinsurance amount for DME and osteoporosis drugs 

furnished as home health services is 20 percent of the fee schedule amount for the services. 

23
 CMS,  Home Health PPS: Overview. Accessed at http://www.cms.gov/HomeHealthPPS/ on 

July 21, 2011. 

24 
 Ibid. 

25
 Social Security Act,  1895(b)(5), 42 U.S.C.  1395fff(b)(5). 

26
 74 Fed. Reg. 58078 and 58080-58087 (Nov. 10, 2009). See also CMS, Medicare Claims  
Processing Manual, Pub. 100-04, ch. 10,  10.1.21.  The Patient Protection and Affordable 
Care Act (Affordable Care Act) made the 10-percent agency-level cap a permanent statutory  
requirement beginning with 2011 by adding a new paragraph (B) to section 1895(b)(5) of the  
Social Security Act.  Affordable Care Act, P.L. 111-148,  3131(b)(2)(C) (adding Social 
Security Act,  1895(b)(5)(B), 42 U.S.C. 1395fff(b)(5)(B)). 
27
 CMS,  Medicare Claims Processing Manual, Pub. 100-04, ch. 10,  10.1.19.2.  
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   4 
   
   
60 days of the previous episodes end date.28  Late episodes have higher 
payment rates than early episodes.29    
Certificate of Need for Home Health Agencies 
In order to participate in Medicare, HHAs must be licensed pursuant to 
applicable State or local law.30  Some States require an HHA to obtain a 
Certificate of Need to be eligible to seek State licensure.31  Generally, a 
Certificate of Need program is intended to ensure that new health care 
facilities (e.g., HHAs) in the State (1) are developed as needed, (2) are the 
most cost effective approach to meeting identified needs, (3) are 
geographically accessible, (4) are financially viable, and (5) will not have  
a significant negative impact on the viability of other health care facilities 
or the quality and cost of the health care services that these other facilities 
provide. In addition, a Certificate of Need program is intended to ensure 
that services in the State (1) are of high quality and (2) are affordable by 
patients. 
As of January 2012, 17 States and the District of Columbia have 
Certificate of Need policies that limit the number of HHAs in operation.  
The remaining 33 States do not require Certificates of Need for HHAs.  
Detecting and Deterring Medicare Fraud and Abuse 
CMS relies partly on contractors to safeguard the Medicare program from 
fraud and abuse. CMS requires these contractors to conduct activities to 
prevent improper payments and identify fraud and abuse.  Specifically, 
CMS contracts with Home Health and Hospice Medicare Administrative 
Contractors (MAC) and Zone Program Integrity Contractors (ZPIC) to 
perform these activities for home health services.32      
MACs primary responsibility is to process and pay Medicare home health 
and hospice claims.  These contractors are also responsible for conducting 
prepayment and postpayment claim review and targeted provider 
education.33  MACs create local coverage determinations and associated 
 
28
 CMS,  Medicare Benefit Policy Manual, Pub. 100-02, ch. 7,  10.3 and 10.4. 
29
 MedPAC, Home Health Care Services Payment System, October 2011. Assuming that 
other factors affecting payment, such as the beneficiarys health condition and care needs, 
remain the same. 
30
 Social Security Act  1861(o)(4), 42 U.S.C.  1395x.  See also 42 CFR  484.12(a). If 
State or local law provides for licensure of HHAs, an HHA not subject to such licensure must 
be approved by the State or local licensing agency as meeting the licensure standards. 
31
 Certificate of Need is a State-specific issue, decided by each State through the health 
planning process.  CMS does not participate in States health planning processes. 
32
 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-
173  911, required CMS to replace its current claims processing contractors (fiscal 
intermediaries and carriers) with Medicare Administrative Contractors.  Also, CMS is 
replacing the legacy benefit integrity contractors, Program Safeguard Contractors, with 
ZPICs.    
33
 CMS,  Medicare Program Integrity Manual, Pub. 100-08, ch.1,  1.3.1.  
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   5 
   
   
articles and use proactive data analysis to monitor areas of  
vulnerability.34, 35  CMS and these contractors also implement and use 
claims processing edits (i.e., system processes) to prevent improper 
payments.  For example, one such edit is intended to prevent payment of 
claims with dates of service after a beneficiarys death.  
ZPICs identify cases of suspected fraud, develop them thoroughly and in a 
timely manner, take immediate action to ensure that Medicare funds are 
not inappropriately paid and that inappropriate payments are identified, 
and refer cases of potential fraud to law enforcement.36  On occasion, 
CMS also contracts with ZPICs for special demonstration projects that 
combat fraud and abuse in a specific Medicare program  and/or geographic 
area. 
Additionally, CMS safeguards the Medicare program through its 
predictive analytics system and its authority to impose a temporary 
enrollment moratorium.  As of June 2011, CMS implemented a predictive 
analytics system that analyzes all Medicare Part A and B claims to identify 
potential fraud.37   This system builds profiles of Medicare providers (e.g., 
HHAs) that enable CMS to create risk scores.38   These risk scores estimate 
the likelihood of fraud and identify potentially fraudulent claims and 
billing patterns. 
CMS may also impose a temporary moratorium on the enrollment of new 
Medicare providers of a particular type (e.g., HHAs) and/or in a particular 
geographic location to safeguard Medicare payments.39  For example, 
CMS may impose this moratorium ifin consultation with OIG (and/or 
DOJ) and with the approval of the CMS Administratorit identifies a 
particular provider type and/or any particular geographic area as having a 
 
34
 Local coverage determinations are decisions made by claims processing contractors (e.g., 

MACs) on a contractorwide basis regarding whether a particular item or service is considered
  
reasonable and necessary.  Any additional information that a contractor wants to 

communicate to providersfor example, information regarding billing or codingwould be 

placed in an associated article, known as a local coverage article. 

35
 Proactive data analysis includes identifying patterns of potential billing errors through data 

analysis and evaluation of other information.   

36
 CMS,  Medicare Program Integrity Manual, Pub. 100-08, ch. 1,  1.7.B.   

37
 CMS,  Predictive Modeling Analysis of Medicare Claims, MLN Network, November 2011.  

Accessed at https://www.cms.gov/MLNMattersArticles/Downloads/SE1133.pdf on 

February 27, 2012. 

38
 The predictive analytics system also builds profiles on networks, billing patterns, and 
beneficiary utilization. 

39
 42 CFR  424.570 (a)(1).  CMS may also impose a temporary enrollment moratorium on 

new Medicare suppliers. 
 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   6 
   
   
significant potential for Medicare fraud, waste, or abuse.40   A temporary 
moratorium may be imposed for 6 months, with the option to extend.   
Related Office of Inspector General Work 
In 2012, OIG found that 98 percent of medical records document that 
Medicare beneficiaries met coverage requirements for home health 
services.41  However, HHAs submitted 22 percent of claims in error 
because services were unnecessary or claims were coded inaccurately, 
resulting in $432 million in improper payments.  This review assessed 
HHAs medical records for beneficiaries but did not determine whether 
those records accurately reflected beneficiaries medical conditions.  This 
review did not involve visiting beneficiaries to confirm their homebound 
status, nor did it determine whether the care provided was medically 
necessary.      
In 2009, OIG found aberrant billing patterns in home health outlier 
payments in 24 counties nationwide.42  One county in Florida 
Miami-Dade Countyaccounted for more home health outlier payments 
in 2008 than the rest of the Nation combined. 
In 2006, OIG found that HHAs improperly coded claims to overstate the 
severity of the beneficiaries conditions, resulting in overpayments.43  OIG 
also found that contractors did not perform prepayment edits or 
postpayment analyses of claims data to prevent and detect overpayments.  
Currently, OIG is conducting a companion study on Medicare contractor 
activities to identify and address improper payments and potential fraud 
and abuse in home health, as well as CMSs oversight of these 
contractors.44  
 
40
 42 CFR  424.570 (a)(2)(iv). Other reasons why CMS may  impose a temporary enrollment 
moratorium include:  (1) CMS determines that there is a significant potential for fraud, waste, 
or abuse with respect to a particular provider or supplier type and/or particular geographic 
area; (2) a State Medicaid program has imposed a moratorium on a group of Medicaid 
providers or suppliers that are also eligible to enroll in the Medicare program; and (3) a State 
has imposed a moratorium on enrollment in a particular geographic area and/or on a particular 
provider or supplier type.  42 CFR  424.570(a)(2)(i)-(a)(2)(iii). 
41
 OIG, Coverage Requirements and Payment Accuracy for Medicare Home Health Claims, 

OEI-01-08-00390, March 2012. 

42 
OIG, Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County 

and Other Geographic Areas in 2008, OEI-04-08-00570, November 2009. 

43 
  OIG, Review of Home Health Agencies Billing for Services Preceded by a Hospital 

Discharge, A-01-04-00527, March 2006. 

44
 OEI-04-11-00220, in progress. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   7 
   
   
METHODOLOGY 
This study is based on our analysis of home health claims from 
100-percent paid claims data from CMSs National Claims History Part  A  
Standard Analytical File for 2010.45  Our analysis included both full and 
partial episode claims.   
We also analyzed paid inpatient claims from hospitals and skilled nursing 
facilities for home health beneficiaries from the Part A Standard Analytical 
File. We used the beneficiarys Health Insurance Claim Number to link 
these inpatient hospital and skilled nursing facility claims to the home 
health claims.  Additionally, we used CMSs Enrollment Data Base to 
identify beneficiaries with dates of death. 
Identification of Inappropriate Medicare Payments for Home 
Health Claims  
We analyzed the home health claims data to determine the number of 
home health claims that (1) inappropriately overlapped with claims for 
inpatient hospital stays, (2) inappropriately overlapped with claims for 
skilled nursing facility stays, or (3) were billed for services on dates after 
beneficiaries deaths.  We also calculated the total inappropriate Medicare 
payments for these home health services.   
First, we identified home health claims that overlapped with claims for 
inpatient hospital stays or skilled nursing facility stays.   According to 
CMS policy, institutional claims for inpatient hospital stays and skilled 
nursing facility stays have priority over claims for home health services.46   
When a home health claim contains dates of service that overlap with 
dates of an inpatient hospital stay or a skilled nursing facility stay, that 
home health claim is rejected regardless of whether it is received before or 
after the institutional claim.   
We excluded appropriate instances of overlap, which are instances when 
beneficiaries receive home health services on the dates of admission to or 
on the dates of discharge from inpatient hospitals or skilled nursing 
facilities or when beneficiaries receive home health services during leaves 
of absence from inpatient stays.  We considered the home health claim to 
have an inappropriate instance of overlap if a home health service was 
provided during an inpatient hospital stay or skilled nursing facility stay 
and a leave of absence did not occur.  For home health claims  
inappropriately overlapping with claims for inpatient hospital stays or 
skilled nursing facility stays, we summed the payment amounts to 
 
45 
 We excluded all claims with a reimbursement amount of zero. 
46
 CMS,  Medicare Claims Processing Manual, Pub. 100-04, ch. 10,  30.9. 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   8 
   
   
calculate the overall amount that Medicare inappropriately paid for these 
claims. 
Next, we identified home health episodes that started after beneficiaries  
deaths. A beneficiarys death during an episode results in a full payment 
for that episode.47  However, a Medicare payment for a home health 
episode that starts after a beneficiarys death is an inappropriate payment.  
After identifying beneficiaries for whom HHAs billed Medicare for home  
health services in 2010, we used CMSs Enrollment Data Base to identify 
those beneficiaries who died before or during 2010.  For home health 
claims in which beneficiaries dates of death preceded the episodes start 
dates, we summed the payment amounts to calculate the overall amount 
that Medicare inappropriately paid for these services.  
Identification of HHAs That Had Questionable Billing 
We first identified all home health claims with dates of service ending in 
2010. In total, we identified approximately 6.96 million Medicare claims  
for both full and partial home health episodes billed by 11,203 HHAs.  To  
identify HHAs that had questionable billing, we first identified those 
HHAs that submitted at least 20 claims in 2010.48   These included 
92 percent (10,341) of the 11,203 HHAs and accounted for 6.88 million 
claims. 
We next identified HHAs that had questionable billing.  We developed six 
measures of questionable billing based on the results of past OIG analyses 
and fraud investigations related to home health services, as well as on 
input from CMS staff and contractors.  We considered an HHAs billing to 
be unusually high, or questionable, on each of the six measures if it was 
greater than the 75th percentile plus 1.5 times the interquartile range.49   
The six measures of questionable billing we developed were:  
   High average outlier payment amount per beneficiary. Medicare 
makes outlier payments to HHAs that provide services to beneficiaries 
who incur unusually high costs. We based this measure on the total 
outlier payments each HHA was paid in 2010 relative to the number of 
beneficiaries for whom the HHA billed Medicare in 2010.  We also 
calculated each HHAs total outlier payments relative to total Medicare 
payments in 2010. 
 
47
 CMS,  Medicare Claims Processing Manual, Pub. 100-04, ch. 10,  10.1.16. 
48
 HHAs that submitted fewer than 20 claims represented 8 percent of all HHAs and 
approximately $18 million (or 0.1 percent) of Medicare payments for home health services in  
2010. 
49
 This is a standard exploratory  method for identifying members of a population with 
unusually high values on a given statistic compared to the rest of the population when no 
established benchmarks exist.  See J.W. Tukey, Exploratory Data Analysis, Addison-Wesley, 
1977. 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   9 
   
   
 	  High average number of visits per beneficiary. We based this measure 
on the total number of visits each HHA billed in 2010 relative to the 
number of beneficiaries for whom the HHA billed Medicare in 2010. 
 	  High percentage of beneficiaries for whom other HHAs billed  
Medicare. When multiple HHAs bill for services provided to the same  
beneficiary in a given period, there is potential for fraud (i.e., 
beneficiary sharing). We based this measure on the percentage of each 
HHAs beneficiaries for whom at least one other HHA billed Medicare 
in 2010. 
	   High average number of late episodes per beneficiary. In a sequence 
of episodes, late (i.e., third and subsequent) episodes have higher 
payment rates than early episodes.  We based this measure on the total 
number of late episodes each HHA billed in 2010 relative to the 
number of beneficiaries for whom the HHA billed Medicare in 2010. 
 	  High average number of therapy visits per beneficiary. Beneficiaries 
who require a greater number of therapy services have episodes with 
higher payment rates.  We based this measure on the total number of 
therapy visits each HHA billed in 2010 relative to the number of 
beneficiaries for whom the HHA billed Medicare in 2010. 
 	  High average Medicare payment amount per beneficiary. We based 
this measure on the total payment for home health services that each 
HHA received in 2010 relative to the number of beneficiaries for 
whom the HHA billed Medicare in 2010.50    
These six measures of questionable billing indicate potential fraud.  There 
may be legitimate reasons for an HHA to have unusually high billing on 
any of our six measures.  For example, a beneficiary receiving home  
health services may live in a State with a colder climate most of the year 
and spend the winter in a warmer State.  If this beneficiary receives home 
health services throughout the year, then at least two different HHAs 
would legitimately bill Medicare for services provided to this beneficiary.   
On the other hand, there are schemes in which multiple HHAs 
fraudulently bill Medicare for services provided to the same beneficiaries.   
Acknowledging legitimate instances of  unusually high billing is necessary,  
but it is equally necessary to examine HHAs that bill unusually high 
amounts relative to other HHAs to determine whether such billing is 
inappropriate or fraudulent. 
Geographic Analysis of HHAs With Questionable Billing  
We compared the geographic locations of HHAs with questionable billing 
to those of other HHAs. Specifically, we determined for each State the 
 
50 
 We did not account for wage adjustments based on geographical areas in this analysis. 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   10 
   
   
total number of HHAs and the number of HHAs with questionable 
billing.51   We then calculated the percentage of HHAs with questionable 
billing in each State.  Additionally, we determined whether States had 
Certificate of Need policies for HHAs.  We then analyzed the total number 
of HHAs and the number of HHAs with questionable billing by States 
with or without Certificate of Need policies.  
Limitations 
We did not independently verify the accuracy of the data we used for this  
study.  Further, our findings are based on an analysis of claims data, rather 
than medical documentation; we did not determine whether the services 
billed were inappropriate or fraudulent.  For example, we did not analyze 
the health status of beneficiaries to determine whether home health 
services billed by HHAs with questionable billing were appropriate.  In 
addition, the measures included in our analysis are not intended to be a 
comprehensive set of measures for identifying questionable billing.   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency.   
 
51
 HHAs were located in all 50 States; the District of Columbia; and certain U.S. territories, 
such as Puerto Rico and the U.S. Virgin Islands.   
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FINDINGS 
In 2010, Medicare inappropriately paid $5 million for 
home health claims with three specific errors  
CMS has claims processing edits in place to prevent payment for home 
health claims with services that inappropriately overlap with claims for 
inpatient hospital stays or skilled nursing facility stays or that are billed for 
services on dates after beneficiaries deaths.  However, Medicare 
inappropriately paid $5 million (out of $19.5 billion total for home health  
services) in 2010 for home health claims that had at least one of these 
three errors.  The $5 million figure is based solely on our analysis of  
claims data for these three specific errors.  It does not include any 
additional inappropriate payments that a medical record review or other 
claims analysis might find to be unreasonable or unnecessary.   
In 2010, 1,285 HHAs had claims with at least 1 of the 3 errors.  Table 1 
shows the inappropriate payment amount, number of services, number of 
claims, and number of HHAs by the three types of errors. 
Table 1: Inappropriate Medicare Payments for Home Health Services, 2010  
Inappropriate  Number of   Number of   Number of  
Error Type  
Payment Amount  Services  Claims   HHAs*  
Overlap between inpatient hospital stay and home 
$3,506,429 1,722 1,309   956 
health service 
Overlap between skilled nursing facility stay and 
$1,268,433   1,180 469  414 
home health service  
Home health service date after a beneficiarys 
$208,311   1,007 82  51 
date of death  
     Total   $4,983,173   3,909   1,857   1,285  
*Column sum exceeds total  because some HHAs had multiple types of inappropriate payments. 

Source:  OIG analysis of Part A data for home health services, hospitals, and skilled nursing facilities, 2012. 

 
Medicare inappropriately paid approximately $4.8 million for 
home health claims that overlapped with claims for stays in 
inpatient hospitals or skilled nursing facilities 
In 2010, Medicare inappropriately paid $3.5 million for home health 
claims that overlapped with claims for inpatient hospital stays and 
$1.3 million for home health claims that overlapped with claims for skilled 
nursing facility stays, for a total of $4.8 million.  Nationwide, Medicare 
paid 956 HHAs when home health claims and claims for inpatient hospital 
stays inappropriately overlapped and paid 414 HHAs when home health 
claims and claims for skilled nursing facility stays inappropriately 
overlapped. 
   
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Medicare inappropriately paid $208,311 for home health 
services billed on dates after beneficiaries deaths 
In 2010, Medicare inappropriately paid $208,311 for home health services 
on dates after beneficiaries deaths.  Overall, Medicare paid 82 claims for 
50 beneficiaries for services on dates after their deaths.  Two beneficiaries 
for whom HHAs billed Medicare had been deceased for more than 
10 years. Table 2 shows the year of death of beneficiaries for whom  
HHAs billed for services on dates after their deaths, the total number and 
percentage of deceased beneficiaries by year, and the inappropriate 
payment amount by year. 
Table 2:  Beneficiaries for Whom HHAs Billed Medicare for Home Health 
Services After Death, 2010  
Number of   Percentage of Total  
Year of  Inappropriate 
Deceased  Deceased 
Death   Payment Amount 
Beneficiaries   Beneficiaries  
1995  1  2%   $11,220  
1999  1  2%   $6,507  
2001  5  10%   $20,082  
2002  1  2%   $12,630  
2005  3  6%   $14,900  
2006  1  2%   $13,331  
2007  2  4%   $15,144  
2008  4  8%   $19,987  
2009  4  8%   $16,344  
2010  28  56%   $78,166 
     Total   50  100%   $208,311  
Source:  OIG analysis of Part A data for home health services, 2012. 
About half of deceased beneficiaries for whom HHAs billed Medicare  for  
services on dates after their deaths died in 2010.  On average, HHAs billed 
Medicare for such beneficiaries for services on dates about 2 months after  
their deaths.  The service date on a claim for 1 beneficiary, who died in  
January 2010, was 275 days later, in October 2010.  
 
   
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Approximately one in every four HHAs had 
questionable billing 
In 2010, 25 percent (2,594 of 10,341) of HHAs exceeded the threshold 
that indicated unusually high billing for at least 1 of our 6 measures of 
questionable billing.52,  53      
More than one-third (36 percent) of the HHAs with questionable billing 
exceeded the thresholds for multiple measures of questionable billing.  
Specifically, 925 HHAs exceeded the thresholds for 2 or more measures, 
and 6 HHAs exceeded the thresholds for 5 measures.  Table 3 shows the 
number and percentage of HHAs by the number of measures of 
questionable billing for which HHAs exceeded thresholds.  
Table 3: Number and Percentage of HHAs by Number of Measures of  
Questionable Billing for Which HHAs Exceeded Thresholds, 2010 
Number of Measures of  
Questionable Billing for Which  Number of HHAs   Percentage of HHAs*  
HHAs Exceeded Thresholds  
0  7,747   75%  
1  1,669   16%  
2  680  7%  
3  199  2%  
4  40  <1%  
5  6  <1%  
6  0  0% 
     Total   10,341   100%  
*The percentages do not sum to 100 percent because of rounding. 
Source:  OIG analysis of Part A data for home health services, 2012. 
 
For each measure of questionable billing, Table 4 shows the median 
among all HHAs, the threshold that indicated unusually high billing, the 
range of unusually high billing, and the number of HHAs with unusually 
high billing. 
 
 
  
 
 
52
 Of these 2,594 HHAs with questionable billing, 299 also had at least 1 inappropriately paid 
home health claim in 2010.  
53
 A Texas physician was indicted in February 2012 for allegedly certifying or directing the 
certification of beneficiaries plans of care so that HHAs were able to bill Medicare for home  
health services that were not medically necessary or were not provided.  Of the HHAs 
affiliated with this physician, 60 percent (288 of 484) had questionable billing. 
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Table 4: HHAs With Unusually High Billing by Measure of Questionable Billing, 2010  
HHAs With Unusually High Billing**  
Median Among All  
Measure of Questionable Billing 
HHAs*  
Threshold   Range of Billing   Number of HHAs  
Average outlier payment amount per 
$13  $403   $404 to $5,793   1,684  
beneficiary  
Average number of visits per 
32  91  91 to 629   658 
beneficiary  
Percentage of beneficiaries for whom 
20%   61%   61% to 100%   618 
other HHAs billed Medicare  
Average number of late episodes per 
<1  2  2 to 4   426 
beneficiary  
Average number of therapy visits per 
9  24  24 to 70   257 
beneficiary  
Average Medicare payment amount per 
$5,112   $11,653   $11,669 to $24,463  173 
beneficiary  
Total   2,594*** 
*The median (i.e., the 50th percentile) indicates that half of all HHAs fell below this value. 

**We considered an HHAs billing  to be unusually high if it was greater than the 75th percentile plus 1.5 times the interquartile range. 

***Column sum exceeds total  because some HHAs exceeded thresholds for multiple measures of questionable billing.  
 
Source:  OIG analysis of Part A data for home health services, 2012. 

 
In 2010, 1,684 HHAs had unusually high outlier payments per 
beneficiary 
Overall, 74 percent (or 7,636) of HHAs had at least 1 outlier payment in 
2010. Of those HHAs, 1,684 HHAs had outlier payments above $403 per 
beneficiary, our threshold for unusually high outlier payments.  Fifty 
percent of all HHAs had average outlier payment amounts per beneficiary 
of less than $13. One HHA received  an average of $5,793 per beneficiary  
in outlier payments.  Ten HHAs average outlier payment amounts per 
beneficiary exceeded $3,000.   
Beginning in January 2010, total outlier payments for an HHA should not 
have exceeded 10 percent of the HHAs annual projected total Medicare 
home health payments.  For 72 percent (5,514 of 7,636) of HHAs with 
outlier payments, total outlier payments were 5 percent or less of total 
Medicare payments.  However, 434 HHAs exceeded the 10-percent cap.  
In particular, one HHAs total outlier payments represented approximately 
74 percent of its total Medicare payments in 2010.  Almost all (429 of 
434) of those HHAs that exceeded the 10-percent cap also exceeded our 
unusually high threshold for this questionable billing measure.  
Additionally, of those HHAs with outlier payments representing 5 to 
10 percent of their total Medicare payments, 72 percent exceeded our 
threshold for unusually high outlier payments.   
 
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In 2010, 658 HHAs billed unusually high numbers of visits per 
beneficiary 
Six hundred fifty-eight HHAs exceeded our unusually high threshold of 
91 visits per beneficiary in 2010. Fifty percent of HHAs billed for fewer 
than 32 visits per beneficiary.  One HHA billed for an average 629 visits 
per beneficiary.   Thirteen (out of 10,341) HHAs billed for over 300 visits 
per beneficiary, on average.  
In 2010, 618 HHAs had an unusually high percentage of 
beneficiaries for whom other HHAs billed Medicare  
In 2010, 618 HHAs had a high percentage of beneficiaries for whom other 
HHAs billed Medicare, exceeding our threshold61 percentfor an 
unusually high percentage of such beneficiaries.  For 50 percent of HHAs, 
other HHAs billed for 20 percent or less of their beneficiaries.  When 
multiple HHAs bill for services provided to the same beneficiary, there is  
potential for fraud (i.e., beneficiary sharing). For six HHAs, other HHAs 
billed for 100 percent of their beneficiaries.   
In 2010, for over 90 percent of beneficiaries, a single HHA billed 
Medicare. For about 9 percent of beneficiaries, two HHAs billed 
Medicare. For the remaining 1 percent of beneficiaries, three or more 
HHAs billed Medicare. In the case of one beneficiary, nine different 
HHAs billed Medicare. 
In 2010, 426 HHAs billed for unusually high numbers of late 
episodes per beneficiary 
Overall, 99 percent (or 10,195) of HHAs billed Medicare for at least 1 late 
episodei.e., a third or subsequent episodein 2010, meaning that such 
HHAs billed for 3 or more consecutive episodes for at least 1 beneficiary.   
However, 426 HHAs billed for unusually high numbers of late episodes, 
exceeding our threshold of 2 late episodes per beneficiary.  Fifty percent 
of all HHAs billed for less than one late episode per beneficiary. Late 
episodes have higher payment rates than early (i.e., first or second) ones.  
Two HHAs substantially exceeded the threshold for this measure by 
billing for an average of four late episodes per beneficiary.    
In 2010, 257 HHAs billed for unusually high numbers of 
therapy visits per beneficiary 
Two-hundred fifty-seven HHAs exceeded our threshold for unusually high 
numbers of therapy visits24 therapy visits per beneficiaryin 2010.  
Fifty percent of HHAs billed for fewer than nine therapy visits per 
beneficiary.  As the number of therapy visits provided during an episode 
increases, the payment rate for the episode also increases.  One HHA  
billed for an average of 70 therapy visits per beneficiary, almost 8 times 
the median. 
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In 2010, 173 HHAs had unusually high payments per 
beneficiary 
One hundred seventy-three HHAs were paid above our threshold for 
unusually high payments per beneficiary$11,653 per beneficiaryfor 
services provided in 2010. Fifty percent of all HHAs had average 
Medicare payment amounts per beneficiary of less than $5,112.  
High-dollar per-beneficiary billing amounts may indicate that HHAs were 
billing for services that were not medically necessary or were never 
provided. Medicare paid one HHA an average of $24,463 per beneficiary,  
almost five times the median.  Fourteen HHAs average Medicare payment 
amounts per beneficiary exceeded $15,000, almost three times the median.   
 
Eighty percent of HHAs with questionable billing were 
located in four States 
In 2010, 80 percent (2,063 of 2,594) of HHAs that exceeded the threshold 
that indicated unusually high billing for at least 1 of our 6 measures of 
questionable billing were located in  Texas, Florida, California, and 
Michigan.  Overall, these 4 States represented 47 percent of the total 
number of HHAs (4,863 of 10,341) in 2010.   
These 4 States all had more than 100 HHAs with questionable billing in 
2010. Thirty-nine percent of HHAs with questionable billing (1,000) were 
located in Texas.  Similarly, 25 percent of HHAs with questionable billing 
(652) were located in Florida.   Table 5 shows the number of HHAs with 
questionable billing and the percentage of the total number of such HHAs 
for these four States. The remaining 531 HHAs with questionable billing 
were dispersed among 37 other States.  Nine States did not have any 
HHAs with questionable billing in 2010.54  
   
 
54
 Additionally, no HHAs with questionable billing were located in the District of Columbia, 
Puerto Rico, the U.S. Virgin Islands, Guam, or Saipan.  Saipan is the largest island of the 
Northern Mariana Islands, a U.S. territory.   
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Table 5: States With More Than 100 HHAs With Questionable Billing, 2010   
 
Number of HHAs With Questionable  Percentage of Total Number of  
State  
  Billing in State   HHAs  With Questionable Billing 
  Texas  1,000   39%  
 
Florida  652  25%  
 
California  281  11%  
 
Michigan  130  5% 
 
     Total   2,063   80%  
 
Note: The remaining 531 HHAs with questionable billing are located in 37 other States. 
  Source:  OIG analysis of Part A data for home health services, 2012.  
Texas, Florida, California, and Michigan also do not have Certificate of 
Need policies that limit the number of HHAs in operation.  Overall, 
97 percent (2,529 of 2,594) of HHAs with questionable billing that we 
identified were located in States that did not have Certificate of Need 
policies in 2010. 
Eight States had high percentages of HHAs with questionable 
billing 
In 2010, eight States had high percentages, or at least two times the 
national average of 9 percent, of HHAs with questionable billing (i.e., at 
least 18 percent of each States total number of HHAs).55  Figure 1 
highlights these eight States. Appendix A corresponds to Figure 1 and 
shows the number and percentage of HHAs with questionable billing for 
each State and the amount by which each State exceeded the national 
average. 
 
 
 
 
 
 
 
 
 
 
55
 Nine percent is the unweighted national average, which is calculated by summing all States 
percentages of HHAs with questionable billing and dividing by the total number of States.  
The weighted national average is 25 percent and is calculated by dividing the total number of 
HHAs with questionable billing nationwide by the total number of HHAs nationwide.  
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Figure 1: States With High Percentages of HHAs with Questionable Billing, 2010 
 
 
 
Source:  OIG analysis  of Part A data for home health services, 2012. 
Five States far exceeded the national average, having at least three times 
as many HHAs with questionable billing as other States.  For example, 
Florida had the largest representation of HHAs with questionable billing.  
In Florida, 652 HHAs (or 52 percent) of the 1,251 HHAs operating in the 
State had questionable billing in 2010.  The percentage of HHAs with 
questionable billing in Florida was nearly six times the national average. 
Texas had the second-largest representation of HHAs with questionable 
billing. Forty-five percent, or 5 times the national average, of the 
2,212 HHAs in Texas had questionable billing.  
   
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CONCLUSION AND RECOMMENDATIONS 
In 2010, Medicare paid $19.5 billion to 11,203 HHAs for services 
provided to 3.4 million beneficiaries.   Recent investigations and prior OIG 
studies have found that home health services are vulnerable to fraud, 
waste, and abuse. 
In 2010, Medicare inappropriately paid approximately $5 million for home 
health claims that overlapped with claims for inpatient hospital stays, 
overlapped with claims for skilled nursing facility stays, or were billed for 
services on dates after beneficiaries deaths.  Further, in 2010, 
approximately one in every four HHAs exceeded the threshold that 
indicated unusually high billing for at least one of our six measures of 
questionable billing.  Additionally, HHAs with questionable billing were 
located mostly in four States.  Two of theseFlorida and Texasalso 
each had a high number of HHAs with questionable billing relative to the 
total number of HHAs in the State.       
Collectively, these findings identify specific issues with Medicare 
payments for home health services that need to be addressed to properly 
safeguard the Medicare program.  However, our review is based solely on 
an analysis of claims data and does not include payments that a medical 
record review, site visits, interviews with physicians and beneficiaries, or 
additional data analysis may find to be unreasonable or unnecessary.  
Similarly, the measures of questionable billing used in this review are 
indicators of potential fraud.  Although there may be legitimate reasons for 
an HHA to have unusually high billing on any of our six measures of 
questionable billing, it is important to examine HHAs that bill such 
unusually high amounts relative to other HHAs to determine whether such 
billing is inappropriate or fraudulent.  CMS must use all of the tools at its 
disposal to more effectively review, identify, and eliminate fraud, waste, 
and abuse in home health services.  
We recommend that CMS: 
Implement claims processing edits or improve existing edits to 
prevent inappropriate payments 
CMS should instruct MACs that process and pay home health claims to 
implement claims processing edits or improve existing edits to prevent 
inappropriate payments.  These edits should identify home health claims  
that overlap with claims for inpatient hospital stays or skilled nursing 
facility stays and flag them for further review to ensure the overlap is 
appropriate (i.e., the service was provided on the date of admission or 
discharge or during a leave of absence).  CMS should also ensure that 
Medicare does not pay for services on dates after beneficiaries deaths. 
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Increase monitoring of billing for home health services 
CMS should instruct MACs and ZPICs to monitor the billing of home  
health services by HHAs by using measures of questionable billing similar 
to those in this report. CMS should develop thresholds for these measures 
and instruct its contractors to conduct additional review of HHAs that 
exceed them.  CMS should also consider including these measures of 
questionable billing in its predictive analytic work. 
Enforce and consider lowering the 10-percent cap on the total 
outlier payments an HHA may receive annually  
In January 2010, CMS began capping outlier payments to individual 
HHAs at 10 percent of total projected Medicare payments.  Although this 
cap is a first step to mitigating potential fraud and inappropriate billing of  
outlier payments, we identified 434 HHAs that exceeded the cap in 2010.  
CMS should properly enforce the cap on the total outlier payments that an 
HHA may receive annually.   
Additionally, 78 percent of HHAs with total outlier payments greater than 
5 percent of total Medicare payments also exceeded the threshold for our 
measure of questionable billing specific to outlier payments, indicating 
potential fraud. CMS should reevaluate the 10-percent cap and consider 
lowering it, if appropriate, to better prevent fraud and inappropriate billing 
of outlier payments.   
Consider imposing a temporary moratorium on new HHA  
enrollments in Florida and Texas  
Florida and Texas each had a high number of HHAs with questionable 
billing in 2010. Additionally, the percentage of HHAs with questionable 
billing relative to the States total number of HHAs exceeded the national 
average by six times in Florida and by five times in Texas.  CMS should 
consider imposing a temporary enrollment moratorium on HHAs in these 
States. 
CMS should determine whether this moratorium should be imposed 
Statewide or imposed in specific counties and/or metropolitan areas.  CMS 
should also assess and consider beneficiary access to home health services 
when determining the geographic areas to which the moratorium would 
apply.  
Take appropriate action regarding inappropriate payments and 
HHAs with questionable billing  
In a separate memorandum, we will refer to CMS for appropriate action 
the claims associated with inappropriate payments and the HHAs with 
questionable billing that we identified.   
   
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AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
In its comments on the draft report, CMS concurred with all five 
recommendations.  CMS acknowledges that home health services have 
historically been vulnerable to fraud, waste, and abuse.  For this reason, 
CMS is taking additional steps to address vulnerabilities in the enrollment 
and claims payment process for HHAs and is building reliable models in 
its Fraud Prevention System that can detect and generate alerts for 
suspicious billing by all major provider types, including HHAs. 
While concurring with our first recommendation, CMS disagreed with the 
inappropriate payment amount the report associates with home health 
claims that inappropriately overlapped with claims for inpatient hospital 
stays and skilled nursing facility stays. CMS noted that in the absence of 
individual claims analysis, it is difficult to determine whether there was 
any financial impact from the submission of overlapping claims.  
Additionally, CMS noted that when this overlap occurs, the home health 
claim is rejected and nothing is paid on that initial claim submission.  The 
HHA is able to remove the overlapping visit(s) from the rejected claim and 
then resubmit the claim for Medicare payment.  However, we found that 
CMS paid for home health claims with visits that inappropriately 
overlapped with claims for inpatient hospital stays and skilled nursing 
facility stays.   Therefore, we continue to consider the entire Medicare 
payment amounts as inappropriate as these claims should not have been 
paid. CMS also stated that it will identify and correct any loopholes in its 
current enforcement after receiving OIGs specific claims examples.   
With regard to our second recommendation, CMS will provide ZPICs with 
a copy of this report. CMS will also  review the measures of questionable 
billing in this report and consider incorporating them into its Fraud 
Prevention System  models.   
With regard to the third recommendation, CMS has taken action to fully 
enforce the 10-percent outlier cap.  In early 2011, CMS identified a 
problem involving the calculation used to enforce the cap and has since 
corrected this problem.  Additionally, CMS plans to continue evaluating 
home health outlier policy, including analysis surrounding the current 
10-percent threshold, while considering the impact of lowering the cap on 
legitimate providers. 
With regard to our fourth recommendation, CMS is assessing a variety of 
provider types for suitability for moratoria, including HHAs.  CMS is also 
carefully assessing the geographic areas to which moratoria would apply 
and is evaluating issues relative to beneficiary access to care.   
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With regard to our fifth recommendation, CMS will determine the most 
appropriate administrative actions to take on claims containing 
inappropriate payments identified in this report.  Additionally, CMS will 
share the HHAs with questionable billing identified in this report with 
MACs to consider as they prioritize their work and with Recovery 
Auditors to consider as they decide what claims to review.  Recovery 
Auditors conduct postpayment reviews of claims to identify and correct 
improper payments. 
We support CMSs efforts to address these issues and encourage continued 
progress. For the full text of CMSs comments, see Appendix B.  We  
made minor changes to the report based on CMSs comments. 
   
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APPENDIX A 
Number and Percentage of Home Health Agencies With Questionable 
Billing by State, 2010  
 	  States shaded in black had percentages of home health agencies 
(HHA) with questionable billing four times or greater than the 
national average.  
	   States shaded in dark gray had percentages of HHAs with 
questionable billing three times the national average. 
 	  States shaded in light gray had percentages of HHAs with 
questionable billing two times the national average.  
Number of HHAs   Percentage of HHAs   Number of Times 
Total Number of  
State   With Questionable  With Questionable  the National 
HHAs in State  
Billing in State   Billing in State   Average 
Florida   652  1251   52%   5.8 
Texas   1,000   2212   45%   5.0 
Utah   33  82  40%   4.5 
California  281  847  33%   3.7 
Oklahoma   76  240  32%   3.5 
Michigan  130  553  24%   2.6 
Louisiana  51  217  24%   2.6 
Ohio   83  462  18%   2.0 
Massachusetts  21  135  16%   1.7 
Nevada   15  99  15%   1.7 
Colorado  19  128  15%   1.6 
New York   25  173  14%   1.6 
Tennessee  20  154  13%   1.4 
Wisconsin  13  102  13%   1.4 
Nebraska  8  70  11%   1.3 
Indiana  19  187  10%   1.1 
Mississippi  5  52  10%   1.1 
Kansas  11  115  10%   1.1 
Rhode Island   2  21  10%   1.1 
Illinois  57  625  9%   1.0 
Connecticut  7  81  9%   1.0 
Idaho  3  44  7%   0.8 
New Hampshire   2  32  6%   0.7 
Vermont  1  16  6%   0.7 
Delaware  1  18  6%   0.6 
Missouri  9  172  5%   0.6 
North Dakota   1  21  5%   0.5 
Kentucky  5  105  5%   0.5 
  (continued)  
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APPENDIX A  (CONTINUED)
  
 
 
Number of HHAs   Percentage of HHAs   Number of Times 
Total Number of  
State   With Questionable  With Questionable  the National 
HHAs in State  
Billing in State   Billing in State   Average 
Pennsylvania  12  301  4%   0.4 
Georgia  4  113  4%   0.4 
Wyoming  1  29  3%   0.4 
Minnesota  5  151  3%   0.4 
Virginia  6  183  3%   0.4 
South Dakota   1  31  3%   0.4 
Iowa  5  157  3%   0.4 
New Mexico  2  71  3%   0.3 
Alabama  4  153  3%   0.3 
Arizona  2  102  2%   0.2 
West Virginia   1  57  2%   0.2 
Washington  1  60  2%   0.2 
Arkansas  2  161  1%   0.1 
Alaska  0  12  0%   -- 
District of Columbia  0  21  0%   -- 
Hawaii  0  11  0%   -- 
Maine  0  27  0%   -- 
Maryland  0  53  0%   -- 
Montana  0  32  0%   -- 
New Jersey   0  52  0%   -- 
North Carolina   0  182  0%   -- 
Oregon  0  58  0%   -- 
Puerto Rico   0  40  0%   -- 
South Carolina   0  68  0%   -- 
U.S. Virgin Islands  0  1  0%   -- 
Guam  0  4  0%   -- 
Saipan***  0  2  0%  --
     Total   2,594*   10,341*   9%**  -- 
*Certain HHAs had  two different provider States listed on  claims and are  counted twice. 

**This national average is unweighted and is  calculated by summing all States percentages of HHAs with questionable billing and dividing by the 
 
total number of  States.  The weighted national average is 25 percent and is  calculated by dividing the total number of HHAs with questionable 

billing nationwide by the total number  of HHAs nationwide. 

***Saipan is  the largest island of  the Northern Mariana  Islands, a U.S. territory.
  
Source:  Office of  Inspector General analysis of Part A data for home health services, 2012. 

   
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   25 
  APPENDIX B 
Agency Comments 
...
{/""."."'tI 
DEPARTMENT OF HEALTH & HUMAN SERVICES 
,~~ 
Adminisft'4tor 
Washington, DC 20201 
DATE:  JUN 2 7 2012 
TO:  Daniel R. Levinson 
Inspector .General 
J:'ROM: 	 MaNlyn 1;.!!ve!<ner 
Acting KclminiS\.rator 
SunJEcr: 	 Office of Inspector Gencral (OIG) Draft Report: Inappropriate and Questionable 
Billing by Medicare Home Health Agencies (OEl-04-! 1-00240) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on 010 Draft Report entitled, "Inappropriate and Questionable Billing by Medicare 
Home Health Agencies" (OEI-04-11-OO240). The objectives of this study are to determine the 
extent to which home health agencies (HHAs) submitted Medicare claims that inappropriately 
overlapped with an inpatient hospital stay, overlapped with a skilled nursing facility (SNF) stay, 
or were billed after a beneficiary'S death and to identify and describe HHAs that exhibited 
questionable billing, 
HHA services have historically been vulnerable to fraud, waste, and abuse. As such, CMS is 
taking additional steps to address potential vulnerabilities in the enrollment and claims payment 
process for this supplier group using the authorities granted under the Affordable Care Actl. 
Under the new screening provisions of CMS 6028-FC2 all newly enrolling HHAs are considered 
a high risk provider/supplier and are, therefore, subject to unannounced site visits. The 
Affordable Care Act also enhanced CMS' authority to suspend payments for credible allegations 
of fraud. In February, CMS announced the suspension of payments to 78 HHAs involved in an 
alleged fraud scheme in Dallas that was part of the February 28, 2012 Health Care Prevention 
A(..1ion Team Strike Force takedown. 
As part of CMS revalidation efforts, all HHAs were sent revalidation notices prior to December 
31, 2011 and are currently in process. In addition, all HHAs are subject to an unannounced 
physical site visit as part of the revalidation process. 
In addition, eMS implemented the Fraud Prevention System (FPS) in June of 2011 which 
applies predictive analytic technology on claims prior to payment to identify aberrant and 
suspicious billing patterns. The FPS has been running predictive algorithms and other 
I Section 6401 of the Affordable Care Act provided the Secretary with authority to perform categorical risk-based 
screening on providers and suppliers at enrollment and upon revalidation. 
' CMS 602S-FC entitled, " Medicare, Medicaid and Children's Health Insurance Programs: Addttlonal Screening 
Requirements, Apptication Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for 
Providers and Suppliers" was published in the Federal Register on February 2, 2011. 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)  26   
   
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APPENDIX B (CONTINUED)
  
 
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APPENDIX B (CONTINUED)
  
 
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APPENDIX B (CONTINUED)
  
 
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APPENDIX B (CONTINUED)
  
 
   
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ACKNOWLEDGMENTS 
This report was prepared under the direction of Dwayne Grant, Regional 
Inspector General for Evaluation and Inspections in the Atlanta regional 
office, and Jaime Durley, Deputy Regional Inspector General.   
Rachel Daiber served as the lead analyst for this study.  Other Office of 
Evaluation and Inspections staff from the Atlanta regional office who 
conducted the study include David Samchok.  Central office staff who 
provided support include Kevin Farber, Scott Horning, Scott Manley, and 
Christine Moritz.  
 
Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240)   32 
   
   
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.