Department  of  Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
HOME  HEALTH:  PROBLEM  PROVIDERS 

AND  THEIR  IMPACT  ON  MEDICARE 

JUNE  GIBBS  BROWN 
Inspector  General 
JULY 1997 
I 
OEI-09-96-00110  OFFICE  OF INSPECTOR  GENERAL 
The  mission  of the Office of Inspector  General  (OIG), as mandated  by Public  Law 
95-452,  is to protect  the integrity  of the Department  of Health  and Human  Services 
programs  as well as the health  and welfare  of beneficiaries  served by them.  This  statutory 
mission  is carried  out through  a nationwide  program  of audits,  investigations,  inspections, 
sanctions,  and fraud alerts.  The Inspector  General  informs  the Secretary  of program  and 
management  problems  and recommends  legislative,  regulatory,  and operational  approaches 
to correct  them. 
Office  of Evaluation  and Inspections 
The Office  of Evaluation  and Inspections  (OEI) is one of several  components  of the Office 
of Inspector  General.  It conducts  short-term  management  and program  evaluations  (called 
inspections)  that focus on issues of concern  to the Department,  the Congress,  and the 
public.  The inspection  reports  provide  findings  and recommendations  on the efficiency, 
vulnerability,  and effectiveness  of departmental  programs. 
OEIs San Francisco  Regional  Office prepared  this report.  Principal  staff included: 
Paul A.  Gottlober,  Deputy  Regional  Inspector  General 

Kaye D. Kidwell,  Regional  Inspector  General 

Don Loeb,  Lead Analyst 

Kathy  Dezotte,  Program  Assistant 

Cynthia  Lemesh,  Consultant 

Celeste  Anderson  and Associates,  Consultant 

Jennifer  Antico,  Program  Specialist 

To obtain  a copy  of this report,  call the San Francisco  Regional  Office at 415-437-7900.  EXECUTIVE  SUMMARY 
PURPOSE 
This  report  identifies  and describes  the common  characteristics  of problem  home  health 
agencies  and how these agencies  contribute  to Medicare  fraud,  abuse,  and waste. 
BACKGROUND 
Medicare  covers  home health  care to homebound  beneficiaries  who need intermittent  skilled 
nursing  care and/or  physical  or speech therapy.  Medicare  does not limit the number  of visits 
or the length  of home health  coverage.  Services  are covered  for as long  as reasonable  and 
necessary  to treat the patients  illness  or injury.  There  are no beneficiary  copayments  or 
deductibles  for home care visits. 
While  the majority  of Medicare  providers  are complying  with the home health  benefit 
requirements,  recent  work by the Office of Inspector  General  and the General  Accounting 
Office has shown that this benefit  is very  susceptible  to abuse.  Furthermore,  it is sometimes 
extremely  difficult,  and often  impossible,  for the program  to recover  overpayments.  To gain 
greater  insight  about these problems,  we examined  a stratified  random  sample of 60 home 
health  agencies  from  a universe  of 698 providers  that were identified  by the fiscal 
intermediary,  the Health  Care Financing  Administration  (HCFA),  or the Office  of Inspector 
General  as having  met our definition  of a problem  home health  agency.  We define  a 
problem  home health  agency  as one that has abused or defrauded  Medicare  or 
misappropriated  Medicare  funds through  the cost report  or claims process.  The providers 
were chosen  from  five  States--New York,  Florida,  Illinois,  Texas,  and California--that  were 
the focus for the special  Medicare  anti-fraud  initiative  known  as Operation  Restore  Trust. 
FINDINGS 
One quarter  of home  health  agencies  in the five  Operation Restore  Trust States are 
problem providers,  and they receive  almost 45 percent  of all Medicare  expenditures  for 
home  health  services in these States 
Of the $5.7 billion  paid to home health  agencies  in the five Operation  Restore  Trust  States in 
1995, problem  agencies  received  $2.5 billion.  Nationally,  8949 Medicare-certified  home 
health  agencies  received  $15.4 billion. 
Problem  home  health  agencies  share  ownership  and operational  characteristics  that can 
thwart overpayment  recovery  and  undermine  sanctions 
Most problem  home health  agencies  are closely-held  corporations.  Their  owners  are 
frequently  involved  in related  organizations  and complex businesses  relationships.  Some of 
them have used their  corporations  to misappropriate  Medicare  funds and incur  substantial 
Medicare  overpayments  that cannot  be recovered.  The owners  of problem  agencies 
i  frequently  rely  on family  members  and consultants  to help them run their  agencies.  Relying 
almost  exclusively  on Medicare  for income  and assets, entrepreneurs  are able to open and 
operate  home health  agencies  without  fixed assets or startup costs.  The owners  and 
principals  can continue  to receive  Medicare  money,  because HCFA  has few preventive 
measures. 
Expansion  of the benefit  and the lack of any restrictions on certification  have led to 
ever-increasing  administrative problems  with littleprospect  of mitigation 
The number  of home  health  agencies  has almost doubled,  and Medicare  home  health  costs 
have more  than quadrupled  since  1989.  Thorough  review  of cost reports  and claims  can 
uncover  a wide variety  of unallowable  costs and non-covered  services,  but submission 
requirements  and limited  resources  hamper  fiscal  intermediaries  oversight  efforts. 
RECOMMENDATIONS 
To protect the Medicare  home health benefit,  HCFA needs to develop and implement 
additional  program safeguards  that would (1) strengthen  its ability to identify  problem 
providers,  (2) prevent problem HHAs from entering the program,  and (3) prevent the 
Medicare  trust fund from incurring  further  losses due to the activities of problem 
HHAs. 
In order  to accomplish  this,  HCFA  should take administrative  action  or,  if necessary,  seek 
legislative  authority  to: 
require  surety bonds  of new and existing  home health  agencies; 
require  user fees to cover  the cost of certifications,  comprehensive  reviews,  and 
recertifications; 
require  that agency  principals  have prior  health  care experience; 
develop  a data bank of owners,  principals,  and related  organizations; 
require  that agency  principals  and owners provide  their  Social Security  and Employer 
Identification  numbers  prior  to certification; 
require  that home health  agencies  are fiscally  sound prior  to certification; 
deny certification  to owners  and principals  of current  or defunct  agencies  who are not 
financially  responsible  and trustworthy; 
preclude  the discharge  of Medicare  debts through  bankruptcy. 
11  We also reiterate  our previous  recommendation  that HCFA  should: 
0 	 tighten  controls  over the periodic  interim  payment  method  of reimbursement  and seek 
legislation  that would eliminate  it entirely. 
PROPOSED  LEGISLATION 
The President  has announced  legislative  proposals  to fight fraud  and abuse in health  care. 
Many  of the provisions  in the Presidents  Medicare  and Medicaid  Fraud,  Abuse,  and Waste 
Prevention  Amendments  of  1997 would strengthen  HCFAs  ability  to address our findings 
regarding  problem  HHAs.  Several of these provisions  are also contained  in Medicare  anti-
fraud legislation  that has been proposed  by Congress.  The Presidents  proposals  include: 
denying  participation  in Medicare  for any person  convicted  of a felony, 

requiring  providers  to furnish  Social Security  and Employer  Identification  numbers  of 

all owners  and managing  employees  prior  to certification, 

collecting  user fees to perform  certifications  and recertifications, 

excluding  entities  controlled  by family  members  of sanctioned  individuals, 

penalizing  anyone  who relies  on sanctioned  individuals  to authorize  or provide 

services, 

b  prohibiting  providers  from using bankruptcy  to stay the recovery  of overpayments  or 

discharge  Medicare  debts, 

clarifying  the definitions  of homebound  and part-time  or intermittent  services,  and 

eliminating  PIP through  the implementation  of prospective  payment  in the year  2000. 

AGENCY  COMMENTS 
We received  comments  on the draft report  from the Assistant  Secretary  for Planning  and 

Evaluation  and the Assistant  Secretary  for Management  and Budget.  Based on their 

comments  we modified  the report  to more fully  describe  recent  anti-fraud  legislative 

proposals  which  have been  sent to the Congress  by the President  and to clarify  that not all of 

the increase  in home health  services  in recent  years  is the result  of illegitimate  billings  by 

problematic  providers. 

We also received  comments  from the HCFA  Administrator.  The HCFA  concurs  with the 

majority  of our recommendations,  although  only partially  with two of them that concern  the 

financial  stability  of HHAs.  Furthermore,  HCFA  does not support our recommendation  for 

a moratorium  on certifying  new home health  agencies until  new program  controls  are put into 

effect. 

We continue  to believe  that the financial  management  integrity  should be an important 

criterion  in certifying  them as suitable for participation  in the Medicare  program. 

With respect  to a moratorium,  HCFA  states that it has the responsibility  to establish  and 

implement  adequate program  requirements  and safeguards  and that if a home health  agency  is 

able to comply  with these requirements,  it should be allowed to enter  the program.  We 

. . . 
111  agree that HCFA  does have  such a responsibility.  We are also aware that numerous 
legislative  proposals  similar  to those we recommend  in this report  are now pending  before 
the Congress.  If enacted,  these proposals  would greatly  strengthen  HCFAs  ability  to curb 
abuses.  For these reasons,  we have withdrawn  our recommendation  for a moratorium  at this 
time. 
However,  we remain  very  concerned  about this program.  Current  program  requirements  are 
woefully  inadequate  to prevent  financially  irresponsible  or fraudulent  home health  agencies 
from  becoming  Medicare  providers.  On the same day that we are issuing this report,  we are 
issuing  another  one that shows that,  in four of the five States reviewed  in this report,  40 
percent  of Medicare  payments  for home health  should not have been made,  resulting  in 
losses of approximately  $2.6 billion  over a 15-month period.  We believe  that Medicare 
cannot  continue  to sustain  losses of this magnitude.  If, even after enactment  of new 
legislation  and stronger  administrative  action,  there  is no major  reduction  of improper 
payments,  then more  dramatic  action  will need to be taken by HCFA  and the Congress. 
This  should  include  the establishment  of strict criteria  relating  to the trustworthiness  of 
applicants,  adequate  resources  to allow  for a thorough  review  of applicants,  and a concurrent 
decertification  of problem  providers  already  certified  in the program  who are responsible  for 
a disproportionate  share of Medicare  losses.  Under these circumstances,  a brief  moratorium 
could be appropriate  while  HCFA  tools up its review  mechanisms  and reexamines  the 
suitability  of previously  certified  problem  providers. 
The full text of each agencys  comments  appears  in Appendix  D. 
iv  TABLE  OF  CONTENTS 
PAGE 
EXECUTIVE  SUMMARY 
INTRODUCTION  ..........................................  1 
FINDINGS  ...............................................  . 
 One-fourth  are problem  providers  ...............................  6 
 Ownership  and operational  characteristics  ..........................  7 
 Expansion  created  administrative  problems  ........................  12 
RECOMMENDATIONS  .....................................  18 
APPENDICES 
A:  Comparison  of ORT and non-ORT  States  ...........  ...........  A-l 
B:  A Complex  Corporate  Web  ....................  ............  B-l 
C:  Synopsis  of Additional  Fraud  and Abuse Cases  .......  ............  C-l 
D:  Agency  Comments  .........................  ...........  D-l  INTRODUCTION 
PURPOSE 
This report  identifies  and describes  the common  characteristics  of problem  home health 
agencies  (HHAs) and how these agencies  contribute  to Medicare  fraud,  abuse,  and waste. 
BACKGROUND 
The Medicare  Home  Health  Benefit 
Medicare  covers  home health  care to homebound  beneficiaries  who need intermittent  skilled 
nursing  care and/or  physical  or speech therapy.  Medicare  home health  benefits  include 
(1) part-time  or intermittent  nursing  care provided  directly  by or under  the supervision  of a 
registered  nurse;  (2) physical,  occupational,  and speech therapy;  (3) medical  social  services  if 
related  to the patients  health  problems;  and (4) part-time  or intermittent  home  health  aide 
services  when provided  as an adjunct  to skilled  nursing  or therapy  care.  To be covered  by 
Medicare,  home  health  services  must be furnished  under  a plan of care that is signed and 
reviewed  by a physician  every  62 days. 
Medicare  does not limit the number  of visits or the length  of home health  coverage.  Services 
are covered  for as long as reasonable  and necessary  to treat the patients  illness  or injury. 
As a Part A benefit,  there  are no beneficiary  copayments  or deductibles  for home  care. 
To be eligible  for Medicare  reimbursement,  HHAs must be certified  Medicare  providers. 
The Health  Care Financing  Administration  (HCFA)  administers  the Medicare  program. 
HCFA  contracts  with State licensing  and certification  agencies  who are responsible  for 
determining  if providers  meet and continue  to meet the Medicare  conditions  of participation. 
Once certified,  providers  may furnish  home health  services using their  own staff or others 
under  a contract  arrangement.  Reimbursement  is based on the costs (subject to 
geographically-based  cost limits)  incurred  in providing  covered  visits to eligible  beneficiaries. 
Medicare-certified  HHAs are either  proprietary  (private,  for-profit),  voluntary  (private, 
nonprofit),  or Government  owned and operated. 
The HCFA  contracts  with eight regional  home health  intermediaries,  referred  to throughout 
this report  as fiscal  intermediaries,  to process  home health  claims,  set reimbursement  rates, 
make payments,  educate providers,  audit cost reports,  and maintain  payment  safeguards. 
Rapid Growth in Home  Health 
The home health  care industry  is the fastest growing  segment of health  care in the United 
States.  This growth  began  in 1989, when,  as a result of a lawsuit,  changes  in Medicare 
regulations  expanded  eligibility  and eliminated  the cap on the number  of visits.  Since that 
time,  the number  of Medicare-certified  HHAs has risen  from 5730 in 1990 to 8949 in 1995. 
1  While  the number  of beneficiaries  receiving  HHA services  has grown,  costs to the Medicare 
program  have  increased  disproportionately.  Total annual  Medicare  expenditures  for home 
health  grew from  $3.7 billion  in 1990 to $15.4 billion  in 1995.  As detailed  in the following 
chart,  home  health  visits more than tripled  and payments  more than quadrupled  in 6 years. 
NATIONAL  MEDICARE HOME HEALTH UTILIZATION  STATISTICS 
Total Medicare  Beneficiaries 
Beneficiaries  Who Received HHA Services  1.98 million  3.48 million  +76% 11 
I  I 
Total HHA Reimbursement  $3.7 billion  $15.4 billion  +316% 11 
I  I 
HHA Percentage  of Total Medicare Program 
3.7%  8.7% 1  +135% 11 
Dollars 
Average  HHA Reimbursement  per Patient  $1,892 1  $4,4381  +135% 11 
Total HHA Visits  70 million I  250 million  I  +2x%  11 
Average HHA Visits per Patient 
Percentages  may not be exact due to rounding 
Many  of these  increases  can be traced  to the influx  of for-profit  HHAs.  According  to a 
1996 General  Accounting  Office  (GAO) report,  proprietary  agencies  are not only  the highest 
utilizers  of HHA  services,  they have undergone  the most rapid growth.  In  1993, proprietary 
agencies  provided  an average  of 78 visits annually  per beneficiary,  while the number  of visits 
provided  by voluntary  and government  agencies  averaged  46.  Furthermore,  in 1989, 
35 percent  of all HHAs were proprietary,  but, by  1995, approximately  50 percent  were. 
In a 1995 study of variation  in Medicare  payments  for home health  services,  the Office  of 
Inspector  General  (OIG) found that proprietary  for-profit  HHAs receive  higher 
reimbursement  per visit and provide  significantly  more visits per patient  than either  voluntary 
non-profit  or government  owned and operated  HHAs. 
Inadequacy  of Current  Safeguards 
While  the majority  of Medicare  providers  are complying  with the home health  benefit 
requirements,  recent  work by both the OIG and the GAO has shown that the home  health 
benefit  is very  susceptible  to fraud and abuse.  For example,  the OIG recently  completed 
audits of eight  HHAs in Florida,  Pennsylvania,  and California.  These audits revealed  that 
between  19 and 64 percent  of the home health  visits that had been billed  by the HHAs did 
not meet Medicare  coverage  guidelines.  Patients  were not homebound  and visits that had 
been billed  to Medicare  were not medically  reasonable  or necessary,  not documented  or 
provided,  and not authorized  by physicians.  Preliminary  data from  Statewide  audits  in New 
York,  Texas,  Illinois,  and California  show similar  problems. 
2 
 The OIG has investigated  numerous  cases of home health  fraud during  the last several  years. 
Appendix  C contains  a synopsis  of some fraud cases that were not included  in the sample we 
selected  for this inspection. 
Definition  of Problem  Home  Health Agency 
For purposes  of this inspection,  we tentatively  defined  a problem  HHA as one that has 
been  identified  by HCFA,  a fiscal  intermediary,  the State certification  and/or  licensing 
agency,  or the OIG as meeting  one or more of the following  conditions: 
has incurred  significant  uncollected  overpayments; 

routinely  submits cost reports  with significant  inappropriate  and unallowable  costs; 

files  a cost report  that is determined  to be unauditable; 

routinely  does not file cost reports  within  a reasonable  time; 

has submitted  multiple  claims  for services  that are not medically  necessary; 

has submitted  multiple  claims  for services  that were not rendered; 

continues  to submit problem  claims despite educational  contacts; 

has significant  certification  deficiencies; 

has been  referred  to the fiscal  intermediarys  program  integrity  unit;  or 

has been referred  to the OIG by the fiscal  intermediary. 

As noted  in the methodology  section  which follows,  prior  to selecting  our sample,  we further 
refined  our definition  to assure that we included  only those HHAs with significant  and/or 
multiple  problems. 
Operation Restore  Trust 
Operation  Restore  Trust  (ORT) began as a 2-year  a new health  care anti-fraud  demonstration 
initiative.  The ORT is a crackdown  on Medicare  and Medicaid  fraud,  waste,  and abuse in 
HHAs,  nursing  homes,  and durable  medical  equipment  suppliers  in five States--California, 
New York,  Florida,  Texas,  and Illinois--that  account  for 40 percent  of the nations  Medicare 
beneficiaries  and program  expenditures.  As part of ORT, the OIG has undertaken  a number 
of national  program  inspections  aimed at identifying  and eliminating  systemic  weaknesses  that 
allow  fraud,  waste,  and abuse to occur  in the Medicare  program.  We conducted  this 
inspection  as part of ORT. 
The fiscal  intermediaries  serving  the five  ORT States are Blue Cross of California,  Blue 
Cross of Illinois,  Aetna  (Florida),  Palmetto  Government  Benefits Administrators  (Texas), 
United  Government  Services  (New York),  and IASD Health  Services  Corporation  (Iowa, 
national  alternate  intermediary). 
METHODOLOGY  AND SCOPE 
In June  1996, the California  Operation  Restore  Trust Steering  Committee  convened  a 
meeting  of representatives  from the OIG, HCFA,  and the fiscal  intermediaries  to discuss 
participants  concerns  about fraud,  abuse,  and waste in the Medicare  home health  benefit. 
3  Based on that meeting  and additional  analysis,  we developed  our initial  definition  of a 
problem  HHA. 
From  July through  September,  we visited  the five Medicare  fiscal  intermediaries  who serve 
the ORT States as well as the backup  intermediary  in Iowa.  In addition  to conducting 
interviews  with fiscal  intermediary  audit,  medical  review,  and program  integrity  staff,  we 
reviewed  selected  files to determine  how and what information  is routinely  maintained  by 
intermediaries.  Based on the visits,  we were able to refine  our working  definition  of a 
problem  HHA and develop  a list of characteristics  to look for during  the inspection. 
In addition  to the fiscal  intermediary  staff,  we conducted  visits and telephone  interviews  with 
the State licensing  and certification  agencies  and HCFA  regional  offices  to determine  what 
information  could be retrieved  from their  files to help us identify  common  characteristics. 
These discussions  led us to investigate  the use of commercial  databases to obtain  information 
about corporations  and individuals  who either  own or manage  HHAs.  While  none of these 
database  systems  are comprehensive  and all of them have their  limitations,  we chose  CDB 
Infotek  to help validate  and complement  information  we collected. 
Although  each organization  maintains  much information,  we learned  that there  is little 
consistency  and considerable  variation  in the nature  and type of information  as well  as the 
way the information  is maintained  and retained.  As might be expected,  we found 
considerable  duplication  of information  and data among the various  organizations. 
Universe  and Sample Selection:  The universe  for this inspection  consists  of all 
Medicare-certified  HHAs in the ORT States which meet one or more  of the conditions  listed 
in our definition  of a problem  HHA.  The list of 698 providers  was compiled  from  lists of 
problem  providers  identified  by fiscal  intermediaries  serving  the ORT States during  the 
fourth  quarter  of fiscal year  1996.  Our original  list had approximately  800 providers,  but we 
refined  the list to include  only  HHAs with significant  and/or  multiple  problems. 
PROBLEM MEDICARE HHAs BY ORT STATE 
State  Certified HHAs  Problem HHAs 
California  653  145 
11Florida  1 
II I  I 
TOTAL  2729  698 
We selected  60 providers  using  a simple random  sample,  stratified  by fiscal  intermediary. 
Our sample consisted  of  10 providers  for each of the 6 fiscal  intermediaries  serving  the 
4 
 5 ORT States.  For Iowa,  we selected  10 HHAs from the ORT States with the proportions 
based on the total number  of agencies  per State:  3 from  California,  4 from  Texas,  1 from 
Illinois,  1 from  New York,  and  1 from Florida.  For all but one fiscal  intermediary,  we used 
spares because  file information  was missing  or an audit was in progress  at the time  of our 
visit. 
Data Collection:  We gathered  data from the following  sources:  (1) the audit,  medical 
review,  and program  integrity  files maintained  by the six fiscal  intermediaries;  (2) public 
records  regarding  business  ownership,  criminal  convictions,  and related  information 
maintained  on-line  by CDB Infotek;  and (3) files and databases maintained  by the OIG, 
HCFA,  and State licensing  and certification  agencies. 
The inspection  team conducted  on-site  visits to the fiscal  intermediaries  to review  their  files 
for the 60 sample HHAs.  We combined  the information  from the on-site  reviews  with data 
and information  from  CDB Infotek  as well as HCFA  and the OIG.  We used a database 
software  program  for analysis. 
Many  of the percentages  and statistics  mentioned  in the report  findings  are understated  for 
the following  reasons: 
  We relied  on information  contained  in fiscal intermediary  files,  and these files are not 
consistently  and uniformly  maintained; 
0  State and national  databases  are dissimilar  and not always  thorough; 
  Many  of these home health  agencies  are under current  investigation  and therefore  the 
fiscal  intermediary  files  lack valuable  information; 
  Many  of the HHAs  are so new that fiscal  intermediary  files do not include  detailed 
audit information;  and 
0  Some of the HHAs had not billed  Medicare  in 1995 because they had filed bankruptcy 
in a previous  year. 
5 
 FINDINGS 
:::::::::~:~..~~~..~..~..~.r~..~..~..~...~..~..~..~.~..~.~..~............~..~..~...~..~....~...~..~........,.... ,.,.,.,.,.,.,.,.,.,.,........i.... .,.,...,.,...,.,.~.....,.,...,i,..,.. ,...,....,...,....,...,....,...,....,...,,..,,..,.,....,.. ...t.,  .., ..,  ..__._. __. _.  ,.. ,........._.__._.  ,. ,.  _.........  ,.. ,..  _. ., ., 
One quarter  of home health  agencies in the five Operation Restore  Trust States are 
probIem providers,  and they receive almost 45 percent of all Medicare 
expenditures  for home health services in these States 
More  than  25 percent  of the home  health agencies  in ORT States are problem  providers 
Of the 2729 HHAs in the 5 ORT States, our list of problem  providers  totalled  698, or 
approximately  one-fourth  of the total number  of HHAs.  Nationally,  there  were 8949 
Medicare-certified  HHAs  in 1995. 
Of the 676 problem  HHAs for which  we have ownership  information,  80 percent  are 
for-profit  with an additional  10 percent  designated  as non-profit  but private.  Nationwide, 
slightly  less than 50 percent  of all Medicare-certified  HHAs are for-profit. 
Problem  home  health  agencies  received  nearly 45 percent  of Medicare  home  health 
payments  in the ORT States 
Although  the problem  providers  represented  approximately  25 percent  of the total  number  of 
HHAs  in the ORT States,  they received  $2.5 billion  of the $5.7 billion  paid to HHAs  in 
these  States in  1995.  Nationally,  Medicare  paid $15.4 billion  for home health  services. 
For-profit  problem  HHAs received  $1.74 billion  or almost 70 percent  of the total  Medicare 
payments  that were made to problem  providers  in the five ORT States.  While  this represents 
a smaller  percentage  of total  reimbursement  than their  numbers  might  indicate,  their  average 
reimbursement  per patient  is approximately  $6000 which  is almost  50 percent  more  than 
nonprofit  problem  HHAs. 
Our sample providers  received  more than $440 million  in 1995.  This  is almost  8 percent  of 
the total  reimbursement  in the ORT States for home health  services,  even though  the number 
of providers  represents  only  2 percent  of the total number  of HHAs in these  States. 
HHAs  in ORT States mirror  the nation 
Thirty  percent  of all Medicare-certified  HHAs are located  in ORT States,  and they receive 
almost  40 percent  of all Medicare  payments  for home health  services.  Despite  the fact that 
 These totals do not include total dollar amounts for some of the chain providers,  but rather  the individual 
agencies.  Furthermore,  these represent  total expenditures  and is not intended to imply that all of the payments 
were inappropriate. 
6  they represent  a disproportionate  share of the national  figures,  their  per patient  statistics 
mirror  those for all HHAs. 
VISITS AND REIMBURSEMENT PER PATIENT 
1995 
100 
80 
60 
40 
20  $looo 
ORT States
0  $0 
Visits per Patient  Reimbursement per Patient  gg  Nationwide 
Although  the ORT States are some of the largest  in the nation,  they represent  a variety  of 
characteristics.  For example,  Texas is the State with the largest  number  of HHAs,  highest 
Medicare  expenditures,  and greatest  number  of total visits.  While  Texas also ranks  near the 
top in reimbursement  and number  of visits per patient,  several  non-ORT  States exceed  it.  In 
comparison,  Florida  is slightly  above the national  average  in these categories.  California  is 
close to the national  average  in reimbursement  per patient  and below  the average  in visits per 
patient.  New York and Illinois  are considerably  below average  in both of these categories. 
See appendix  A for more  detailed  State rankings. 
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Problem home health  agencies share ownership  and operational  characteristics  that 
can thwart  overpayment  recovery  and undermine  sanctions 
Most problem  home  health  agencies  are closely-held corporations  whose owners are 
involved in related organizations  and complex  business  relationships 
Problem  HHAs  are typically  for-profit  corporations  owned by one,  two,  or,  at the most, 
five individuals.  Almost  40 percent  of the HHAs in our sample are family-owned,  usually 
by husband  and wife teams,  Many  others  are owned by siblings,  a sole individual,  or 
two unrelated  persons.  While  many  of these closely-held  corporations  are simple  mom and 
pop  operations,  their  annual  Medicare  revenue  ranges from  $50,000  to as much as 
$33 million. 
For the most part,  the owners  of these HHAs are neither  health  care professionals  nor do 
they  have any prior  health  care business  experience.  In fact,  of the 31 sampled providers  for 
whom ownership  background  information  is readily  available,  only  14 have an owner  who is 
a health  care professional.  This  is usually  a nurse.  Those owners  who have previous  health 
7  care business  experience  usually  gained  it at another  problem  HHA.  More  commonly  the 

owners  came to home health  from  such unrelated  businesses  as investment  banking,  trucking, 

real estate,  accounting,  the beauty  industry,  and even jai  alai. 

More  than half  of the problem  HHAs have ownership  interests  in related  companies  which  do 

business  with the home health  agency.  The related  companies  frequently  own the office 

space and lease  it to the HHA.  Some exist merely  to provide  the HHA with office 

equipment  or lease automobiles  for the owners use.  Separate but related  companies  also 

provide  billing,  consultant,  and/or  administrative  services  to the HHA. 

It is not unusual  for owners  of problem  agencies  to have links  with other HHAs  and 

questionable  relationships  with physicians.  Nearly  one quarter  of the owners  in our sample 

own other  HHAs,  while  another  quarter have  informal  links  with other HHAs.  Fiscal 

intermediaries  have  identified  numerous  situations  where a problem  HHA has sold patients, 

shared employees,  and used the same referral  physicians.  They have  also discovered 

potential  kickback  situations  where referring  physicians  routinely  rubber stamp plans  of 

care for one or more problem  HHAs. 

During  the course  of our inspection,  we identified  several  situations  where the owners  of 

problem  HHAs are involved  in other businesses  which they did not disclose  as related 

organizations  for Medicare  reimbursement  purposes.  These businesses  included  durable 

medical  equipment,  health  consulting,  board and care facilities,  hospices,  retirement  homes, 

and nurse registries  which  may be providing  services  directly  to the HHA or acting  as 

referral  and recruitment  sources  for the HHA. 

The complex  web of interrelated  businesses  enables the owners  of some problem  HHAs to 

maximize  their  Medicare  reimbursement  while claiming  that the HHA itself barely  breaks 

even or operates  at a loss.  Some owners  receive  full-time  salaries  from the HHA despite 

having  ownership  interest  and concomitant  responsibilities  in other companies.  Others  may 

be paid twice for the same service,  as in the case of HHA owners  who also own board  and 

care facilities.  The HHAs are paid to provide  home health  aide services  to the board  and 

care residents  while the board  and care facility  receives  per diem that is intended  to include 

aide services.  Still others  may own property  or equipment  that is worth  far less than the 

amount  they  are charging  the HHA and the HHA is reporting  on its cost report  as a 

Medicare  patient-related  expense.  (See appendix  B for an illustration  of these issues.) 

The owners  of problem  home  health agencies frequently  rely on family  members  and 
consultants  to help them run  the agency 
Problem  HHAs typically  employ  or contract  with relatives  to serve in key positions.  More 
than half  of the HHAs  in our sample paid spouses,  siblings,  children,  nieces,  nephews, 
and/or  in-laws  to perform  services  for the HHA.  One-quarter  of the agencies  have 4 or 
more  relatives  who serve as owners  and employees  and 4 of the agencies  employ,  or contract 
with,  10 or more  family  members. 
8 
 Family  members  rarely  have  any health  care experience.  Rather,  they come from  such 

diverse  backgrounds  as military  service,  engineering,  and teaching.  We also noted that 

several  family  members  were college  students with no prior  work experience. 

Some relatives  are on the HHAs payroll  but perform  little  or no work.  One HHA,  for 

example,  contracted  with the owners  nephew to maintain  the agencys  computers  for 

$250,000.  The nephew  was a full-time  college  student at the time,  and his services  were not 

commensurate  with the amount  of money  he was paid.  In another  situation,  the HHAs 

payroll  included  three  relatives.  The checks  that were issued to these relatives  were not 

cashed by the relatives  but instead were returned  to the agency  and cashed by the HHAs 

owners.  These relatives  were  ghost employees  whose existence  allowed  the agency  to 

claim  costs that were never  really  incurred. 

While  many  consultants  provide  valuable  services  for start-up agencies,  a few have earned 

their  reputations  as inside experts  who can help HHAs  maximize  their  Medicare 

reimbursement.    They claim  to have intimate  knowledge  of each fiscal  intermediarys 

operations  and promise  to work the system  to increase  the HHAs reimbursement  rate and 

the owners  compensation  allowance  as well as to insulate  the owner  from personal  liability. 

Three-fourths  of the HHAs  in our sample use management  or reimbursement  consultants  who 

specialize  in home  health.  We identified  13 consultants  who each work for 2 or more  of the 

problem  HHAs  in our sample.  We were able to ascertain  that nearly  half  of these 

consultants  were former  fiscal  intermediary,  State agency,  or HCFA  employees. 

Following  the advice  of these consultants,  problem  HHAs realize  even higher  reimbursement 

than their  counterparts.  For the sampled HHAs,  reimbursement  per beneficiary  was more 

than 20 percent  higher  when  1 of the  13 consultants  was involved  ($7042 vs.  $5787).  These 

HHAs  also consistently  make exorbitant  claims  for administrative  overhead,  such as owners 

salary.  For example,  one HHA claimed  $200,000  salaries  each for the husband  and wife 

owners,  plus an additional  $100,000  for their  daughter  owner.  Another  claimed  a total of 

$350,000  for husband  and wife owner  salaries. 

Use of these  consultants  is not always  a guarantee  of success.  Each  of the five HHAs  in 

our sample that was involuntarily  terminated  based on an expanded  certification  survey  had 

contracted  with one of these consultants. 

Relying  almost exclusively on Medicare for  income  and assets, entrepreneurs  are  able to 
open  and  operate  home  health  agencies  without fixed  assets or startup costs 
Problem  HHAs rarely  treat non-Medicare  patients.  For more than three-quarters  of the 
sampled providers,  greater  than 90 percent  of their  income  is derived  from Medicare.  In 
Texas,  where  there  has been a marked  increase  in the number  of HHAs in the last few years, 
the sample HHAs  average  an astonishing  98 percent  of income  from Medicare.  Few,  if any, 
of them have contracts  with health  maintenance  organizations  or Medicaid,  both  of whom 
frequently  restrict  the number  of home health  services,  limit payment,  or more closely 
monitor  services  than does Medicare. 
9 
 If it were not for Medicare  accounts  receivable,  problem  agencies  would have  almost  nothing 
to report  as assets.  Agencies  tend to lease their  office  space, equipment,  and vehicles.  They 
are not required  by Medicare  to own anything,  and they are almost  always undercapitalized. 
On average,  cash on hand and fixed assets amount  to only  one-fourth  of total  assets for the 
HHAs,  while  Medicare  accounts  receivable  frequently  equal  100 percent  of total  assets. 
These  agencies  are almost totally  dependent  on Medicare  to pay their  salaries  and other 
operating  expenses. 
For a home  health  agency,  there  are virtually  no startup costs or capitalization  requirements. 
In many  instances,  the problem  agencies  lease everything  without  collateral.  They  do not 
pay user fees to Medicare,  they do not reimburse  Medicare  for the cost of the State agency 
survey,  and they  do not even have enough  cash on hand to meet their  first payroll. 
More  than half  of the agencies  in our sample claimed  that they lost money.  The average  net 
income  was less than  $7500.  So why and how do they  stay in business  and why do they 
keep expanding ?  Because they  are able to manipulate  the Medicare  cost reimbursement 
system  and provide  the owners  and other principals  with personal  income  that far exceeds the 
concept  of reasonable  cost.  
The  owners and principals  of problem  home  health agencies  can  continue  to receive 
Medicare  money,  because  HCFA  has few preventive  measures 
Problem  HHAs  can accumulate  substantial  and uncollectible  Medicare  overpayments.  When 
overpayments  are determined  by the fiscal intermediary,  or even before  it has a chance  to do 
so, many  HHAs file bankruptcy  or merely  cease business  to avoid the debt.  After  these 
HHAs declare  bankruptcy  or disappear,  Medicare  has little chance  of recovery  because  the 
debts apply  only  to the defunct  corporation,  not to individual  owners  or their  other 
businesses. 
Approximately  one-third  of the agencies  in our sample receive  periodic  interim  payments 
(PIP) from  Medicare.  For those HHAs,  payments  are made on a regular  basis without 
regard  for the services  they provide  or the claims they  submit.  The PIP payments  are 
reconciled  against  actual expenses  when the cost report  is submitted,  which  may be as long 
as 5 months  after the end of the HHAs fiscal year.  The other  agencies  in our sample 
receive  interim  payments  based on the claims they  submit during  the course  of the year. 
These are also reconciled  when the cost report  is submitted.  Under either  payment  method, 
overpayments  can accrue.  The PIP method,  however,  leaves the program  more  vulnerable 
because  there  may not even be claims to substantiate  the payments  that have been made. 
One-third  of the sample HHAs incur  significant  overpayments  every  year.  These 
overpayments  range  from  $100,000  to several million  annually.  For the providers  in our 
sample on PIP,  the overpayments  are greatest.  In fact,  seven of the PIP providers  account 
for  $56 million  in outstanding  overpayments.  In a 1995 report,  the OIG noted that PIP 
providers  accumulate  a disproportionate  share of Medicare  overpayments  and recommended 
that HCFA  more  closely  monitor  the PIP program  and seek legislation  that would eliminate  it 
entirely. 
10  The 60 HHAs  in our sample have a combined  outstanding  Medicare  debt exceeding  $321 
million.  Of that amount,  at least $63 million  will never  be recovered,  because the HHAs are 
no longer  in business,  have no assets,  or have filed bankruptcy.  Almost  all of these  HHAs 
are repeat  offenders,  who maintain  consistently  high overpayment  balances  and regularly 
request,  and sometimes  are granted,  extended  repayment  plans. 
The HCFA  can terminate  a problem  provider,  but like closing  the barn door  after the horse 
runs off,  the action  comes too late to recover  Medicares  losses.  Nine HHAs in our sample 
have been terminated  involuntarily,  and two others had branches  that were terminated. 
Three  providers,  who were involuntarily  terminated,  left the program  owing  a total  of 
$47 million. 
Owners  of problem  HHAs find ingenious  ways to make money  even when their  businesses 
are terminated.  For example,  one HHA profited  by selling  its patients  to another  HHA  for 
$1,000  each.  Another  sold its branches  to its employees  who then proceeded  to obtain 
Medicare  certification. 
Problem  providers  dont let termination  or bankruptcy  interfere  with taking  advantage  of 
Medicare.  Many  reorganize  and open a new HHA,  often joining  forces  with key  individuals 
from  other problem  providers.  Owners and key staff,  especially  nurses and administrators, 
move  from  one problem  provider  to another,  often bringing  their patients  and unscrupulous 
practices  with them. 
Even when Medicare  terminates  an HHA,  other HHAs owned by the same individual  through 
different  corporations  continue  to operate.  For example,  the principals  of one family-owned 
HHA operate  several  related  HHAs,  each established  as a separate corporation;  one HHA 
filed for bankruptcy  without  affecting  the others.  When Medicare  terminated  another  HHA, 
its owners  simply  discharged  the patients  and then readmitted  them to another  HHA they 
owned  in a city  nearby. 
Some problem  HHAs  simply  cease doing business  after receiving  hundreds  of thousands  or 
even millions  in reimbursement,  often without bothering  to inform  HCFA  or the fiscal 
intermediary.  Still others  undergo  a change  of ownership  where the new owner  does not 
assume the prior  owners  assets or liabilities. 
The HCFA  does not require  fiscal  solvency  through  secured assets or surety bonding.  This 
leaves  Medicare  holding  the bag when a problem  provider  goes out of business.  Under  the 
Medicare  conditions  of participation,  HCFA  may require  HHAs to meet  such additional 
requirements  (including  conditions  relating  to bonding  or escrow  accounts,  as the Secretary 
finds necessary  for the financial  security  of the program). . . .   However,  HCFA  has not 
enforced  this provision. 
11 
 Expansion  of the benefit  and the lack of restrictions  on certification  have led to 
ever-increasing  administrative  problems with little prospect of mitigation 
The number  of agencies  and Medicare  costs have grown  dramatically since  1989 
In  1989, based on a lawsuit  (Duggan v. Bowen),  HCFA  implemented  regulatory  changes  that 
expanded  eligibility  for home health  services  and eliminated  the cap on the number  of visits. 
Since that time,  the number  of HHAs nationally  has almost doubled.  During  the same 
period,  the percentage  of beneficiaries  receiving  home health  services  has increased  but not 
nearly  as significantly  as the number  of visits  and reimbursement  per patient,  each of which 
has more  than doubled. 
Certain  States have expanded  more than others.  In Texas and California,  the number  of 
Medicare-certified  agencies  has increased  by more than 50 percent  in just  2 years.  In terms 
of reimbursement,  Texas has gone from  approximately  $750 million  to $1.8 billion  total 
home  health  reimbursement  and from  $4300 in average per patient  reimbursement  to 
$7100 per patient  in the same time period.  While  California  has had a similar  growth 
pattern,  Texas has surpassed  the other  ORT States in each of these categories  while  still 
serving  fewer beneficiaries  than either  California  or Florida. 
Some  States limit the number  of HHAs,  but Medicare  costs still rise 
In contrast  to the uncontrolled  growth  in Texas and California,  in New York  and Florida  the 
number  of agencies  has grown by less than  10 percent.  Since HCFA  does not limit the 
number  of certified  HHAs,  controls  are at the States discretion.  Both Florida  and New 
York require  new HHAs to go through  a Certificate  of Need process  before  they  can be 
licensed.  Unfortunately,  the mere existence  of a Certificate  of Need requirement  does not 
guarantee  that all new HHAs are actually  needed.  In response  to questions  about the value 
of the Certificate  of Need,  some of our contacts  believe  that it is just another  way for the 
State to make money  without  really  addressing  or controlling  the need for new HHAs. 
In Florida,  because  of the way the Certificate  of Need is administered,  the number  of HHAs 
continues  to rise,  albeit  at a slower rate than in States without  this requirement.  New York, 
on the other  hand,  decided  to stop processing  new HHA applications  early  in  1994, 
effectively  imposing  an informal  moratorium  on new agencies. 
One effect  of limiting  the number  of new HHAs is that existing  HHAs grow larger.  For 
New York and Florida,  the two sample States with a Certificate  of Need requirement,  the 
1995 average  reimbursement  per HHA was $3.3 million  and $4.6 million  respectively.  The 
next highest  State averaged  $1.9 million  per agency. 
Another  effect  in States which  limit new HHAs is that the existing  agencies  have larger 
beneficiary  patient  loads.  In Florida  and New York,  for example,  the average  number  of 
beneficiaries  per agency  is over 900; HHAs in Texas average  only  200 beneficiaries  each. 
12  In States like New York and Florida,  having  fewer HHAs to monitor  has made the fiscal 
intermediarys,  HCFAs,  and the State agencys  oversight  responsibilities  much more 
manageable.  Despite  their  increased  size, each HHAs modus operandi  remains  the same so 
the government  and its contractors  need not deal with all of the problems  inherent  in new 
agencies,  particularly  ones that are just  entering  the business  to get rich quick. 
In States where  the number  of new HHAs has increased  dramatically  during  the last few 
years,  fiscal  intermediaries  estimate  that as many  as 50 percent  of the new agencies  are 
problem  providers. 
Problem  agencies frequently  exceed  national and State averages  in several areas 
Compared  to their  respective  States and the rest of the nation,  problem  agencies  typically: 
(1) have  a higher  average  number  of visits per patient, 

(2) receive  higher  average  reimbursement  per patient, 

(3) see more  chronic  patients, 

(4) are relatively  newer,  and 

(5) are located  in dense population  areas where few,  if any,  new agencies  are needed. 

b 	 Problem H&Is  perform  significantly more visitsper patient.  Sample agencies  ranged 
from  as low as 20 visits per patient  for the newest providers  to as high  as 285 visits 
per patient  for older  agencies.  Forty  percent  of the problem  HHAs exceeded  an 
average  100 visits per patient.  As shown in the following  chart,  problem  HHAs 
routinely  exceed the statewide average  number  of visits per patient: 
COMPARISON  OF AVERAGE NUMBER OF VISITS PER PATIENT 
PPrroobblleemm  HHHHAAss   SSttaatteewwiiddee   HHHHAAss  
CCAA   8899   5533  
FFLL   8877   7788  
IILL   7733   5544  
NNYY   6611   4499  
TTXX   114433   111166  
According  to HCFA  data,  problem  HHAs significantly  exceed other  HHAs  in average 
number  of visits per patient  even when case mix,  based on age, race,  primary 
diagnosis,  and gender,  is taken  into consideration.  Furthermore,  three-quarters  of our 
sample providers  rank  in the top third  of the nation  for total number  of visits per 
agency.  Almost  half  of the sample providers  also rank in the top third  for average 
number  of visits per patient. 
13 
 b 	 Problem HHAs have a higher  average  reimbursement per patient.  Nearly  two-thirds 
of our sample providers  have an average  reimbursement  per patient  that is higher  than 
the national  average  which  is $4438.  One-third  have patients  whose average 
reimbursement  exceeds  $7000,  and six of them have average  reimbursements  that 
exceed  $12,000  per patient.  For  six of the HHAs in our sample,  their  average 
reimbursement  per patient  grew between  150 and 340 percent  in 1 year. 
b 	 Problem HI&Is serve more chronic patients.  The majority  of the HHAs in our sample 
specialize  in patients  who are rarely  discharged.  Although  these patients  may need 
fewer  skilled  nursing  visits,  they may need routine  visits by both nurses  and home 
health  aides for the rest of their  lives.  Diabetes  and hypertension  are two of the most 
common  diagnoses  for these types of patients. 
b 	 Problem HHAs are newer.  One-third  of the sample HHAs have been certified  for less 
than 4 years. 
b 	 Problem HHAs tend to be located in saturated markets.  Nearly  one quarter  of our 
sample have  solicited  patients,  swapped patients  (ping ponging),  sold patients  or 
provided  medically  unnecessary  services.  Because they operate  in markets  where 
there  are enough  HHAs to serve the Medicare  population,  they use these  strategies  to 
enlist  and retain  patients.  The fiscal intermediaries  serving  these HHAs have  even 
received  allegations  that a patient  does not need skilled  nursing  care,  so the HHA  is 
supplying  someone  to mow the lawn,  shop,  chauffeur,  or keep the beneficiary 
company. 
The  lack of requirements  for background  checks,  credit checks,  and prior  health  care 
experience  allows anyone,  even those with questionable pasts,  to receive  Medicare 
certification 
The current  certification  process  does not take into account HHA owners  credit  and financial 
history,  criminal  records,  or past work experience.  This allows certification  to he granted  to 
just about anyone.  Bankruptcies,  unpaid  Federal  debts (including  Medicare  overpayments), 
even criminal  convictions  (that are not specifically  related  to Medicare  and Medicaid),  do not 
preclude  individuals  from  obtaining  Medicare  certification  for their HHAs. 
By utilizing  a readily  available  commercial  database,  we were able to determine  that more 
than one-third  of the HHAs we researched  had questionable  backgrounds.  We found 
instances  where  the HHAs  and their  owners had filed bankruptcy,  defaulted  on loans,  failed 
to pay Federal  or State taxes,  and had been found guilty  of criminal  wrongdoing.  Many  of 
these existed before  the HHA became  certified.  For example: 
0 	 The owner  of one of the HHAs in our sample,  who was listed as a co-debtor  on two 
Federal  tax liens against  a nursing  service,  opened another  Medicare-certified  HHA a 
few years  later.  The latter HHA went out of business  in mid-1996  and did not inform 
HCFA,  its fiscal  intermediary,  or the State agency.  As a result,  the HHA continued 
14 
 to receive  Medicare  checks,  never  submitted  a cost report,  and,  a few months  later, 
filed bankruptcy. 
 	 The owner  of another  HHA went bankrupt  twice and had a felony  conviction  prior  to 
opening  the HHA. 
Some fiscal  intermediaries  have begun using  online  services  to verify  information  supplied by 
HHAs.  However,  since HCFA  does not preclude  certification  in these  situations,  any 
negative  information  that is discovered  is of limited  value.  At present,  the most common  use 
of the online  service  is to identify  undisclosed  related  organizations  for cost report  audit 
purposes. 
Thorough  review of cost reports and  claims can uncover  a wide variety of unallowable 
costs and  noncovered  services,  but submission requirements  and limited resources  hamper 
fiscal  intermediaties  oversight  efforts 
Fiscal  intermediary  resources  for oversight  have not kept pace with the rapid increase  in the 
number  of HHAs.  In California,  80 new HHAs opened in a recent 4-month  period,  but the 
fiscal  intermediarys  oversight  resources  were not increased  proportionately.  In fact,  their 
resources  for fiscal  year  1997 were decreased.  Furthermore,  fiscal  intermediaries  are funded 
to perform  only  a few on-site  audits.  For example,  one fiscal  intermediary  is funded to 
perform  less than  12 percent  of its home health  agency  audits on-site,  while  another  is 
funded to perform  approximately  20 percent.  The on-site  audit is usually  very  limited  in 
scope,  and less than 5 percent  of all audits are comprehensive  reviews  of all the costs 
claimed  by an individual  HHA. 
v 	 HHAs can receiveMedicare payments for 18 months or more before  any improperly 
claimed costs are  identified and disallowed by a fiscal  intermediary.  HHAs  are 
required  to submit cost reports  within  5 months  after the close of their  fiscal  year. 
This means that an HHA can operate  for up to a year  and a half before  the fiscal 
intermediary  has an opportunity  to review  costs and make adjustments.  Some 
problem  HHAs have billed  and received  large Medicare  payments  for  12 to 
16 months  and then gone out of business  without  filing  cost reports.  When  this 
happens,  Medicare  has no way to identify  unallowable  costs,  let alone  collect  any 
overpayments.  Three  HHAs in our sample went out of business  without  filing  cost 
reports.  One of these had incurred  $6 million  in overpayments  that are now 
uncollectible. 
When problem  HHAs do submit cost reports,  fiscal  intermediaries  frequently  find 
significant  unallowable  costs during  on-site  audits.  However,  because the number  of 
on-site  audits is limited,  we cannot  measure  the full extent of the problems.  The 
following  examples,  which represent  audit adjustments  from  our sampled providers, 
illustrate  the types of adjustments  that could be made only  through  on-site  audits: 
Unreasonable  Owners  Comnensation:  The allowable  amount  for owners 
compensation  is based on the time and type of work that the owner  does for 
15  the HHA.  One HHA owner,  who also runs a major  home health  consulting 
business,  claimed  a full-time  salary  from the HHA.  The owner  of another 
HHA  is a full-time  school teacher  who claimed  a full-time  salary  from  the 
HHA.  Yet another  owns a private  duty nursing  service,  a retirement  home,  a 
health  care facilities  construction  company,  a durable medical  equipment 
company,  and an automobile  rental  agency  and still claimed  a $182,000  salary 
from the HHA. 
Undisclosed  Related  Organizations:  These entities  typically  (1) lease office 
space,  equipment,  or automobiles  to the HHA,  (2) provide  financial, 
management  consulting,  or maintenance  services,  or (3) contract  with the 
HHA to provide  direct patient  services  or supplies.  HHA owners  profit 
through  their  interest  in the related  organizations  which they do not mention  on 
the cost report. 
For  example,  one HHA had six or more related  agencies  that provided 
everything  from  nursing  services  and medical  supplies,  to maintenance, 
construction,  and property  leasing.  None of the companies  were disclosed  on 
the cost report  even though they  were owned by the HHA owner  or his family. 
In this agencys  case,  the four principals  claimed  salaries  of $152,000  each on 
the HHAs cost report.  Another  agency  claimed  costs for a medical  supply 
company  whose address was actually  a Seven-Eleven  convenience  store.  This 
medical  supply company  did not exist,  and the convenience  store was,  in fact, 
owned  and operated  by one of the HHA owners relatives. 
Ghost Employees:  To inflate the cost of providing  patient  care services,  the 
HHA maintains  records  that indicate  salaries  were paid to employees  who do 
not exist.  In one case,  the fiscal  intermediary  discovered  that salary  or 
compensation  checks were written  to nonexistent  employees,  the checks  were 
cashed,  and the money  was returned  to the owners. 
Nonpatient-related  Expenses:  Because Medicare  reimburses  HHAs only  for 
the costs associated  with patient  care,  some agencies  lump nonpatient-related 
expenses  with patient-related  ones in an attempt to bury  the nonreimbursable 
costs.  For the HHAs in our sample,  auditors  have become  aware  of such 
buried  items as trips to resorts,  the purchase  of liquor  for a national  HHA 
association  meeting,  promotional  items such as T-shirts,  home remodeling, 
purchase  of real and personal  property,  health  club dues,  and even 
maintenance  of a horse. 
Discrepancies  in Visit Counts:  This situation  has been discovered  during 
on-site  audits,  when there were no records  to substantiate  patient  visits  that had 
been billed  to Medicare.  When this is discovered,  the fiscal  intermediary  puts 
the HHA on prepayment  review.  In response,  one problem  provider  simply 
increased  claims  volume  to compensate  for the increased  denial  rate. 
16 
 Unreasonable  Contractor  or Related  Organization  Costs:  Both of these 
practices  are ways for owners  of problem  providers  to maximize 
reimbursement.  High payments  to contractors  can be an indication  of 
kickbacks,  while high payments  to related  organizations  end up back in the 
owners  pocket. 
F  By conducting  on-site medical reviews, fiscal  intermediaries can discover a variety of 
fraudulent  and abusive practices  that cant be identified during  routine claims 
processing.  Fiscal  intermediaries  often uncover  illegal  or questionable  patient-related 
practices  during  on-site  medical  reviews  of problem  providers.  Many  of these 
practices  are discovered  only  during  on-site reviews,  because problem  HHAs often 
know how to document  claims  to make them look  legitimate.  Some of the most 
common  fraudulent  and abusive practices  include: 
billing  for services  not rendered;  for example,  padding  visits, 
billing  for noncovered  services;  for example,  where the patient  does not 
qualify  because  he is not homebound, 
providing  services  that are not medically  necessary;  for example,  therapy 
services  or durable  medical  equipment, 
favoring  one or two chronic  diagnoses  from which  the patients  will never 
recover;  for example,  hypertension  and diabetes, 
ping ponging;  for example,  sharing beneficiaries  with other  agencies,  and 
using rogue doctors  or nurses;  for example,  doctors  who sign plans  of care 
without  seeing the patient  or nurses who contract  with several  agencies  and 
cannot  possibly  make all of the visits for which they bill,  e.g.,  the full-time 
owner  of  1 HHA who billed  32 visits in a single day through  another  agency. 
While  on-site  medical  reviews  can be invaluable  oversight  tools,  problem  providers 
know  that limited  fiscal  intermediary  resources  mean there  is little  chance  they  will be 
selected  for review.  Also,  since fiscal  intermediaries  notify  providers  well in advance 
of planned  visits,  problem  HHAs have plenty  of time to make  sure that their 
documentation  is complete.  They know that fiscal  intermediaries  rarely  contact 
beneficiaries  for verification. 
Under  Operation  Restore  Trust,  the fiscal  intermediaries  servicing  at least two of the ORT 
States have participated  in HCFA  regional  office  initiatives  to conduct  multidisciplinary  on-
site HHA reviews.  These reviews,  which include  medical,  accounting,  and certification 
areas,  have resulted  in numerous  investigations  and terminations  of HHAs that should not 
have been certified  in the first place.  In California,  47 expanded  surveys  were conducted 
and,  as a result,  23 HHAs have been terminated  or voluntarily  withdrew  from  the Medicare 
program. 
17  RECOMMENDATIONS 
To protect the Medicare  home health benefit,  HCFA needs to develop and implement 
additional  program safeguards  that would (1) strengthen  its ability to identify  problem 
providers,  (2) prevent  problem HHAs from entering the program,  and (3) prevent the 
Medicare  trust fund from incurring  further  losses due to the activities  of problem 
HHAs. 
In order  to accomplish  this,  HCFA  should take administrative  action  or,  if necessary,  seek 
legislative  authority  to: 
require  that each HHA obtain  a surety bond equal to the amount  of anticipated 
Medicare  billings  during  its fiscal year.  Should the HHAs claims exceed  the amount 
of the bond before  a cost report  has been filed and audited,  the HHA  should be 
required  to increase  the amount  of the surety bond accordingly.  The cost of the bond 
should  not be considered  reimbursable  for Medicare  cost reporting  purposes. 
require  user fees,  so that new and existing  HHAs are required  to pay for their 
initial  certifications,  comprehensive  on-site reviews,  and recertifications.  If this is not 
possible,  we believe  that the allocation  of additional  resources  to the certification  and 
monitoring  effort  by the fiscal  intermediaries,  State agencies,  and HCFA  regional 
offices  will pay for itself,  because it will  substantially  reduce  or even eliminate  the 
continued  accrual  of uncollectible  overpayments  as well as payments  for noncovered 
and medically  unnecessary  services. 
require  that the majority  of the HHAs principals  have prior  health  care experience 
directly  related  to the provision  of home health  services  in order  to receive  Medicare 
certification. 
develop  a data bank  of owners,  principals,  and other HHA officials  and related 
organizations  so that their  activity  can be monitored,  tracked,  and cross-referenced. 
require  that all HHA owners  and principals  provide  their  individual  Social  Security 
numbers  and Employer  Identification  numbers  when they  submit an application  to 
become  Medicare  providers. 
prior  to certification,  assure that new HHAs are financially  sound and have  adequate 
fiscal  recordkeeping  capabilities  and that their  owners  and principals  are qualified  and 
trustworthy.  This  should be accomplished  through  a comprehensive  on-site  review  by 
an interdisciplinary  team of auditors,  medical  reviewers,  and State surveyors. 
refuse  to enter  into a provider  agreement  with any HHA whose owners  or principals: 
owe money  to the Federal  government  in the form of Medicare  overpayments, 
tax liens,  or unpaid  loans; 
18  have filed bankruptcy  or have negative  credit  ratings; 
have prior  criminal  records;  and/or 
have been associated  with,  or are the relatives  of the owner  of,  a Medicare 
provider  who was found to defraud,  abuse, or otherwise  misappropriate 
Medicare  dollars. 
  preclude  the discharge  of Medicare  debts through  bankruptcy. 
We also reiterate  our previous  recommendation  that HCFA  should: 
 	 tighten  controls  over the PIP program,  more closely  monitor  HHAs that are on PIP, 
and seek legislation  to eliminate  this method  of reimbursement. 
Proposed  Legislation 
The President  has announced  legislative  proposals  to fight fraud and abuse in health  care. 
Many  of the provisions  in the Presidents  Medicare  and Medicaid  Fraud,  Abuse,  and Waste 
Prevention  Amendments  of  1997 would strengthen  HCFAs  ability  to address our findings 
regarding  problem  HHAs.  Several  of these provisions  are also contained  in Medicare  anti-
fraud legislation  that has been proposed  by Congress.  The Presidents  proposals  include: 
b  denying  participation  in Medicare  for any person  convicted  of a felony, 

F  requiring  providers  to furnish  Social Security  and Employer  Identification  numbers  of 

all owners  and managing  employees  prior  to certification, 
b  collecting  user fees to perform  certifications  and recertifications, 
b  excluding  entities  controlled  by family  members  of sanctioned  individuals, 
b  penalizing  anyone  who relies  on sanctioned  individuals  to authorize  or provide 
services, 
b  prohibiting  providers  from using bankruptcy  to stay the recovery  of overpayments  or 
discharge  Medicare  debts, 
b  clarifying  the definitions  of homebound  and part-time  or intermittent  services,  and 
b  eliminating  PIP through  the implementation  of prospective  payment  in the year  2000. 
Agency  Comments 
We received  comments  on the draft report  from the Assistant  Secretary  for Planning  and 

Evaluation  and the Assistant  Secretary  for Management  and Budget.  Based on their 

comments  we modified  the report  to more fully  describe  recent  anti-fraud  legislative 

proposals  which  have been sent to the Congress  by the President  and to clarify  that not all of 

the increase  in home  health  services  in recent years  is the result  of illegitimate  billings  by 

problematic  providers. 

We also received  comments  from the HCFA  Administrator.  The HCFA  concurs  with the 

majority  of our recommendations,  although  only partially  with two of them that concern  the 

19  financial  stability  of HHAs.  Furthermore,  HCFA does not support our recommendation  for 
a moratorium  on certifying  new home health  agencies until new program  controls  are put into 
effect. 
We continue  to believe  that the financial  management  integrity  should be an important 
criterion  in certifying  them as suitable  for participation  in the Medicare  program. 
With respect  to a moratorium,  HCFA  states that it has the responsibility  to establish  and 
implement  adequate program  requirements  and safeguards and that if a home health  agency  is 
able to comply  with these requirements,  it should be allowed  to enter the program.  We 
agree that HCFA  does have such a responsibility.  We are also aware that numerous 
legislative  proposals  similar  to those we recommend  in this report  are now pending  before 
the Congress.  If enacted,  these proposals  would greatly  strengthen  HCFAs  ability  to curb 
abuses.  For these reasons,  we have withdrawn  our recommendation  for a moratorium  at this 
time. 
However,  we remain  very concerned  about this program.  Current  program  requirements  are 
woefully  inadequate  to prevent  financially  irresponsible  or fraudulent  home health  agencies 
from becoming  Medicare  providers.  On the same day that we are issuing this report,  we are 
issuing  another  one that shows that,  in four of the five States reviewed  in this report,  40 
percent  of Medicare  payments  for home health  should not have been made,  resulting  in 
losses of approximately  $2.6 billion  over a 15-month period.  We believe  that Medicare 
cannot  continue  to sustain losses of this magnitude.  If, even after enactment  of new 
legislation  and stronger  administrative  action,  there  is no major  reduction  of improper 
payments,  then more dramatic  action  will need to be taken by HCFA  and the Congress. 
This should  include  the establishment  of strict criteria  relating  to the trustworthiness  of 
applicants,  adequate  resources  to allow for a thorough  review  of applicants,  and a concurrent 
decertification  of problem  providers  already  certified  in the program  who are responsible  for 
a disproportionate  share of Medicare  losses.  Under these circumstances,  a brief  moratorium 
could be appropriate  while HCFA  tools up its review mechanisms  and reexamines  the 
suitability  of previously  certified  problem  providers. 
The full text of each agencys  comments  appears in Appendix  D. 
20 
 APPENDIX  A 
The following  5 tables represent  summary  data of all home health  agencies  in all 50 States, 
the District  of Columbia,  Puerto  Rico,  and the U.S.  Virgin  Islands.  We obtained  the 
information  from  the HCFA  Customer  Information  System.  The five charts  contain  the same 
information,  sorted by five  important  variables.  The ORT States are at or near the top when 
looking  at aggregate  numbers  of claims,  total reimbursement,  total patients,  and total  visits. 
The ORT States tend to drop to average  or below average,  however,  when looking  at per 
patient  statistics. 
NOTE:  The five ORT States are shaded for emphasis. 
A-l  HHA SUMMARY  DATA -- STATES SORTED BY TOTAL REIMBURSEMENT 
FOR 1995 
Total  I  Total  Total  1  Average Reimbursement  1  Average Visits  1 
60,483  1  7,796,641  $7,452  129 
^^   7,374,113  $5,969  124 
5,534,482  $3,329  56 
94,108  1  4,946,663  $3,385  s53 -it
$4,399 
I  _,  $_-2, _9 8-
-7   t 
II  I  I 
 =- -9,    4,562;117  1  $4,707  79 
II 
J7,rr  _I,/,  I,,., 
.    3,180,825  $3,850 
3,579,627  $3,757  79 
34,883  2,293,206  $4,564  66 
49,829  1,854,381  $2,953  37 
.-
1,914,602  $4,197  57 
1,744,537  $2,988  38 
35,640  I  1,739,504  1  $2,429  I  49  II 
II NlC  ,  I IL,J  Ll,bj,  ,  I,JW,,L,,J  ,  W,b4/  I  I" 

19,195  1 	 1,211,596  1  $4,055  63 
1,410,561  I  $1,583  I  37 
$4,732  66 
11,960  1  787,453  1  II 
817,159  $4,169  65 
)7,869  1  17,524  748,666  $2,705  43 
12,626  827,436  $2,953  66 
13,264 1  415,050  1  $4,540  I  79 
II 
7,768  1  326,003  $2,518  42 
1,974  1  90,338  $4,800  46 
I 
10,207  $4.594  60 
A-2  HHA SUMMARY  DATA -- STATES SORTED BY TOTAL PATIENTS 
FOR 1995 
State  Total  I  Total  Total  Total  I  Average Reimbursement  I  Average Visits  1 
MA 
TN 
,  ~,  ,- , 
NC  468,223  1  $330,0 28,822  1  991146 1  5.534.482  1  $3,329  56 
1I1 MGNAOJ    1II    435168898 .:855926371    11I    $Q$25lR9235 .,798969.,404583 - 1  9985,.498 2  1  4:188:451  1  $2,983  43 
180 1  101209,736  1  $5,480  106 
II  I  ---7---,  _-_-(IL.
LA  I 897.294  1 Qmi  I 
518,153  94,108  1  4,946,663  1  $3,385  53  II 
___-,6_04,845  1  84,095  1  12.064.526  I- $7,808  143 
AL  1  549,376  1  $453,834,415  81,565  1  9:766:686  1  $5,564  120 
VA  1  _31_X-,9_8_7_  I  $245,974,060  72,8 29  1  3,758,603  1  $3,377  52 
372,097  1  $312,954,991  71,141  5,592,118  i4,.1_9_9_  19 
11 OK  1  495.363  1  $45--0,  74.J,746  60,483  7,796,641  I.452 E 
II  KY !  334,927  1  $211,726,968  1  59,6213  3,977,675  ,551 
II  MS  II   4.2__2,495._- I  $355,159,176  1  59,503  7,374,113  ,969 
11  CT  I  2~6-7.,6-8--1) 1  $_3_71. _(6.9 5.871  1  57,721  4.5 62.117  T4,707  79 
MD  163,397  $147,-12:2,944  1  49,829  1  1,854,381  1  $2,953  37 
SC  216,685  $182,528,625  1  47,4104  1  3,180,825  1  $3,850  67 
WI  183,638  $127,119,783  1  46,720  1  1,981,404  1  $2,721  42 
WA  167.805  I  $137248,931  1  45.926  1,   1,.7 44.537  1  $2,988  38 
II AR  1  273,556  1  $l70,554,835  1  45,393  1  3.579.627  1  $3,757  79 
II  PR I  184,272  1  $60375,397  1  38,332  1  (410,561  1  $1,583  37 
IA  1  144,491  1  $86,559,442  1  35,640  1,739,504  $2,429  49 
co  1  160,774  1  $159,199,686  1  !  ll 
34,883  2,293,206 
11 AZ  1  124.257  1  $141.433.666_  I  33,697  1.914.602 
MN  1131175  $86,935,663  31,7: 
KS  138,376  $111,786,864  29,900  1  1,821,852  1 
OR  112,281  $90,4f 51,850 I  29.338  I    --,--- I  -- 
II 
WV  155,911  $84,849,043  28,151  1  1,542,992  1  $3,014  I  55 
ME  112,663  $78,920,340  21,637  1  1,504,263  1  $3.647  70 
RI  92,245  $77,826,643  19,1!35 1  1,211,596  1  $4,055  63 
UT  106.5xn  I  $118,925,525  1  19,147  1  1.998.036  1  $.-76-m. .211 I  1-_0.4   II 
NH  1  95,963  1  $56,346,863  1  17,558  1  1:162:998  1  $3.209  I  66 
NE  1  69.127  1  $47.397.869  1  17.5: 
A-3 
 HHA SUMMARY  DATA -- STATES SORTED BY TOTAL VISITS 

FOR 1995 

$6,744  I  119 
$7.808  143  II 
$5,480  106  II 
I  .- II 
81,565  1  9,766;686  1  $5:564  I  120 
II 
7,374,113 1  $51969  I  124 
  I  __,__ 
7 1  $312,954;991 1  711141 I  5,592,118  1  $4,399  79 
NC  468:i23  $330,028,822  99,146 1  5,534,482 1  $3,329  56 
MO  438,561  $318,538,153  94,108 1  4,946,663 1  $3,385  53 
CT  267,680  $271,695,871  57,721 1  4.562.117 1  $4,707  79 
NJ  369,893  $293,7E16,448 1  98,482 1  411881451 1  $2.983  43 
6711 
KY  334,927  $211,726,968 1  59,623 1  3,977,675 1  $31551 
VA  318 982  $345 974 nhn I 77 wa  I 174~ c;n~ I 421277 
I  .-.-,-.  .,-..- ,I,-l  .,,,_IY,d  WJ,J,  I  52 
AR  1  273,556 1  $170,554,835 1  45,393  3,579,627  $3,757  79 
47,404  3,180,825  $3.850  67 
I  .- II 
13,666 1  33,697 1  119141602 1  ii41197  I  57 
371 
$21953 
$3,739  61 
$2.988  I  3x  II 
4911 
$2:429 
II 
ME  1  112,663  1  $78,920;340 1  21,'6 37 1  1,504,263  $$33,,061447   5750 
PR  184,272  $60,675,397 1  38,332 1  1.410.561  $1.583  37 
MN  113,175  $86,935,663  31,721 1  1,342;319 1  $2:741  42 
RI  92,245  $77,826,643  19,lS15 1  1,211,596  1  $4,055  63 
NH  95,963  $56.346.863  21971.353588  II   l1-.110692.6.3919 8 1I   $3.209  II   h-f-i   II 
IIOR  112.281 I  $90,461;850 1  I  $-- 3.7---083  I  3x  II
NM  1  88,288 1  $63,197,547 1  15,760 1  110441356 1  s4:010  I  66
!  II 
ID  68,267  $56,047,308 1  13.4413 1'   877,159 1  $4,169  65  II 
VT  76,165  $37,284,_3,-7x '  1-I,vIy 7 67~. 1  I"I27,436  $2,953  66 
NV  43~.~1~7 1 $_5mm6,._5-9-07.7'22  11,960  787,453  $4,732  66 
NE  69,127  $47,397,869  17,524  748,666  R-_,?.  71_I1 4 I  A.<? 
MT  46,152  $32,342,351  10,351  540,432  $.3~.,1 25 52 
DE  38,376  $28,865,907  9,843  478,895  $2,933  I  49  I 
II 
WY  23,882  $23,883,264  5.261  4.1_5_ ,nIs_n_   $4 5AO  I  70 
ND  34,782  $20,619,203  8,485  382,079  $2,430  I  45 
SD  32,855  $19,557,153  7,768  326,003  $2.518  42  II 
II 
DC  21,029  $21,439,998  6,717  258,496  $31192  I  38 
II 
HI  18,207  $20,154,084  4,702  244,968  $4I,2-8-6-  II  -5-7   II 
AK1  7,f6z38< c; $9.475.697  1.974  90.338  $4.800  I  4.6-
I 
$780,953 1  '170 1  lo:207 1  i4:594  60 
A-4  HHA SUMMARY  DATA -- STATES SORTED BY AVERAGE REIMBURSEMENT 
PER PATIENT FOR 1995 
L&.&ITotal  I  Total  1  Total  1  Total  1  Average Reimbursement  I  Average Visits 
Claims  Reimbursement  Patients  Visits  per Patient  per Patient 
II 
LA  I  897.294  1  $656.604.845  1  X4 095  12,064,526  $7,808  143
I~~  ..- ~,..  ,- .- - .,-
OK  495,363  $450,743,746  60.4183 ,  7.,7 96.6, 41  ,  $7.452  I  129
i.i.as:i.:j,.i.:i. *,.g,.$j, ...~.,..~.., ~.,i :~~~~~~~~~~ ~~;~~~~~~~~~~~~~~~ji.~.. .j.   ~.. ~.~..A~B iiiii~,i~~~~~R:~~~~:..i~,r,~.:.i.~i..:i.~;-. i ~,i.i .-..;\.: i.,:~..~..~.I.,.:..i,.:....i.i..~.,~,..:.a. 9l.i.. iiiiii..i .i i.i. .i. . i. . i.  i..i.i i.i. .~ . .  
TN  741,475  $747,043,282  110,771  13,157,404  $6,744  119 
UT  106,580  $118,925,525  19,147  1,998,036  $6,211  104 
MS  422,495  $355,159,176  59,503  7,374,113  $5,969  124 
AL  549,376  $453,834,415  1  81,565  1  9,766,686  1  $5,564  1  120  II 
$5 480  I  106  II 
, 
AK  7.638  $9.475.697  1.974  I  90.338  1  $4.800 I  46  II
II ,I
NV  1  43,171  I  $56,590,722  1  11,960  787,453  $4,732  66 
CT  267,680  7_7_1.  _,h_9_T_ ,_X71_ 1  _57  ,7 .2 1  4,562,117  $4,707  79
194  11.231.546  $4.696  93 
II v1 !  656  1  $780,953  1  170  1  10,207  1  $4,594  60 
co  II 
160,774  $159,199,686  34,883  I  2.293.206  l  $4.564  I  66  II 
WY  23,882  $23,883,264  5,2..  ,  ._-,___  ,  _ .,_  .  I 
IN  372,097  $312,954,991  71,141  1  5,592,118  1  $4,399  I  79  II 
II 
.AH-iIT-   11   1--1784,,72- 50-77    1I   _61$-4210 -,,1A5Z"4?-,0(h-8h4- h -   11   7-41I,6)7.90 72   1,294144,,966082   $$44,,218967   5527 
ID  68,267  $56,047,308  13,4143 ,  877.,1~5~9.   $_4 .,1~6~9   65
I 
RI  92,245  $77,826,643  19,195  1  1,211,596  1  $4,055  63 
NM  88.288  $63.197.547  15.760  1  1.044.356  1  ed nln  hh  II 
.+  .,..- I  YI 
$3,850  I  67 
$3.757  79  II 
I
V,Y,  .  I 
 II 

RZ 647  I  713 
II 
MO  438,561  $318,538,153  94,108  4,946,663  $3,385  I  53 
VA  318,982  $245,974,060  72,829  3,758,603  $3,377  52 
NC  468,223  $330,028,822  99,146  5,534,482  $3,329  56 
NH  95,963  $56,346,863  17,558    1 167 998 I  w 309  I  hh  II
I_  _,___,  __- I,___  I  __ 
OH  642,806  $466,023,099  145,;-1_2 1 ,I  77,.7 n_7,2._4 
  I  $3,198  I  53
DC  21,029  $21,439,998  6,717  1  258,45  $3.192  38  I 

167,805  1  $137,248,931  1  45,926  1  1,744,537  1  $2,988  38 
II 
$37,284,27q  12,626  ]  827,436  1  $2,953  66  II 
,119,783  1  46,720  1,981,404  $2,721  42 
17 524  748,666  $2,705  43 
lh8  32h M?  m51x  42 
A-5 
 HHA SUMMARY  DATA -- STATES SORTED BY AVERAGE VISITS 
PER PATIENT FOR 1995 
1 Otal  Total  Total  Average Reimbursement  Average Visits 
I  Llalrns  Reimbursement  Patients  Visits  per Patient  per Patient 
II  LA  1  897 394  $656,604,845  84,095  12.064.526  $7.808  lA? 
86 1  $5,564  I  120 
110,771  I  13:157.404  I  $6.744  114  II 
II 
$6,211  I  104 
79 
I 
51 1  3,547195,,602570   11   $$34,,755470   79  II 
Y 
II  ~~ i  I 3.850  I  67  II 
VT  7hIhS 
NV  1 

_-,_--
II co~~i 
lfirl774 I  __ 
II 
877,159  1  $41169  I  65 
---,-,  Y  $3,739  61
II  ~V~T~   i
0  10,207  $4,594  60 
17  1,914,602  $4,197  57 
$330,028,822  1  99,146  5.534.482  $3.329 
_-
II 
I  52 
-,  10,351  1  540,,4 32  $__,_3. ,125  52
II  ~~i  126,675  1  6,268,031  $3,694  49
DE  38 376  I    478,895  $2.933  49 
AK  7,638  $9,475,697  1,974  90,338  $4,800  46 
PA  921,427  $697,116,831  223,913  10,108,911  $3,113  45 
ND  34,782  $20,619,203  8,485  382,079  $2,430  45 
NE  I  6v,,I9e, 177  647.39;1,869 1  17,524  1  748,666  1  $2,705  43 
NJ  1  369,893  1  $l!93,786,448  98.48 2  1  4,188,451  1  $2,983  43 
SD  I  32.,8~5~5.  1  9319,557,153  7,768  326,003  $2,518  42 
MN  1  113,175  I  $86,935,663  31,721  1,342,319  $2,741  42 
WI  I 
1--x-1, h- -?RI  I  vQ. I27,119,783  46,720  1,981,404  $2.721  42 
OR  112,281  1;90,461,850  29.338  1,109,631  $31083  38 
DC  21,029  $21,439,998  6.717  258,496  $3,192  38 
WA  167,805  $137,248,931  45,926  1,744,537  $2,988  38 
MD  163,397  $147,122,944  49,829  1,854,381  $2,953  37 
PR  184,272  $60,675,397  38,332  1,410,561  $1,583  37 
A-6  APPENDIX  B 

ACOMPLEXCORPORATEWEB 

Own CDE Home 
Health 
TERMINATJZD 
----- 
Own a medivan  Owners came fern 
XYZ Home Health
mmpany 
Owners: Husband, wife 
TERMINAIED 
and three friends 
Hired relatives 
SAMPLEHomeHealth 
Uses consultants 	 Contracts with  Referring physicians 
similar therapy  refer to other 
companies  problem providers 
IJK 
 LMN 

Home Health 
 Home Health 

B-l  APPENDIX  C 
The OIG,  in conjunction  with other  Federal,  State, and local  law enforcement  agencies,  has 
conducted  numerous  successful  fraud investigations  and audits regarding  the home  health 
benefit  before  and during  Operation  Restore  Trust.  A synopsis  of some of the cases that 
were completed  during  the past 2 years  follows.  The summaries  are in no particular  order. 
They  represent  cases that were not included  in our sample of 60 problem  home health 
agencies. 
b 	 An employee  of an HHA in Missouri  was sentenced  to 21 months  imprisonment  and 
2 years  of probation  and was ordered  to pay $6000 in restitution  after pleading  guilty 
to making  false Medicare  claims.  Over a 2-year period,  the employee  misrepresented 
herself  as a licensed  social worker.  The HHA owner allowed  the employee  to 
perform  psychiatric  services  on nursing  home patients,  but billed  Medicare  as if the 
owner  had performed  the services.  Overpayments  amounted  to $23,000. 
The co-owner  of a Washington  D.C.  HHA was sentenced  to 27 months  in prison  and 
b 	
ordered  to pay full restitution  of $100,000.  The HHA defrauded  the Medicare  and 
Medicaid  programs  by billing  for  1450 skilled  nursing  visits in a lo-month  period  for 
which  there  were neither  time slips nor nurses notes.  It also billed  for hospitalized 
patients.  Another  co-owner  was also convicted  disappeared  after escaping  from  a 
detention  center  assignment. 
The former  owner  of a Texas HHA was sentenced  to 27 months  incarceration  after 
b 	
pleading  guilty  to presenting  false claims to Medicare.  The owner  was indicted  for 
billing  for visits  which the HHA did not make.  This combined  with the owners  prior 
State conviction  for embezzlement  led to the lengthy  sentence.  The HHA billed  for 
$49,000  in fal se claims  during  the first 6 months  of business. 
Two owners/operators  of a Las Vegas HHA pleaded  guilty  for attempting  to defraud 
b 	
the Medicare  program.  The owners tried to set up an Arizona  HHA by offering  a 
physician  an arrangement  for compensation,  They agreed to hire the physicians 
husband  in exchange  for Medicare  referrals.  The owners  also submitted  false 
information  during  the Medicare  certification  process. 
F 	 The owner  and owners  brother/employee  of a Texas HHA agreed  to pay  $20,000  to 
resolve  civil  liability  for submitting  fraudulent  Medicare  cost reports.  They  conspired 
to include  false expenses for medical  supplies,  office  supplies,  and automobile  leases 
on the cost reports.  The brother  was president  of a medical  supply company  that sold 
products  to the HHA at a 100 percent  markup.  The brother  also altered  invoices  for 
supplies that werent  purchased  and fabricated  automobile  lease contracts  from 
vendors  who did not lease automobiles. 
In Utah,  HCFA  obtained  $149,490  from  an asset seizure related  to an earlier  civil 
b 	
judgment  against  the owner  of nine HHAs in seven States.  The owner  had pleaded 
C-l  guilty  to criminal  charges  related  to false claims,  kickbacks,  and income  tax fraud. 
The owner  set up a billing  company  for the HHA without  revealing  the relationship 
between  the two companies,  claimed  costs for ghost employees,  paid kickbacks,  and 
omitted  income  on tax returns  for  1990 through  1994.  The Medicare  overpayment 
totaled  $3.5 million.  Sentencing  will be in June  1997. 
F 	 The owner  of two Texas HHAs pleaded  guilty to one count of making  false 
statements  in a Medicare  cost report.  Charges  against the spouse and son were 
dismissed.  The owner  agreed to pay  $794,700  in restitution  and to forfeit  the 
building  housing  one of the HHAs.  Sentencing  is scheduled  for May  1997. 
Both the president  and administrator  of a California  HHA pleaded  guilty  to fraud  and 
F 	
conspiracy  in a Medicare  scheme.  Over a 17-month period,  they  submitted  false 
claims  totaling  up to $2.5 million,  paid kickbacks  for Medicare  referrals,  created 
fraudulent  medical  records  documenting  home visits,  and submitted  false cost reports. 
Altogether  the two had billed  Medicare  more than  $9.9 million  for more than 
88,900  visits to 680 beneficiaries,  some of whom were deceased,  and were paid 
$5.6 million  by Medicare.  The president  did not have a health  care background,  but 
was instead  a former  nightclub  owner.  The president  started the agency  with  a 
registered  nurse  friend  who left soon after Medicare  certification.  The administrator 
was also a former  nightclub  manager. 
b 	 The former  owner  of a Michigan  HHA pleaded  guilty  to defrauding  the Medicare 
program.  The owner  failed to disclose  related  organizations  on the cost report  and 
lied during  the certification  process,  saying  that the agency had a medical  director. 
Medicare  paid the agency  a total of $3.4 million. 
b 	 The owner/president,  the vice president,  and the risk manager  for a Georgia  HHA 
were sentenced  to Medicare,  Medicaid,  and other  fraud.  The founder  and CEO,  who 
pleaded  guilty  to charging  Medicare  and Medicaid  for campaign  contributions,  ghost 
employees,  and personal  vacation  trips,  was sentenced  to 33 months  incarceration 
followed  by 200 hours  community  service.  He also was fined $25 million  and 
ordered  to pay  $11.5 million  in restitution.  The vice president  was sentenced  to 
151 months  incarceration  and 3 years of probation,  fined $75,000,  and ordered  to 
repay  $710,000.  The vice-president  was convicted  of making  false statements  about 
salaries  for ghost employees  and a related  organization,  converting  workers 
compensation  premiums  to personal  funds, using Medicare  funds to support  a 
consulting  business,  embezzling  employee  health  insurance  and benefit  plan  funds, 
committing  bank fraud,  and laundering  money.  The risk manager  was sentenced  to 
97 months  incarceration  and 3 years  of probation  after being  convicted  of mail  fraud 
and conspiracy  to defraud  the Medicare  and Medicaid  programs.  The risk managers 
consulting  business  was sentenced  to 5 years  of probation,  fined  $250,000,  and 
ordered  to pay restitution  of $710,000. 
c-2  F 	 The owner  of a now-defunct  HHA was arrested  in Texas after being  indicted  for 
charges  related  to Medicare  fraud.  The owner had written  off more than  $3.5 million 
in fraudulent  expenses  in cost reports  from  1991 through  1994. 
An accountant  pleaded  guilty  to submitting  fraudulent  cost reports  to Medicare.  A 
F 	
joint  investigation  by 01 and the FBI led to a negotiated  plea by the accountant.  He 
agreed  to cooperate  with the Government  in investigating  the HHAs involved.  One 
HHA owner  reported  being approached  by the accountant  with a scheme  in which 
employee  bonuses  would be counted  on the cost report  and then kicked  back to the 
owner. 
b 	 A Michigan  HHA owner  was sentenced  to 5 months  house arrest  and ordered  to pay 
$18,000  for his part in a Medicare  fraud scheme.  The owner  sold the HHA to 
another  HHA,  but all documents  relating  to the sale and employees  were backdated. 
The backdating  allowed  the acquiring  HHA to bill Medicare  for all care provided  by 
the original  owners  HHA,  thereby  covering  all acquisition  costs.  In addition,  the 
original  owner  received  a salary  of $5,000 a month,  although  the owner  did not 
perform  services  commensurate  with the payments.  This salary  was charged  to 
Medicare. 
b 	 A Missouri  HHA owner/operator  was indicted  for mail fraud,  forgery,  and Medicare 
fraud.  The former  owner allegedly  submitted  false statements  to HCFA  to obtain  a 
Medicare  provider  number.  Between  1991 and 1994, the owner used the provider 
number  to accrue  $1.5 million  in Medicare  overpayments.  The owner has also been 
charged  with submitting  inflated  expenses on cost reports  and forging  a physicians 
signature  in order  to receive  Medicare  payments  totaling  $100,000. 
b 	 The owner  of two Pennsylvania  HHAs was sentenced  to 2 years probation,  assessed 
$50, and ordered  to perform  100 hours  of community  services.  The owner  submitted 
claims  for personal  expenses,  such as hotel  stays,  meals,  flowers,  clothing,  and 
placing  her husband  and nanny  on the company  payroll.  Because of the owners 
financial  situation,  no civil  action will be taken.  However,  on the basis of a Medicare 
carrier  review,  $300,000  was withheld  and retained  by the program. 
b 	 Blue Cross  of Illinois  disallowed  $454,220  in consulting  costs claimed  by a consulting 
company.  The intermediary  also disallowed  compensation  costs claimed  by two 
HHAs for services  rendered  by individuals  associated  with the consulting  company. 
It also is reopening  the  1991 cost report  looking  to disallow  $175,000.  Blue Cross of 
California  and Iowa have already  disallowed  costs totally  $636,800.  Intermediaries  in 
Pennsylvania  and Florida  are also looking  into the situation.  The costs have been 
disallowed  because  the providers  cannot  demonstrate  that services  were rendered  to 
the extent billed,  that they were related  to patient  care,  or that the providers  actually 
worked  at the site.  This  is an on-going  ORT case. 
 	 The owner  of a Louisiana  HHA was sentenced to 5 years probation  and ordered  to 
repay  $119,000.  The owner listed expenses of a costume  shop and a magazine  that 
c-3  the individual  owned  in the HHAs cost report.  Expenses  included  payroll,  leases, 
telephone  services,  and advertising. 
b 	 The owner  of a Louisiana  HHA,  four employees,  and one personal  friend  defrauded 
Medicare  by submitting  false cost reports,  concealing  financial  transactions  with 
fictitious  corporations,  forging  physician  signatures  on certificates  of medical 
necessity,  claiming  services  that were never  rendered,  and submitting  claims  for 
services  to non-Medicare  qualifying  individuals.  The owner was sentenced  to 
37 months  in prison  and ordered  to make restitution  of $221,220  to the Department 
for conspiracy,  false statements,  and mail  fraud.  The administrator,  quality  assurance 
coordinator,  staff coordinator,  and licensed practical  nurse were also sentenced  to 
prison,  with terms ranging  from  3 to  18 months  and ordered  to pay restitution  and 
fines totaling  $67,370.  A personal  friend  who allowed  the owner to use the friends 
name  in the fraud  scheme was sentenced  to 3 months  and ordered  to make  $62,270  in 
restitution.  All were given  3 years  supervised  release  following  their prison  terms. 
A recently  issued audit,  conducted  by the OIG and Blue Cross of California,  reviewed 
w 	
a sample of  100 claims  for which a California  HHA received  Medicare  monies.  The 
100 claims  represented  1,895 visits to 92 beneficiaries.  Of those,  1,214 visits,  or 
64.1 percent,  were deemed unallowable.  Reasons  included  beneficiaries  who were 
not homebound,  services  claimed  that were not reasonable  and necessary,  services 
provided  without  valid physician  orders,  and services  without  supporting 
documentation.  Approximately  $2.2 million  were estimated  to be unallowable. 
c-4  APPENDIX  D 

AGENCY  COMMENTS 
The full text of comments  received  from the Health  Care Financing  Administration, 
the Office  of the Assistant  Secretary  for Planning  and Evaluation,  and the Office  of the 
Assistant  Secretary  for Management  and Budget.  Health Care 

DEPARTMENT OF HEALTH & HUMAN SERVICES  Financing-Administration 

Memorandum 
JUL 2 I 199-i' 
DATE: 
TO: 	 June Gibbs Brown 
Inspector General 
FROM: 	 Bruce C. Vlade 
Administrator 
SUBJECT: 	 Office of Inspector General (OIG) Draft Report entitled: Hom&Ieahh 
Problem Providers and Their Impact on Medicare, (OEI-09-96-00110) 
We reviewed the above-referenced report that identifies and describes the common 
characteristics of problem home health agencies, and how these agencies, contribute to 
Medicare fraud, abuse, and waste. 
Our comments are attached for your consideration.  Thank you for the opportunity to 
review and comment on this report. 
Attachment  Health Care Financing Administration (HCFA) Comments on 
the Office of  Inspector General (OIG) Draft Reuort entitled: Home Health 
Problem Providers and Their Impact on  Medicare. (OEI-09-96-00 1101 
OIG Recommendation 
To protect the Medicare home health benefit, HCFA needs to develop and implement 
additional program safeguards that would  (1) strengthen its ability to identify problem 
providers; (2) prevent problem home health agencies (HHAs) from entering the program; 
and (3) prevent the Medicare trust fund from incurring further losses due -tothe activities 
of problem HHAs.  HCFA should take administrative action or, if necessary, seek 
legislative authority to: 
Require that each HHA obtain a surety bond equal to the amount of anticipated Medicare 
billings during its fiscal year.  Should the HHAs claims exceed the amount of the bond 
before a cost report has been filed and audited, the HHA should be required to increase 
the amount of the surety bond accordingly.  The cost of the bond should not be 
considered a reimbursable expense for Medicare cost reporting purposes. 
HCFA ResDonse 
We concur.  Bonding provides a higher level of scrutiny before HHAs are permitted to 
participate in the Medicare program. 
OIG Recommendation 
Require userfees, so that new and existing Has  are required to pay for their initial 
certifications, comprehensive on-site reviews, and recertifications.  If this is not possible, 
we believe theallocation  of additional resources to the certification and monitoring effort 
by the fiscal intermediaries, state agencies, and HCFA regional offices will pay for itse& 
because it will substantially reduce, or even eliminate, the continued accrual of 
uncollectible overpayments as well as payments for noncovered and medically-
unnecessary services. 
HCFA Response 
We concur.  HCFA agrees and supports such a proposal.  2 

OIG Recommendation 
Require the majority of the HHAs principals have prior health care experience directly 
related to the provision of home health services in order to receive Medicare certification. 
HCFA Response 
We concur.  The current HHA conditions of participation at 42 CFR 484.4 prescribe the 
personnel qualifications for the administrator.  The CFR states: Administrator, home 
health agency.  A person who: (a) Is a licensed physician; or (b) Is a registered nurse; or 
(c) Has training and experience in health service administration and at least 1 year of 
supervisory or administrative experience in home health care or related home health 
programs.  HCFA published in the Federal Register on March 10,1997, a proposed 
revision to the conditions of participation at 42 CFR484.4 to read: The administrator of 
a home health agency must: (i) Be a licensed physician; or (ii) Hold an undergraduate 
degree and (A) Be a registered nurse; or (B) Have education and experience in health 
services administration, with at least 1 year of supervisory or administrative experience in 
home health care or a related health care program, and in financial management. 
OIG Recommendation 
Develop a data bank of owners, principals, and other HHA officials and related 
organizations so their activity can be monitored, tracked, and cross-referenced. 
HCFA Response 
We concur.  The  new provider enrolhnent process, which includes a new national 
enrollment application for Part A and Part B providers, will provide HCFA with a 
comprehensive profile of all Medicare providers.  It will allow Medicare to screen 
applicants before they are authorized to receive payments for services because it requires 
contractors to verify all data provided on the application; e.g., licensure information,  prior 
sanction or exclusion information, place of business, ownership information, billing 
contracts, tax identification data, etc.  The new application will collect information on 
owners, principals, and managing and directing employees of HHA organizations.  The 
revised enrollment application will be implemented for initial use by Part A providers in 
July 1997. In conjunction with the new application, HCFA will develop and implement 
the Provider Enrollment, Chain, and Ownership System.  This database will consolidate 
ownership data collected on the enrollment application by Medicare contractors and the 
National Supplier Clearinghouse.  Similar to the enrollment application, this database will 
contain national data on Part A (owners and managing employees) and Part B providers. 
We expect to implement this system by the end of calendar year 1997.  3 

OIG Recommendation 
Require all HHA owners and principals to provide their individual Social Security 
numbers and Employer Identification numbers when they submit an application to 
become Medicare providers. 
HCFA ResDonse 
We concur.  We support this recommendation. 
OIG Recommendation 
Prior to certification.,ensure that new HHAs are financially sound and have adequate 
fiscal recordkeeping capabilities and their owners and principals are qualified and 
trustworthy.  This should be accomplished through a comprehensive on-site review by an 
interdisciplinary team of auditors, medical reviewers, and state surveyors. 
HCFA Response 
We partially concur.  While we agree with the intent of the recommendation, we believe 
the provisions in the Presidents Medicare and Medicaid Fraud, Abuse, and Waste 
Prevention Amendments of 1997, take a more appropriate approach in addressing 
problem HHAs. 
: 
OIG Recommendation 
Refuse to enter into a provider agreement with any HHA whose owners or principals: 
-...ZS-- 
owe money to the Federal Government in the form of Medicare 
overpayments, tax liens, or unpaid loans; 
have filed bankruptcy or have negative credit ratings; 
have prior criminal records; and/or 
have been associated wi erg are the relatives of the owner of a Medicare 
9 
provider who was found to defraud, abuse, or otherwise misappropriate 
Medicare dollars.  4 

H&A  Resnonse 
We partially concur.  While we agree we should refuse to enter into provider agreements 
with HHAs whose owners and principals do not live up to certain financial standards, we 
believe the provisions in the Presidents Medicare and Medicaid Fraud, Abuse, and 
Waste Prevention Amendments of 1997take a more appropriate approach in addressing 
problem HHAs. 
OIG Recommendation 
Preclude the discharge of Medicare debts through bankruptcy. 
HCFA Rewonse  ---. 
We concur.  The President announced legislative proposals to fight fraud and-abuse in 
health care, including precluding individuals and entities from discharging Medicare 
debts through bankruptcy. 
OIG Recommendation 
Impose a moratorium on any new HHA certifications until adequate program safeguards 
are implemented, unless the HHA can demonstrate that it will be operating in an 
underserved area. 
HCFA Resoonse 
We nonconcur.  HCFA has the responsibility to establish and implement adequate 
program requirements and safeguards.  Ifan  HHA is able to comply with these 
requirements, it should be allowed to enter the Medicare program. 
OIG Recommendation 
We also reiterate our previous recommendation that HCFA should: 
Tighten controls over the periodic interim payment (PIP) program, more closely monitor 
HHAs that are on PIP, and seek legislation to eliminate this method of reimbursement.  5 

HCFA Response 
The President announced, as part of his Balanced Budget Act of 1997, the elimination of 
PIP for HHAs effective on or after the implementation of HHA Prospective Payment on 
October 1, 1999. We support the Presidents Medicare and Medicaid Fraud, Abuse, and 
Waste Prevention Amendments of 1997. 
: 
----...-_.  DEPARTMENT  OF HEALTH  & HUMAN  SERVICES  Office of the Secretary 
Washingtpn,  D.C.  20201 
JUN 1 0 1997 
TO: 	 June Gibbs Brown 
Inspector  General  , 
FROM:  David F. Garrison 
Principal  Deputy Assistant  Secret& 
for Planning  and Evaluation 
SuE3JECT: 	 OIG Draft Report: Home Health: Problem  Providers  and Their Impact on 
Medicare, OEIO9-96-00110 -- CONCUR WITH COMMENTS. 
I concur with this report and submit the following  comments. 
My staffmet  with your staff in March of 1997 to discuss this report.  Though  ASPE is quite 
pleased with the changes that the IG has made, we continue  to be concerned  that the report  can 
be confusing  if the reader is not familiar with the history  and evolution  of the home health 
benefit. 
Specifically,  we are concerned that one might conclude that all post-1989  home health visits  by 
the sampled problem providers  in the five ORT states were fraudulent.  ASPE recommends  that 
the IG make the following  changes: 
1. 	 The fmdings on page ii of the Executive  Summary that refers to the home health program 
benefit  expansion and the lack of restrictions  on certification  could be contusing  to the 
reader.  The report implies that all post-1989 utilization  is suspect when in fact the 
Duggan  settlement  liberalized  the home health eligibility  criteria  and the availability  of 
services. The Duggan  case is relevant to the post-1989  growth in costs, utilization  and the 
number. of Medicare-certified  HHAs.  A sentence should be inserted here that explains 
how the home health benefit changed substantially  as a result of the Duggan  v. Bowen 
lawsuit. 
2. 	 Similarly,  in describing  that 45 percent of all Medicare expenditures  for home health 
services went to the problem providers  in the five ORT states, the reader might conclude 
that the provision  of these services were somehow  fraudulent  or unnecessary.  The IG 
should insert a sentence explaining  that though  it is clear that problem  providers  may 
have taken advantage of the liberalization  in the benefit  since  1989, this does notmean 
that all visits provided  to these patients by these providers  were  problem  or 
unnecessary  visits.  . 
 
Page 2 - June Gibbs Brown 
3. 	 The first sentence on page 12 of the report -- In 1989, Congress  enacted  changes...  is 
not correct.  Please insert the following  sentence: 
On July  1,1989,  regulatory  revisions  to the home health benefit  as a result of the 
Duggan  v. Bowen lawsuit became effective.  The Duggan  decision  resulted  in easing 
barriers-to program participation  and expanding  the types of services  provided  to 
beneficiaries.  DEPARTMENT  OF HEALTH  & HUMAN  SERVICES  Office of the Secretary 
Washingtqn,  DC.  20201 
JUN I7 1997 
iii;  i-,,: :. ;.)(i~T~**
MEMORANDUM  TO:  The Inspector General 
GEf:lE14,f,L 
Attention:  June Gibbs Brown 
FROM  : 
 John J. Callahan 

Assistant  Secretary for Management  and Budget 

SUBJECT  : 	 Concur with Comment:  OIG Draft Report:  Home Health: 
Problem Providers and Their  Impact on Medicare 
ac,i-~9-9&-6twO 
-
_-_. 
ASMB commends the OIG for its strong recommendations  for combating  Medicare 
fraud, waste,  and abuse in the home health benefit  , as outlined  in this draft report. 
However, since this draft report was written,  Congress  has offered  several  proposals.as 
part of Medicare  reconciliation  legislation  that would  address  some of the OIGs 
concerns.  Furthermore,  the current draft does not completely  recognize  all the 
Presidents  legislative  proposals to address home health fraud.  In order to ensure that 
the OIG final  report is as timely as possible, ASMB suggests  that OIG rewrite  its 
recommendations  section to acknowledge  the following: 
 	 Both the President  and Congress are recommending  elimination  of periodic 
interim  payments (PIP) upon implementation  of a home health  prospective 
payment  system in FY 2000. 
0 	 The President  has proposed giving the Secretary  authority  to exclude  Medicare 
certifications  to provider applicants  convicted  of a felony. 
0 	 Congress  has proposed Medjcare  legislation  that would  require  surety bonds for 
home health agencies. 
0 	 .  Congress  has proposed Medicare  legislation  that would  exclude  health entities 
from participating  in Federal health programs  if ownership  of the entity is 
transferred  to an immediate family  member in anticipation  of, or following,  a 
conviction