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California Operation Restore Trust

Steering Committee

MEDICARE HOME HEALTH:

Eliminating Fraud, Abuse, and Waste

SERVICES. 
'0 
C(la 
1996
JUY  " ' ' '
" .
GENRA

OFFCE OF INSPECTOR 
The mision of the Offce of Inpector General (DIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrty of the Departent of Health and HumanServce' (HHS) 
programs as well as the health and welfare of beneficiaries served by those programs. 
network of audits, investigations, and 
statutory mission is carred out through a nationwide 
inpections conducted by three DIG operating components: the Offce of Audit Servce, the 
Offce of Investigations, and the Offce of Evaluation and Inpections. The DIG also inorm 
the Secretary of HHS of program and management problems and recmmends courses to
correct them. 
OFFCE OF AUDIT SERVICE 
The DIG's Offce of Audit Servce (OAS) provides all auditing servce for HHS, either by 
audit work done by others. 
conducting audits with its own audit resource or by overseeing 
Audits examie the performance of HHS programs and/or ' its grantee and coiltractorsm' 
carrg 
out their respective responsibilties and are intended to provide independent 
in order to reduce waste, abuse  and, , 
assessments of HHS programs and operations 
mimanagement and to promote ecnomy and effciency throughout the Department 
OFFCE OF, INTIGATIONS 
The DIG's Offce of Investigations (01) conducts crial, civil, and administrative 
HHS beneficiaries and of 
investigations of allegationS of wrongdoing in HHS programs or to 
unjust enrchment by providers. The investigative effort of 01 lead to criminal convictions 
admitrative sanctions, or civil money penalties. The 01 also oversee State Medicaid fraud 
in the Medicaid program. 
control units which investigate and prosecute fraud and patient abuse 
ALUATIONAN INSPECTONS 
OFFCE OF EV 
The DIG's Offce of Evaluation and Inpections (DEI) conducts short-term management and 
program evaluations (called inpections) that focus on isues of concern to the Department, 
, and the public: The fidings and recmmendations contained in these inpection 
the Congress
report generate rapid, accurate, and up-tq-date inormation on the effciency, vumerabilty, 
and effectiveness of deparmenta program. 
For additional copies of this report, pleae contact the San Francisco offce at (415) 437-7.900.  California Operation Restore Trust

Steering Committee

MEDICARE HOME HEALTH:

Eliminating Fraud, Abuse, and Waste

SERVICEo
~t-\' 
4-
~1t~C(la 
JUY 
1996  INTRODUCTION 
PUROSE 
This report summarizes the findings and recommendations of a Californa Operation Restore 
Trust meeting in which focus group participants discussed fraud, abuse, and waste in the 
Medicare home health benefit. 
BACKGROUN 
Operation Restore Trust (ORT) is a two-year initiative designed to address Medicare fraud 
waste, and abuse in nursing homes, durable medical equipment, and home health in the five 
states with the largest Medicare populations (Californa, Texas, New York, Florida, and 
Ilinois). The ORT is unique in that offcials from all agencies involved in elimnating fraud 
waste, and abuse have been given the necessary tools and the mandate to work together as a 
unified team. Officials from the Health Care Financing Admnistration (HCFA), the Offce of 
Inspector General (OIG), the Administration on Aging, and the Departent of Justice are the 
principal participants in the ORT intiative. 
To help identify problems and develop possible solutions concerng the Medicare home health 
benefit, the Californa ORT Steering Commttee convened a meeting of representatives from 
HCFA, the OIG, fiscal intermediaries, and the regional attorney s offce. Most of the 
paricipants have been workig with Californa home health agencies (HHAs) since the 
beginng of ORT. A few home health expert from other states were included to provide 
different perspectives and to determe if the problems identified in Californa are also 
problems in other ORT states. 
During the meeting, attendees participated in each of thee different focus groups: licensing 
and certification; coverage and payment policy; and medical review and quality of care. The 
focus group format was used because it allows paricipants from different disciplines and 
arve 
backgrounds to share, discuss" and deliberate their varied experiences and  at some 
agreement concerng problems and potential solutions. The goal of the sessions was to 
maxime interaction among participants. Moderators were present to stiulate conversation 
control the general flow and content of the discussion, transcribe, and summarize. 
nie 
This report is a sumary of the issues and possible solutions discussed in the  different 
focus groups. The Californa ORT Steering Commttee recognies that a considerable amount 
of work has been done by HCFA and others to identify and correct deficiencies in the home 
thgs 
health benefit and that some of the  mentioned in ths report may be redundant. 
Neverteless, we believe the concern are stil valid and need to be addressed as quickly as 
possible though changes in law, regulation, or policy. We would also like to caution the 
reader that, because participants were asked to be creative and not restricted by their  paradigms , some of the suggested solutions may seem iconoclastic or unrealistic. 
tNhevegrte less, they are wort considering and evaluating, since they represent the combined
of a group of people who are deeply concerned about the integrity and financial 
viabilty of the Medicare program and, specifically, its home health benefit. 
The report consists of several general fmdings, each of which includes numerous 
problems/vulnerabilties. The fmdings are intended to give some organiation to the report 
although they are inter-related and some of the problems/vulnerabilties overlap. Imediately 
following the list of vulnerabilties is a list of suggested 
solutions. Next to each suggested 
solution is a symbol indicating if the solution requires a legislative change or if it can be 
accomplished by HCF A though a regulatory or policy change. 
HCFA	 The "HCFA" symbol mean that a change in HCFA policies and/or regulations is

necessary .

The "Bil" symbol means legislation is necessary.  THE CERTIFICATION PROCESS DOES NOT PREVENT PROBLEM PROVIERS 
FROM ENTRIG AN RE-ENTERIG THE MEDICAR PROGRA 
One of the best ways to reduce fraud, waste, and abuse in the Medicare program is by assuring 
that only home health agencies with experience in the provision of health care, who are fiscally 
sound and responsible, can obtain Medicare certification. If more resources and more 
stringent requirements were par of the certification and recertification process , HCFA could 
prevent dishonest and incompetent providers and their owners from entering the Medicare 
program. Focus group participants rated the provider screenig and certification process as 
one of the most importnt oversight functions for the Medicare program. 
Currently, the licensing and certification process for HHAs is inadequate and ineffective. 
It is 
too easy to enter the Medicare program. Anyone, regardless of business or health care 
experience, can become a home health provider. Even individuals who have been part of 
HHAs that have defrauded the governent, been decertified, or declared bankptcy 
(and stil 
owe the program millons of dollars in overpayments) can figure out a way to bil and be paid 
by Medicare. Because HCFA lacks the authority, resources, and tools to properly certify 
nothg 
home health agencies,  discourages, inbits, or prevents the same unscrupulous 
entrepreneurs from continuing to take advantage of the Medicare program and its beneficiaries. 
Problems IV ulnerabilties: 
The Standard Survey, which covers only about half of the conditions of 
participation, does not properly screen providers. 
There are thee types of surveys 
for HHAs: a standard survey, a partial extended survey, and a full extended survey. 
The standard survey, performed at intial application and repeated for annual 
recertifications, covers only 5 of the 12 conditions of participation and 1 standard. The 
other surveys are performed only if the state identifies problems in the standard survey. 
HCFA makes certification and recertfication decisions too quickly. The HCFA does 
not tae enough time to consider all the aspects of each application and does not require 
that each item on the application be fully and accurately completed. This has resulted in 
providers entering the Medicare program who should never have been certified. 
HH 
put up facades to pass the initial certifcation requirements. Often, HHAs 
hire temporary consultats who act as principals in the business until certification is 
granted. After certification, the consultants leave. The organiational structure 
changes, and the HHA operates without the basic business strcture required in HCFA' 
conditions of participation. 
It is too easy to reenter the Medicare program following decertfication and/or 
banuptcy. 
HHA owners have found ways to enter the program using new 
corporations, owners, and/or by setting up nurse registries that contract with certified  --..,,""

HHAs to bil the program on their behalf. 
HH 
Tracking and identifying owners and their interests in other  is problematic. 
The current trackig system is manual, although an automated system is planned. 
Individuals with 5 percent ownership or more must be disclosed. An individual could 
own just under 5 percent in multiple HHAs and never be identified on disclosure forms. 
their business and open as a 
Instead of waiting for recertifcation, providers dissolve 
new entity. The HCF A requires a reasonable assurance period, which is at the 
discretion of the HCF A regional office, before a decertified provider can re-enter the 
program. However, a new entity does not have to follow these rules. 
Sanctioned providers reopen with relatives and/or friends as new owners. This is 
allowed because the sanction applies only to individuals. 
Banuptcy protects individuals from Government sanctions. Following bankptcy, 
individuals are free to start new corporate entities, since the bankptcy applies only to 
the defunct corporation. 
Contracting for services allows a decertified provider to reopen as a registry without 
Medicare certifcation. A registry can potentially bil though a certified HHA and 
receive Medicare payments though one or more HHAs. 
Suggested Solutions: 
Limit new providers to a conditional or provisional certification for 6 months or

HCFA	
until the HHA has demonstrated its

1 year. Certification should not be granted 
abilty to meet all of the Medicare conditions of participation though an on-site

medical review, an on-site audit, and a complete review of the HHA'

organiational strcture.

HH 
Require a prior track record. For example, require that an  is licensed and 
functionig for 6 month or longer before it can apply for Medicare certification. 
Requiring prior experience is good business. It' s okay to set arbitrary requirements 
to protect Medicare and its beneficiaries. 
Limit the number of Medicare beneficiaries that the HHA can serve during the

HCFA	
provisional certification period and never allow its Medicare patient load to exceed

50 percent of its total business.

_HC0F,A" 	 Require applicants to post bonds. Bonding would eliminate providers with
Bonding builds in 
inadequate financial resources as well as prior criminal records. 
legitimacy and would elimnate some of the disreputable HHAs. Fly-by-night  ....................
agencies wouldn t be abie to get a bond and couldn t become Medicare providerso 
The bond should be at least $1 milion or equal to the anticipated Medicare 
HH 
receivables during the fIrst year of operation. If the  receivables exceed the 
amount of the bond, the bond must be increased accordingly. If there are 
overpayments, HCFA should be able to recoup money from the bond or require that 
the amount of the bond be increased in order for an extended repayment plan to be 
approved. The bond should not be considered a reimbursable cost for cost report 
purposes. Note: The Medicare law allows bonding, but the provision has never 
been implemented. 
Use the extended survey for all initial HHA certifications. Consider elimating 
HCFA

deemed status " for any HHA. 
Require imediate notification of changes in strcture, ownership, or principal 
HCFA

timg 
offcers. (Current regulations require notification but are vague on  and 
exactly what needs to be reported. 
If an HHA owner owes Medicare money, do not grant new certification until the 
HCFA 
debt is fully repaid. 
Require owners (board members and principals as well) to provide their Social 
Security numbers (SSNs). Expand the SSN requirement to imediate family 
members. (Medicare regulations already require some of this under program 
integrity disclosure requirements , but it's not enforced. 
Impose penalties for failure to provide timely notification of changes in 
HCFA

organiational structure, ownership, or principals. 
If an HHA does not disclose ownership inormation, decertify it. 
"H"C0F"A" 

"H"C0F"A"  Redo Form 1513 (disclosure form), and use it to set up a database. The HCFA 
central offce should maintain the database, with regional offce access. Data 
elements for all owners should include: name, SSN, percent of ownership, prior 
convictions , naes. of other companies owned, overpayments written off, business 
failures, and prior decertifications. The HCFA should collect simar inormation 
on famly members and other principals in the business. The forms should be 
retained for 7 years (HCFA now purges much earlier). 
When HHAs are sold, require the new owners to assume outstanding debts and 
liabilties.  Either don t allow contracting for services or allow contracting only with other 
Medicare certified agencies. Significantly limt the percentage of the business that 
can be contracted. For example, only allow one type of therapy to be contracted-out 
and require that all others services be provided by HHA employees. 
THE OPEN-ENDED BENEFIT, BROADLY DEFIND BENEFICIAY ELIGmILITY 
CRIRI, AN COST-BASED REIMUREl\NT SYSTEM CONTRIUTE TO 
AN FRUD 
OVERUTILIZATION, ABUSE, 
Participants in the focus groups have found that the problems among home health agencies are 
far more systemic and widespread than just the actions of a few rogue providers intent on 
defrauding Medicare. In many instances, unclear, imprecise , or deficient regulations coupled 
with confsing and complex guidelines predispose the program to fraud, abuse, and waste. 
Participants commented that the program has been so open-ended since the liberalization of 
benefits in 1989 that any unscrupulous entrepreneur can figure out how to become wealthy 
without much effort. 
Precious resources are wasted because the home health industr views the Medicare benefit as 
long-term care, since there are no limts on the number or length of services. Participants 
commented that the home health program defInitely funds long-term care at home , and " 
tring to fIx a bad system. " One participant furter noted that private inurers pay for skilled 
services , not personal care and that we need to separate skilled services from personal care 
rendered by home health aides and limit benefits accordingly. 
The current payment mechanism for home health, which is based on interim payments and cost 
report settlements, does not discourage fraud, waste , and abuse. Paricipants complained about 
the cost-based payment system and suggested that it is obsolete and should be abandoned in 
favor of a more prudent reimbursement system. 
ProblemslVulnerabilties: 
Exceptions to the definition of "homebound" are confusing and difficult to monitor. 
, runng 
The defInition of homebound allows for such activities as attending church
errands , etc. The exceptions have been used by unscrupulous providers to challenge 
clear-cut determinations that services are not medically necessary. 
Unlike the SNF benefit, a prior stay is not required. Anyone can receive home health 
services without any prior hospital or outpatient stay. This allows HHAs to provide 
services to larger populations with less monitoring. Patients who might otherwise not 
need services are added to the rolls. 
The interpreted definition of par-time or intermittent care leads to overutilization 
by allowing an infinite number of visits. A 1989 court case led to a change in the  interpretation of "part-time and intermittent care" to "part-time il intermttent care. 
This allowed HHAs to drastically increase the number of visits per patient. 
The long-term nature of the benefit, i.e., coverage of chronic cae, creates 
difficulties in determining which services are medicaly necessar and which are 
incidenta. The HCF A needs to decide if the home health benefit is going to focus 
post-acute episodes or chronic care. Providing long-term care can blur the line between 
medically necessary services and more incidental services such as housekeeping. 
It is 
extremely diffcult to prove services were not medically necessar unless multiple 
services are deemed inappropriate. 
Cost-based reimbursement systems do not provide incentives for providers to 
properly manage costs. Providers bil as often as they want and have no incentive to 
limt visits or costs. Other payment caps, such as the part B limit on physical therapy, 
drive providers into the home health business. 
Suggested Solutions: 
Define a home health visit. How much of the visit can involve incidental services?
"H"CIFOA 
Define criteria for discharging patients from home care.
"H"C1FoA 
"H"C1FoA Require that HHAs bil based on increments of hours or portions of hours rather 
Develop and implement a fee schedule for visits. Pay an hourly rate. 
than per visit. 
"H"C1FoA  Offer bonuses for meeting rehabiltation goals compared to open-ended therapies.
Adopt managed care for the home health benefit. 
Impose a cap on reimbursement and/or the number of visits. 
Develop and implement a prospective payment system. Although ths system would 
address the cost of home health services, it would not solve the problem of 
determing eligibilty (Le. , is the patient homebound?). 
"H"C1FoA  Consider competitive bidding as a long-range solution. Overutilization is a much
bigger issue than fraud. The long-term solution is selective contracting though 
competitive bidding. Legislative authority already exists, and precedents have been 
set. Competitive bidding is already being used for durable medical equipment 
laboratories , and coronary bypass surgery on a demonstration basis. NOTE: 
Californa s Medicaid program shifted from cost reimbursement to competitive 
bidding for acute hospitals. It was diffcult to do, but it revolutionied the program.  THE LACK OF PHYSICIAN AN BENEFICIARY INOLVEMENT 
ACCOUNTABILITY HAS CONTRIUTD SIGNIFICANLY TO 
AN 
OVERUTILIZATION  ABUSE 
Relying on physician to oversee the medical necessity and delivery of home health services 
has been entirely ineffective. The home health benefit anticipates that physicians wil act 
gatekeepers. Physicians are supposed to certify initial plan of care, periodically review 
treatment plans, and review and recertify the entire plan every 62 days. The expectation is that 
physicians wil help control utilization by monitoring beneficiar eligibilty and the medical 
necessity of services. To encourage this, in January 1995 , HCFA began paying physicians for 
Unfortnately, this system is not working, and 
reviewing these plans of care (paC). 
physicians are not acting as gatekeepers but instead are unwittingly or knowingly helping 
unscrupulous operators defraud and abuse Medicare. 
Most beneficiaries, with a minum amount of education, adequate inormation, and some 
incentive , can effectively monitor their own health care. However, for the home health 
benefit, beneficiaries receive no inormation regarding the number, type, and cost of services 
that have been biled for their care. Furtermore, they have no fmancialliabilty or 
responsibilty. Essentially, beneficiaries are out of the loop. This lack of involvement by the 
two groups closest to the actual delivery of services , beneficiaries and physicians , creates a 
situation without suffcient checks and balances to deter and prevent fraud, waste, and abuse. 
ProblemsN ulnerabilties: 
Physicians are not playing the role of gatekeeper as intended, or they are 
performing it perfunctorily, at best. Physicians are not aware of the requirements or 
simply do not care. They want the HHA to tae charge. The "attending" physician turns 
out to be any physician. Some agencies even shop around for physicians to perform 
certifications and recertifications. 
The regulations do not require that physicians see patients before signng POCs. 
char. 
Consequently, they may not see patients or even their medical 
Physician are not consulted when a patient' s condition changes (either positively or 
negatively) as required by HCFA. Physicians are not even contacted by HHAs; 
sometimes nurses wil change the orders. 
Il 
Some  boilerplate" POCs. Some respondents had no problem with an 
utilize "
part 
agency preparing the pac , but suggested that there should be an independent 
authorizing services, such as an intermediary or independent regional organization. 
Beneficiaries do not have any financial liabilty , and they do not receive any 
information regarding the number and cost of services rendered. Unlike other  services, beneficiaries have no concept of what is being biled to the Medicare program 
and have no fmancial incentive to limit the services they receive. 
ID 
The  do not promote independence by teaching beneficiaries self-care. Many 
beneficiaries are able to provide some of their own basic health care, but HHAs 
discourage them from doing so. For example, diabetics , who have been injecting 
themselves with insulin for years, are encouraged by HHAs to let the home health 
agency perfonn the "procedure " when the beneficiary becomes Medicare-eligible. 
Suggested Solutions: 
-H.CIFBA 	 Strictly defme who can be considered the "attending physician" for home health.
The HCF A should require that the attending physician, who signs the P~C and 
recertification, is the physician who decided that the beneficiary needs home care. 
The HCF A could also require that the physician has an established relationship with 
the beneficiary as evidenced by Medicare claim preceding the date of the ;pac. 
mium 
-H.CIFBA	 Set  stadards that require physicians to see the patient at, or near, the time,
pac  pac 
the  is developed. In addition, the physician who signs the  should be 
required to exame the beneficiary when he recertifies the pac to determe 
whether home health care is stil necessary. 
-H.CIFBA  Establish a definite time limit between the physician examnation and the

development of the P~C.

-H.CIFBA 	 Have independent certifiers review POCs.
-H.CIFBA Pay the physician for reviewing and signg the pac and require the physician to 
If there is no corresponding 
bil for recertifying. Not all physician currently bil. 
, Medicare should not pay for the services. 
bil from the physician
-H.CIFBA  Allow physician to' approve POCs for a limted number of visits. Once a
beneficiary has received a certin level of benefits, require prior approval by an 
independent peer review entity for additional b nefits. 
-H.CIFBA Track physicians who are approving POCs to determe if their patterns warrant

review. This would require including the physician UPIN on each claim.

-H.CIFBA 	 Offer bonuses or incentives to beneficiaries who are good managers of their own
health care needs.

-H.CIFBA  Have beneficiaries sign completed claim form, nurses notes, or visit logs to

acknowledge receipt of services.
 ---...,,,"""

Send Explanation of Medicare Benefits (EOMBs) for home health care to the

HCFA	
Include the number of

beneficiaries so that they can check for improper biling. 
visits, dates, services rendered, and the dollar amount biled and paid.

HCFA	 Unless an agency can prove a patient cannot learn self-care, limit the number of

visits for certin diagnoses.

Create an incentive for patients and their familes to reduce overutilization 

HCFA	
payments.

requiring co-
FEDERA OVERSIGHT ACTMTIES CANOT INSUR THAT HOME HEALTH 
AR 
SERVICES  MEDICALLY NECESSARY, OF AN ACCEPTABLE QUALITY OF 
CAR, OR BILLED PRO PERL Y

After certification, Medicare imposes few controls on HHAs to assure that they retain qualified 
staff, provide quality care, and bil appropriately. Medicalreview, cost report audits, and 
recertifications have not proven to be effective means of controlling costs or utilization or 
Because these activities have not been adequately funded 
assuring the integrity of the benefit. 
neither state agencies nor fiscal intermediaries have been able to devote suffcient resources to 
monitoring HHAs. Furtermore, most of the effort has been concentrated on postpayment 
review which does not prevent the fraud, abuse, or waste from occurring. 
ProblemsN ulnerabilties: 
Staff may not be properly licensed. The intial survey requires surveyors to verify that 
can access a toll-free telephone number to fmd out 
nurses are licensed. State surveyors 
if a nurse is licensed; however, the verification does not occur each time a new nurse is 
hired. Furtermore, HHAs do not properly monitor contracted services , such as nursing 
registries. Certified HHAs are required to keep copies of contracted nurses' and aides 
licenses, but this is not always done. Home health aides are a particular concern, since 
investigators have found that some of the aides are non-licensed undocumented aliens. 
Beneficiaries may be at risk, because nurses and home health aides have access to 
their homes. Medicare does not require background checks on HHA employees. This 
may endanger an already vulnerable population. 
Larger providers are difficult to monitor since branch offices can bil different fiscal 
intermediaries. The original intent was for nationwide companies with multiple 
locations to use Blue Cross of Iowa. But the use of multiple intermediaries by one 
company with several branches is not specifically prohibited. 
based reimbursement system, audits are the primary method of 
In a cost-
monitoring providers; however, funding for on-site visits is limted and audits are  -.,"

post-payment in nature. Without on-site audits, HHAs can commit fraud and stil 
appear legal and clean on the surface. Desk audits without detailed backup 
documentation frequently do not uncover inappropriately claimed costs, duplicate 
claims, claim for services not rendered, services that duplicate those provided by 
facilties, or falsified records. Funding for on-site visits has been very limted, and ths 
situation is furter complicated by the large distances between HHAs and their fiscal 
intermediaries. Often, inappropriate costs tae 2 to 3 years to disallow and, by that 
time, the company may have gone out of business. 
There is no systematic way to track nurses, aides, and physicians for biling 
purposes. Claims do not require license numbers and UPINs. Without ths 
information, prepayment edits are not possible. 
Duplicate services and bilings are common for home health services provided to 
HHAs provide services for residents of board 
residents of board and care facilties. 
and care facilties and subsequently bil Medicare. In many states , part of the Medicaid 
per diem is supposed to cover these services. The Medicare fiscal intermediaries 
frequently do not know if a beneficiary is in a board and care facilty. 
Licensing and certifcation staff, medica review personnel, and cost report staff do 
not share information regarding problem individuals and agencies. Many HHAs 
management problems also have cost report problems. Medical 
with adminstrative and 
reviews are not as focused as they could be if there was coordination with licensing and 
certification staff. 
Kickbacks and self-referrals are commonplace in the home health industry. 
Doctors , board and care facilty adminstrators, and others receive kickbacks for 
referrals to HHAs and DME companes. In addition, HHAs bil Medicare for services 
provided to relatives and friends which may not even be rendered. 
Suggested Solutions: 
_HC0F,A" 	 Routinely review HHA records to ensure staff is properly licensed.
H_C0F,A"  Complete crimal background checks on HHA employees who have access to

patients' homes.

HCFA	 Develop a system to assure that registered nurses supervise home health aides

biweekly, as the regulations require.

_HC0F,A"  Licensing and certification staff should coordinate findings with fiscal intermediary
staff. There should also be cross-trainig.  --------------..........................................
When possible, recertification surveys should be performed at the same time as on-
HCFA	
site cost report audits to faciltate information sharing and coordinate fmdings. 
Require same or related companies to deal with the same fiscal intermediar. 
HCFA	
Until the structure of the program changes, there need to be more on-site reviews. 
HCFA	
fiscal intermediaries should be 
Adequate funding should be provided. Responsible 
geographically closer to HHAs. 
Require unique identifiers (UPIN, license, code) on claims for all providers 
HCFA	
physicians, therapists, nurses, and suppliers for whom services are being biled. 
Develop a database that would track the services provided by them. 
Based on a statistical sample, fiscal intermediaries should interview physicians and 
HCFA	
beneficiaries to validate services.

Auditors should be taught how to identify services that are potentially medically 
HCFA	
unnecessary . 
Fiscal intermediaries should be funded to conduct pre-payment medical review on 
HCFA	
new and problem HHAs. 
Intermediaries should validate inormation in medical records. 
HCFA	
Fiscal intermediary staff should be expected to search for kickbacks when they 
HCFA	
review claims and cost report.

Require nurses and aides to complete a trip or visit log and submit the log with the 
HCFA	
claim. The beneficiary should be required to sign the log. 
Track beneficiaries who account for a large volume of HHA claim. 
HCFA	
Develop and implement a prepayment claim edit that would limt the number of 
HCFA	
visits per day for nurses, aides, and therapists. Limt the number of consecutive 
days a nurse can work. 
Identify subcontracted services on the claim form via a modifier. 
HCFA	
Prohibit HHAs from biling for services rendered to relatives of either direct 
HCFA	
employees or contract staff (perhaps by expanding the Stark self-referral ban). 
Adopt a fee-for-service (based on a fee schedule) payment 
Eliminate cost report. 
policy.  _HoCFlEA  Require the preparer of othe cost report to assume financial liabilty for its accuracy.
Require the owner of the HHA to sign the cost report.
_HoCFlEA 
-.IE  Eliminate payments of home health benefits that duplicate services that are supposed
HCFA
to be provided by board and care facilities. 
ID 
FACE FEW PENALTIES FOR NONCOMPLIANCE, FRAUD, OR ABUSE 
Once an HHA has been certified, there is little that HCF A can do to penalize the agency and 
its owners. Decertification is not easy since providers believe they have a "right" to dtoa g 
A from 
business with Medicare and frequently use political infuence to prevent HCF 
any adverse action. 
The HCFA has few administrative remedies at its disposal. Coordination with other agencies 
s Offce, for criminal or civil investigation and 
such as the OIG and the United States Attorney 
prosecution is very time-consumig and unproductive, unless the case is particularly 'egregious. 
Therefore, the best way to address fraud and abuse in the home health area is to prevent it 
from happening in the first place. However, in cases where ths is not possible, HCFA needs 
stronger administrative penalties that it can impose timely and effectively. 
Problems/Vulnerabilties: 
Providers fie late cost report, often with signifcant overpayments. The current 
requirement that HHAs submit cost report within 5 months of the end of the fiscal year 
is too lenient. Some providers do not even meet that deadline. Others never fie their 
cost report. Significant overpayments are rarely repaid when HHAs voluntarily 
terminate or go out of business. 
ID 
Fiscal intermediaries do not routinely stop payments to  that have cost report 
problems. Even after costs have been disallowed, payments continue. 
Banuptcy protects providers from HCF A suspensions and sanctions. The court 
bankptcy. Unless fraudulent activity is 
protect individuals and corporations that fie 
proven, HCFA rarely recoups overpayments. 
ID 
Very few  are prosecuted. The likelihood of prosecution is small. Investigators 
face many obstacles because of the extremely complex nature of home health cases. 
Judges are reluctant to impose penalties against corporations and their owners. 
Even when records are altered or falsifed, Adminstrative Law Judges (ALs) 
ID. 
frequently rule in favor of  Providers sell patient lists Without fear of kickback penalties. Kickback cases are 
diffcult to prove and rarely result in crimal prosecution. 
HHAs attempt to shield themselves from 
Providers use contracting to avoid liabilty. 
prosecution and penalties by claiming that they are not responsible for contracted 
employees (such as nurses and therapists) who submit false charge slips. 
Suggested Solutions: 
simlar to 
Toughen penalties/sanctions for non-compliance. Penalties should be 
those established in the Clinical Laboratory Improvement Amendments (CLIA). 
Under CLIA, an owner who is sanctioned (decertified for quality of care reasons) is 
any health service to Medicare beneficiaries for 2 years.
prohibited from providing 

Require timely filing of cost report. Shorten current requirement from 5 to

HCFA
IE . 
3 months. If a cost report is late, HCFA should begin decertification proceedings

and withold future Medicare payments.

Fiscal intermediaries should discontinue payments to HHAs when overpayments are
IHEC.F"A" 
discovered though cost report audits or sample claims reviews. As mentioned 
earlier, a bond should be required if an HHA is granted an extended repayment 
plan. 
Permt administrative sanctions against individuals. This would avoid having to go 
though the conviction process. 
Add a threshold amount (for example, $5,000 in disallowed claims), before a 
provider can request a hearing before an AU. 
Make selling or trading patient lists ilegal. 
HHAs should be automatically excluded from Medicare when they bil for 
unlicensed branches. Exclusions should be for 10 years and should affect 
individuals as well as corporations.

Penalties should be modeled after those of the Internal Revenue Service (IS). The 
IRS imposes 100 percent penalties in certin situations. 
Elimte 
periodic interim payments and require that HHAs bil no less than 
monthy. 
HHAs should not be allowed to 
Contracting should be eliminated or limited. 
abrogate their responsibilty to assure that services are rendered.