Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
CMS C
 AND  ONTRACTOR 
 
 
O H
VERSIGHT OF  OME 
 
 
H A  
EALTH  GENCIES
 
 
 
 
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
December 2012 
OEI-04-11-00220   
   
EXECUTIVE SUMMARY:  CMS AND CONTRACTOR OVERSIGHT OF HOME 
HEALTH AGENCIES 
OEI-04-11-00220 
 
WHY WE DID THIS STUDY  
 
In 2010, Medicare paid $19.5 billion to 11,203 home health agencies (HHA) for home 
health services provided to 3.4 million beneficiaries.  HHAs are considered to be 
particularly vulnerable to fraud, waste, and abuse.  The Centers for Medicare & Medicaid 
Services (CMS) designated newly enrolling HHAs as high-risk providers in March 2011, 
citing their record of fraud, waste, and abuse.  A 2012 Office of Inspector General (OIG) 
report also found that one in four HHAs had questionable billing, which was concentrated 
in certain geographic areas where Federal investigators and analysts have focused their 
efforts to combat fraud, waste, and abuse.  Other OIG studies have found vulnerabilities 
in Medicare contractors efforts to identify and investigate potential fraud and abuse, as 
well as limitations in CMSs oversight of these contractors. 
 
HOW WE DID THIS STUDY 
   
We collected information and supporting documentation from CMS, selected Medicare 
Administrative Contractors (MAC), and selected Zone Program Integrity Contractors 
(ZPIC) regarding activities to prevent improper payments on home health claims and to 
detect and deter potential HHA fraud in 2011.  In addition, we identified geographic areas 
prone to HHA fraud, waste, and abuse and determined whether contractor activities 
focused on these areas.  We also analyzed claims data to determine whether Medicare 
paid HHAs that were suspended or had their billing privileges revoked, and we examined 
the timeliness with which CMS and its contractors acted on revocation recommendations.  
 
WHAT WE FOUND 
 
In 2011, the 2 MACs we reviewed collectively prevented $275 million in improper 
payments and referred 14 instances of potential fraud.  The four ZPICs we reviewed did 
not identify any HHA vulnerabilities and varied substantially in their efforts to detect and 
deter fraud.  In 2011, Medicare also inappropriately paid five HHAs with suspended or 
revoked billing privileges; additionally, CMS did not act on all revocation 
recommendations. 
 
WHAT WE RECOMMEND 
 
We recommend that CMS (1) establish additional contractor performance standards for 
high-risk providers in fraud-prone areas, (2) develop a system to track revocation 
recommendations and respond to them in a timely manner, and (3) follow up on and 
prevent inappropriate payments made to HHAs with suspended or revoked billing 
privileges.  CMS concurred with all three recommendations. 
 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................9 
Findings......................................................................................................13 
In 2011, the two MACs we reviewed collectively prevented  
$275 million in improper payments and referred 14 instances of 
potential fraud ................................................................................13 
In 2011, the four ZPICs we reviewed did not identify any HHA 
vulnerabilities and varied substantially in their efforts to detect and 
deter fraud ......................................................................................15 
In 2011, Medicare inappropriately paid five HHAs with suspended 
or revoked billing privileges; additionally, CMS did not act on all 
revocation recommendations......................................... ...17 
Conclusion and Recommendations ............................................................19 
Agency Comments and Office of Inspector General Response .....21 
Appendixes ................................................................................................22 
A:  Map of Medicare Administrative Contractors .........................22 
B:  Map of Zone Program Integrity Contractors ............................23 
C:  Number and Percentage of Home Health Agencies for Which 
Zone Program Integrity Contractors Initiated Investigations From 
External and Internal Sources in 2011 ...........................................24 
D:  Number and Percentage of Home Health Agencies for Which 
Zone Program Integrity Contractors Recommended Specific 
Administrative Actions and Referred Law Enforcement Cases in 
2011.................................................... ............................25 
E:  Agency Comments....................................................26 
Acknowledgments..................................................................................... 29 
 
 
 
 
 
   
   
OBJECTIVES 
To determine the extent to which: 
1.  the Centers for Medicare & Medicaid Services (CMS) and its 
contractors performed activities to prevent improper payments and 
to detect and deter potential fraud among home health agencies 
(HHA) in 2011 and 
2.  HHAs with suspended or revoked billing privileges received 
inappropriate Medicare payments in 2011. 
BACKGROUND 
In 2010, the Medicare program paid $19.5 billion to 11,203 HHAs for 
home health services provided to 3.4 million beneficiaries.1  Home health 
services are covered under Parts A and B of Medicare.  Part A covers 
home health services for individuals enrolled in Part A only, and Part B 
covers home health services for individuals enrolled in Part B only.2  For 
individuals enrolled in Parts A and B, Part A covers postinstitutional home 
health services for up to 100 visits and Part B covers services if the 
individual exhausts the 100-visit limit.3  Home health services include 
part-time or intermittent skilled nursing services, physical therapy, 
occupational therapy, speech language pathology services, part-time or 
intermittent home health aide services, medical social services, and 
medical supplies and durable medical equipment.4, 5  Although there are 
copayments for most other Medicare services, there are generally no 
beneficiary copayments for home health services.   
 
1 Office of Inspector General (OIG) analysis of 2010 National Claims History (NCH) 
Part A Standard Analytical File. 
2 Social Security Act,  1812(a)(3), 42 U.S.C.  1395d(a)(3); Medicare Benefit Policy 
Manual, Pub. No. 100-02, ch. 7,  60.3. 
3 Social Security Act,  1812(a)(3), 42 U.S.C.  1395d(a)(3); Medicare Benefit Policy 
Manual, Pub. No. 100-02, ch. 7,  60.1.  Home health services are postinstitutional if they 
are initiated within 14 days of discharge from an inpatient hospital stay lasting at least 3 
consecutive days or within 14 days of discharge from a skilled nursing facility in which 
the individual was provided posthospital extended care services.  Social Security Act,  
1861(tt)(1), 42 U.S.C.  1395x(tt)(1); Medicare Benefit Policy Manual, Pub. No. 100-02, 
ch. 7,  60.1.  If an individual is enrolled in Parts A and B but does not meet the  
3-consecutive-day stay requirement or the 14-day initiation of care requirement, home 
health services are covered under Medicare Part B.  Medicare Benefit Policy Manual, 
Pub. No. 100-02, ch. 7,  60.2. 
4 Social Security Act,  1861(m), 42 U.S.C.  1395x(m).   
5 Part-time or intermittent skilled nursing or home health aide services are furnished for a 
total of fewer than 8 hours each day and 28 or fewer hours each week (or, subject to 
review on a case-by-case basis as to the need for care, fewer than 8 hours each day and 
35 or fewer hours per week).  Social Security Act,  1861(m), 42 U.S.C.  1395x(m). 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  1 
   
   
Medicare Home Health Coverage Criteria 
To qualify for home health services, Medicare beneficiaries must:  
  be confined to the home (i.e., homebound);  
  be in need of intermittent skilled nursing care or physical, speech, or 
continuing occupational therapy; 
  be under the care of a physician; and 
  be under a plan of care established and periodically reviewed by a 
physician. 6, 7, 8     
For home health care starting on or after January 1, 2011, the certifying 
physician or nonphysician practitioner must document a face-to-face 
encounter with the beneficiary prior to certifying his or her eligibility.9, 10 
Fraud in the Home Health Benefit  
CMS designated newly enrolling HHAs as high-risk providers in March 
2011, citing their record of fraud, waste, and abuse.11  Findings from OIG 
reports and results of Federal investigations also indicate that HHAs may 
be vulnerable to fraud.  Further, they indicate that certain geographic areas 
may be more prone to HHA fraud than others.  For example, a 2012 OIG 
report found that one in four HHAs nationwide had questionable billing 
 
6 Social Security Act,  1814(a)(2)(C) and 1835(a)(2)(A), 42 U.S.C.  1395f(a)(2)(C) 
and 1395n(a)(2)(A).  
7 A beneficiary is considered to be homebound when he or she has a condition because of 
an illness or injury that restricts his or her ability to leave his or her residence except with 
the aid of supportive devices, the use of special transportation, or the assistance of 
another person; or if leaving home is medically contraindicated.  CMS, Medicare Benefit 
Policy Manual, Pub. No. 100-02, ch. 7,  30.1.1. 
8 For purposes of benefit eligibility, intermittent skilled nursing care means care that is 
provided or needed fewer than 7 days each week or fewer than 8 hours of each day for 
periods of 21 or fewer days (with extensions in exceptional circumstances when the need 
for additional care is finite and predictable).  Social Security Act,  1861(m), 42 U.S.C.   
 1395x(m). 
9 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 7,  30.5.1.  Starting on or 
after January 1, 2012, for patients receiving home health care immediately after an acute 
or a postacute stay, a physician who cared for the patient in an acute or a postacute 
facility can inform the certifying physician regarding face-to-face encounters with the 
patient.  42 CFR  424.22(a)(1)(v), as amended by final rule entitled Medicare Program; 
Home Health Prospective Payment System Rate Update for Calendar Year 2012 (76 Fed. 
Reg. 68526 (Nov. 4, 2011)), effective January 1, 2012. 
10 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 7,  30.5.1.1.  This 
encounter must occur no more than 90 days before the start of home health care or within 
30 days after the start of care. 
11 CMS, Testimony of Ted Doolittle entitled Protecting Medicare and Medicaid:  Efforts 
to Prevent, Investigate and Prosecute Health Care Fraud, before Committee on the 
Judiciary, Subcommittee on Crime and Terrorism, U.S. Senate, March 2012; 42 CFR      
 424.518(c)(i). 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  2 
   
   
and eight States had high percentages of HHAs with questionable 
billing.12  
Federal investigators and analysts have focused their efforts to combat 
Medicare fraud, waste, and abuse on certain geographic areas of Florida, 
Texas, Louisiana, California, Illinois, New York, and Michigan that are at 
a high-risk for fraud.13  These efforts have included Medicare Strike Force 
(Strike Force) investigations and cases.  The Strike Force is an essential 
component of the Health Care Fraud Prevention and Enforcement Action 
Team, a joint effort of the Department of Health and Human Services 
(HHS) and the Department of Justice (DOJ) to prevent, deter, and 
aggressively prosecute health care fraud.  Strike Forces are designed to 
identify and investigate fraud and to prosecute perpetrators quickly.  Strike 
Force teams are composed of Federal prosecutors and law enforcement 
personnel and, in some cases, State and local law enforcement personnel.  
These teams are supported by data analysts and CMS program experts.14   
Strike Force investigations have led to charges against individuals for 
billing Medicare for potentially fraudulent home health services in 2011.  
For example, owners of an HHA in Miami were charged with conspiring 
to commit health care fraud, money laundering, and payment of kickbacks 
in July 2011.15  These owners allegedly submitted fraudulent claims to 
Medicare for home health services from August 2006 to March 2009 
amounting to more than $11 million.  Additionally, these owners allegedly 
paid kickbacks to recruiters and instructed nurses to falsify patient medical 
records to make it appear that Medicare beneficiaries qualified for and 
received home health services that were not medically necessary or were 
not provided. 
States identified as having high percentages of questionable billing HHAs 
in the prior OIG report also coincided with Strike Force cities where 
individuals were charged for billing potentially fraudulent HHA services 
in 2011.  Using these three criteria, we identified certain areas prone to 
HHA fraud (Figure 1).  Specifically, OIG defined fraud-prone areas as 
those that (1) are Strike Force cities, (2) are Strike Force cities where 
individuals had been charged with billing potentially fraudulent home 
 
12 OIG, Inappropriate and Questionable Billing by Medicare Home Health Agencies, 
OEI-04-11-00240, August 2012.   
13 OIG, Testimony of Daniel R. Levinson entitled Anatomy of a Fraud Bust:  From 
Investigation to Conviction before the U.S. Senate Committee on Finance, April 2012. 
14 Ibid. 
15 U.S. Attorneys Office, Southern District of Florida, Miami Husband and Wife 
Charged with Home Health Care Fraud, July 27, 2011.  Accessed at 
http://www.justice.gov/usao/fls/PressReleases/110727-03.html on February 16, 2012. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  3 
   
   
health services in 2011, and (3) are located in a State that had a high 
percentage of HHAs with questionable billing identified by OIG. 
Figure 1:  Fraud-Prone Areas 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sources:  OIG analysis of Health Care Fraud Prevention and Enforcement Action Team Strike Force cities, DOJ press 
releases, and HHAs with questionable billing.   
 
Medicare Program Administration and Oversight Contractors 
CMS uses contractors to assist in the administration and oversight of 
Medicare.  Administration activities include preventing improper 
Medicare payments, and oversight activities include detecting and 
deterring fraud.  CMS provides direction and technical guidance to these 
contractors by publishing program manuals and statements of work, which 
govern contractor duties.  In addition, contractor oversight is a current 
HHS top management challenge, and OIG has identified issues with CMS 
contractor oversight in previous reports.16 
Medicare Administrative Contractors 
The Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 mandated that CMS replace claims processing contractors (fiscal 
intermediaries and carriers) with Medicare Administrative Contractors 
 
16 OIG, 2011 Top Management and Performance Challenges, Management Issue 7:  
Oversight of CMS Program and Benefit Integrity Contractors; Zone Program Integrity 
Contractors Data Issues Hinder Effective Oversight, OEI-03-09-00520, November 
2011; and Medicares Program Safeguard Contractors:  Performance Evaluation 
Reports, OEI-03-04-00050, March 2006. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  4 
   
   
(MAC).17  As a part of this contracting reform, CMS established four 
regions in which MACs process and pay Medicare Parts A and B home 
health claims.18  Each region covers multiple States.19  As of December 
2012, CMS had awarded contracts for all four regions, and three of the 
four regions were operational.20  Appendix A provides a map of the MAC 
regions and lists the States in each region.  
Claims Processing.  MACs are responsible for making correct, reliable, 
and timely payment of Medicare home health claims.21  To accomplish 
this, MACs are expected to use computerized edits, analyze and review 
claims to prevent improper payments, and educate providers submitting 
improper claims.   
Claims Review To Prevent or Identify Improper Payments.  To prevent or 
identify improper payments, MACs conduct both complex and 
noncomplex reviews of claims.22  Complex reviews involve requesting, 
receiving, and conducting medical record reviews of documentation 
associated with claims.  Noncomplex reviews occur when the MAC makes 
a claim determination without conducting clinical review of medical 
documentation submitted by the provider.  Review of claims may occur 
either before payment or after payment.    
Additionally, MACs implement computerized edits to prevent improper 
payments for claims submitted by providers that have been excluded, have 
been suspended, or have had their Medicare billing privileges revoked.  
For example, MACs collaborate with benefit integrity contractors, such as 
Program Safeguard Contractors (PSC) and Zone Program Integrity 
Contractors (ZPIC), to implement computerized edits to ensure that 
suspended HHAs do not receive Medicare payments.23  MACs also 
 
17 Medicare Prescription Drug, Improvement, and Modernization Act of 2003,             
P.L. 108-173,  911; Social Security Act,  1874A. 
18 These four MAC regions also process and pay hospice claims.  CMS, Medicare 
Administrative Contractor Jurisdictions Fact Sheet.  Accessed at 
https://www.cms.gov/MedicareContractingReform/Downloads/MACJurisdictionFactshee
t.pdf on March 18, 2011. 
19 MAC regions also cover territories, such as Puerto Rico. 
20 The three MACs operational in June 2012 were Regions A (operational as of 
December 2010), C (January 2011), and B (June 2011).  CMS awarded the contract for 
the Region D MAC in September 2012 but the contract is currently under protest.    
21 CMS, Part A and Part B MAC Statement of Work, ch. 4,  4.4b, September 2011. 
22 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 3,  3.3.1.  
23 Contractors implement edits in their claims processing systems to verify and validate 
claims data by detecting errors or potential errors.  Edits also verify that certain data are 
consistent and appropriate.  CMS, Medicare Administrative Contractor Workload 
Implementation Handbook (Legacy-to-MAC), ch. 4,  4.10.3.2.  Accessed at 
http://www.cms.gov/MedicareContractingReform/Downloads/Legacy2MACImp.pdf on 
February 3, 2012.   
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  5 
   
   
approve or deny recommendations to revoke an HHAs Medicare billing 
privileges.24  Once a MAC approves a revocation recommendation, it 
implements an edit to ensure that the HHA does not receive Medicare 
payment during the revocation period.  
Referrals To Investigate Potential Fraud.  MACs must refer any instances 
of suspected fraud they encounter during their claims reviews to benefit 
integrity contractors.25   After investigating MAC referrals, benefit integrity 
contractors determine the proper actions to take to address the potential 
fraud. Actions may include referring the provider to law enforcement or 
recommending administrative actions.  
ZPICs 
The Medicare Prescription Drug, Improvement and Modernization Act of 
2003 required CMS to implement Medicare contracting reform.  As part of 
contracting reform, CMS is replacing the Medicare Parts A and B Program 
PSCs with ZPICs. CMS established seven zones in which ZPICs will 
operate, and each zone covers multiple States.26   As of June 2012, CMS 
had awarded the contracts for all seven zones, and six were operational.27   
Appendix B provides a map of the ZPIC zones and lists the States in each 
zone. 
ZPICs are responsible for preventing, detecting, and deterring fraud in 
Medicare, including fraud among HHAs.28    
Identifying Vulnerabilities To Prevent Fraud. One of the ways ZPICs help 
prevent fraud, waste, and abuse is identifying program vulnerabilities 
through the analysis and management of provider, supplier, and 
beneficiary data.29, 30  Program vulnerabilities may also be identified 
through other sources, such as audits, fraud alerts, and information from  
 
24 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15,   15.27.2.  CMS 

approves or  denies revocation recommendations in which the providers or  suppliers 
 
submit claims  for services or  supplies that  could not  have been furnished to specific 

individuals on  the dates of service.  MACs approve or  deny revocation recommendations 

for other reasons, such as HHAs not maintaining appropriate physical facilities (e.g., 

facilities are not located at the addresses on  file with CMS or are not open during 
 
business hours).  Revocation recommendations may originate from contractors (e.g., 
 
ZPICs) or CMS. 

25 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 3,  3.6.A.  

26 ZPIC zones also cover territories, such as Puerto Rico. 

27 The six ZPICs operational in June 2012 were Zones 1 (operational as  of December 

2010), 2 (February 2011), 3 (April 2012), 4 (February 2009), 5 (December 2009), and 7 

(February  2009).  The Zone 6 ZPIC contract was awarded in September 2011, but  was 

not operational  as of September 2012.  

28 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 4,  4.2.2.  

29 Ibid. 

30 CMS, Medicare Benefit Vulnerability Reporting, Transmittal 211, Change Request 
 
5581, June  2007.  
  
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)   6 
   
   
OIG.  Examples of vulnerabilities may include providers receiving 
improper payments because of incorrect coding or billing for more than 
the allowed number of services.  ZPICs submit identified program 
vulnerabilities to CMS in a report that includes information on how each 
vulnerability was discovered, a summary of the vulnerability issues, a 
description of the methodology, recommendations for resolving the 
vulnerability, and any action taken to resolve it.31  Some methods through 
which program vulnerabilities may be resolved are claims processing 
edits, provider education, or issuance of new regulations. 
Analysis To Detect Fraud.  ZPICs are expected to detect potential fraud by 
analyzing information from internal or external sources.32  Internal sources 
may include proactive data analysis of claims, while external sources may 
include beneficiary complaints or referrals from law enforcement and 
MACs.33 
Once potential fraud has been identified, ZPICs open investigations.34  
Investigations may include interviews with beneficiaries to determine 
whether they are homebound or medical reviews of potentially fraudulent 
home health claims to determine whether services were medically 
necessary.35  
Administrative Actions To Deter Fraud.  ZPICs are expected to 
recommend appropriate administrative actions to CMS or its contractors 
when they identify reliable evidence of fraud.36  Administrative actions 
may include payment suspension or revocation of a providers billing 
privileges, edits for prepayment review of claims, overpayment 
recoupment, civil monetary penalties, and deactivation of a providers 
billing privileges.37  However, these recommendations are not always the 
result of investigations.  For instance, ZPICs may receive a request from 
law enforcement to recommend a provider payment suspension.  ZPICs 
may also refer certain providers or beneficiaries to claims processing 
contractors (e.g., MACs) for outreach and education.      
 
31 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 4,  4.31. 
32 Ibid.,  4.2.2. 
33 Ibid. 
34 Ibid.,  4.7. 
35 Ibid.,  4.7.1. 
36 Ibid.,  4.2.2. 
37 A providers billing privileges may be deactivated for many reasons, including not 
submitting a Medicare claim for 12 consecutive months, failing to report a change to 
information supplied on an enrollment application to CMS within 90 calendar days of  
the change, or failing to report a change in ownership or control to CMS within 30 
calendar days of the change.  CMS, Medicare Program Integrity Manual, Pub. No. 100-
08, ch. 15,  25.27.1. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  7 
   
   
CMS must approve certain administrative actions that ZPICs recommend 
before they can be implemented.  For instance, CMS must approve or 
deny recommendations to suspend Medicare payments to providers.38  
While they are suspended, providers should not receive Medicare 
payments.  In some instances, CMS must also approve or deny 
recommendations to revoke billing privileges of providers that do not 
comply with Medicare requirements.39  Provider billing privileges may be 
revoked for 1 to 3 years, and providers are barred from reenrolling in 
Medicare or receiving payment during that time.40  Providers must apply 
to reenroll in Medicare after the expiration of the reenrollment bar.  
ZPICs may also deter fraud by referring cases to law enforcement for 
further development.41 
Related OIG Work 
Previous OIG reports have identified billing and coding as problems 
among HHAs.  For instance, in 2012, OIG found one out of four HHAs 
had questionable billing and eight States had high percentages of HHAs 
with questionable billing.42   
In 2012, OIG found that 98 percent of medical records for home health 
claims documented that Medicare beneficiaries met coverage requirements 
for home health services.43  However, HHAs submitted 22 percent of 
claims in error because services were unnecessary or claims were coded 
inaccurately, resulting in $432 million in improper payments.  That review 
assessed HHAs medical records for beneficiaries but did not determine 
whether those records accurately reflected beneficiaries medical 
 
38 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 8,  8.3.2.1.  The 
initial approval is for a payment suspension period of up to 180 days, with the option to 
extend for an additional 180 days. 
39 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15,  15.27.3.1.  
CMS approves or denies revocation recommendations in which the providers or suppliers 
submit claims for services or supplies that could not have been furnished to specific 
individuals on the dates of service.   
40 42 CFR  424.535(a)(12)(ii)(c). 
41 Law enforcement may include the OIG/Office of Investigations, Federal Bureau of 
Investigation, Civilian Health and Medical Program of the Uniformed Services (now 
TRICARE), Railroad Retirement Beneficiaries OIG, and/or the Medicaid Fraud Control 
Units.  CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 4,  4.18.1 and 
4.18.1.5.3.  Certain allegations are referred directly to law enforcement without a ZPIC 
investigation, such as specific allegations that indicate HHAs are involved with organized 
crime.  These referrals are known as immediate advisements.  However, immediate 
advisements are not considered case referrals to law enforcement.  CMS, Medicare 
Program Integrity Manual, Pub. No. 100-08, ch. 4,  4.18.1.2, 4.8. 
42 OIG, Inappropriate and Questionable Billing by Medicare Home Health Agencies, 
OEI-04-11-00240, August 2012.   
43 OIG, Coverage Requirements and Payment Accuracy for Medicare Home Health 
Claims, OEI-01-08-00390, March 2012. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  8 
   
   
conditions.  It did not involve visiting beneficiaries to confirm their 
homebound status, nor did it determine whether the care provided was 
medically necessary.      
In 2009, OIG found that Miami-Dade County, Florida, accounted for more 
home health outlier payments in 2008 than the rest of the Nation combined 
and that 67 percent of HHAs that received outlier payments greater than 
$1 million were located in Miami-Dade County.44 
Previous OIG studies have also found vulnerabilities in Medicare 
contractors efforts to identify and investigate potential fraud and abuse, as 
well as limitations in CMSs oversight of these contractors.  For instance, 
in 2007, OIG found that PSCs performed substantially different levels of 
activities to detect and deter fraud across jurisdictions.45  In 2010, OIG 
found that only one of three Recovery Audit Contractors (RAC) referred a 
total of two cases of potential fraud to CMS during a demonstration 
project between 2005 and 2008.46  However, CMS reported that it received 
no specific provider referrals from Recovery Audit Contractors during this 
time.   
METHODOLOGY 
We reviewed the home health administration and oversight activities that 
MACs, ZPICs, and CMS performed from January to October 2011, 
hereinafter referred to as 2011.47  We included MACs from Regions A and 
C and ZPICs from Zones 1, 4, 5, and 7.  We did not include the remaining 
MACs and ZPICs because they were not fully operational during our 
evaluation timeframe.   
We selected 2011 because it was the first period in which MACs and 
ZPICs were operational in HHA fraud-prone areas.  OIG defined fraud-
prone areas as those that (1) are Strike Force cities, (2) are Strike Force 
cities where individuals had been charged with billing potentially 
fraudulent home health services in 2011, and (3) are located in a State that 
 
44 OIG, Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade 
County and Other Geographic Areas in 2008, OEI-04-08-00570, November 2009.  CMS 
makes additional payments, known as outlier payments, to HHAs that supply services to 
beneficiaries who incur unusually large costs. 
45 OIG, Medicares Program Safeguard Contractors:  Activities To Detect and Deter 
Fraud and Abuse, OEI-03-06-00010, July 2007. 
46 OIG, Recovery Audit Contractors Fraud Referrals, OEI-03-09-00130, February 2010.  
CMS contracts with RACs to identify improper payments from Medicare Parts A and B 
claims that have been paid by claims processing contractors. 
47 We did not include November and December 2011 in our review timeframe because 
we collected data from CMS and its contractors in November 2011.   
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  9 
   
   
had a high percentage of HHAs with questionable billing identified by 
OIG. 
Data Collection 
We requested information from MACs, ZPICs, and CMS on activities 
performed to prevent improper payments on home health claims and to 
detect and deter potential fraud among HHAs in 2011.  We requested that 
respondents submit documentation to support their responses.  If we did 
not receive documentation supporting the reported activities, we did not 
include them in our report.  
Data Analysis 
For each MAC region and ZPIC zone, we also analyzed 2011 home health 
claims data to determine the total number of HHAs, the total number of 
home health claims paid, and the total amount Medicare paid for these 
claims.  Finally, to determine the extent to which HHAs with suspended or 
revoked billing privileges received improper payments, we analyzed home 
health claims data from CMSs Part A Standard Analytic File for 2011.   
We reviewed responses and documentation to determine the number and 
type of contractor activities to prevent improper payments and detect and 
deter potential fraud in 2011.   
MACs Activities To Prevent Improper Payments Among Home Health 
Claims.  We identified the methods (e.g., proactive data analysis or 
medical review) each MAC used to prevent improper payments.  We then 
calculated the number and dollar amount of home health claims for which 
each MAC prevented payment as a result of each method.  However, we 
did not determine whether HHAs appealed improper payments the MACs 
prevented.  We also asked MACs to specify the number of instances of 
potential home health fraud they referred to benefit integrity contractors in 
2011.  We then determined whether activities and efforts varied across 
MAC regions and fraud-prone areas.   
ZPICs Activities To Prevent, Detect, and Deter Fraud Among HHAs.  We 
asked ZPICs to specify how many and what type of vulnerabilities they 
reported to CMS in 2011.  We also asked ZPICs to specify which methods 
they used to identify potential fraud and initiate investigations on HHAs in 
2011.  We then determined how many HHA investigations were initiated 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  10 
   
   
in 2011 in each ZPIC zone and whether the investigations resulted from 
internal or external sources.48   
We asked ZPICs to specify which administrative actions they 
recommended to CMS and/or MACs to address potential fraud. 
Administrative actions included recoupment of overpayments, prepayment 
edits, revocation of billing privileges, payment suspensions, unannounced 
site visits, provider education referrals, and requests for anticipated 
payment suppressions.49  We also determined the number of case referrals 
ZPICs made to law enforcement.  Finally, we determined whether 
activities and efforts varied across ZPIC zones and fraud-prone areas. 
Improper Payments to HHAs With Suspended or Revoked Billing 
Privileges.  We determined the number of HHAs that ZPICs recommended 
for payment suspension or revocation of billing privileges.  We then 
determined whether these recommendations had been approved or denied 
by CMS or MACs.  For approved recommendations, we determined the 
dates on which HHAs were suspended or had billing privileges revoked 
and the time it took for approval.50  For recommendations not approved or 
pending, we asked why these HHAs were not suspended or did not have 
their billing privileges revoked.  Additionally, we reviewed home health 
claims data to determine whether Medicare paid HHAs that were 
suspended, had billing privileges revoked, or were recommended for 
revocation.  
Limitations 
While we substantiated responses from our information request using 
documentation submitted by CMS and its contractors, these data were 
self-reported.  Our findings also cannot be projected to all MACs and 
ZPICs because not all were operational at the time of our review.  
Additionally, the fraud-prone areas identified in this report are not 
intended to be a comprehensive list of areas in which HHA fraud, waste, 
and abuse may be occurring.   
 
48 We did not account for investigations initiated before or after our timeframe.  In 
addition, one ZPIC zone reported that it sometimes initiated multiple investigations on 
the same HHA.  Therefore, we determined the number of unique HHA investigations 
initiated in this zone.   Finally, we did not determine whether an investigation was closed 
or open at the conclusion of our review timeframe.   
49 Payment for home health episodes is typically made in two parts.  The initial payment 
is made at the start of the episode and the final payment is made at the end of the episode.  
To receive initial payments, HHAs must submit a request for anticipated payment (RAP) 
to claims processing contractors.  One ZPIC in our evaluation recommended that CMS 
suppress RAPs for multiple HHAs because of the potential for fraud, significant 
overpayments, or inappropriate payments.  
50 To determine the dates that HHA billing privileges were revoked, we used the 
revocation dates that contractors reported.  If multiple revocation dates were reported, we 
used the latest. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  11 
   
   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  12 
   
   
FINDINGS 
In 2011, the two MACs we reviewed collectively 
prevented $275 million in improper payments and 
referred 14 instances of potential fraud  
MACs primary responsibility is to process and pay Medicare claims 
submitted by a variety of providers, including HHAs.  MACs are also 
required to prevent payment for improper claims and refer instances of 
potential fraud to benefit integrity contractors.  Collectively, the two 
MACs in our review prevented $275 million in improper payments, with 
one MAC accounting for approximately 98 percent of these improper 
payments.  In addition, the MACs referred 14 instances of potential home 
health fraud to benefit integrity contractors for further investigation. 
The Region A MAC prevented approximately 98 percent of 
improper payments 
The two MACs in our review performed data analyses and prepayment 
medical review of home health claims to prevent $275 million in improper 
payments in 2011.51  The Region A MAC accounted for approximately 
98 percent ($268 million of $275 million) of improper payments prevented 
by the two MACs in our review.  This region included 5 percent (326 of 
7,138) of HHAs in these two MAC regions.   
In contrast, the Region C MAC, which included the HHA fraud-prone 
areas of Miami, Baton Rouge, Dallas, and Houston, accounted for the 
remaining 2 percent ($6 million of $275 million) of improper payments 
prevented by these two MACs.  This MAC region contained 95 percent 
(6,812 of 7,138) of HHAs in our review.  See Table 1 for improper 
payments by MAC region. 
 
 
 
 
 
 
 
 
 
51 MACs may also use other methods to prevent improper payments (e.g., postpayment 
review of claims).  However, the MACs in our review did not report using these methods.  
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  13 
   
   
       Table 1:  Improper Payments by MAC Region, 2011* 
Total  Total Home 
Percentage 
Number  Home  Health  Total Improper 
of Improper  Fraud-Prone 
Region  of  Health  Claims With  Payments 
Payments  Areas  
HHAs**  Claims  Improper  Prevented 
Prevented 
Reviewed  Payments 
   
MAC A  326  59,446  55,499  $268,424,685  98%  -- 
   
Miami, Baton 
   
Rouge, 
MAC C***  6,812  6,525  2,718  $6,170,817  2% 
Dallas, 
   
Houston 
Total  7,138  65,971  58,217  $274,595,502  100%   
*Our review timeframe was from January to October 2011.  We did not include November and December 2011 in our review 
timeframe because we collected data from CMS and its contractors in November 2011. 
**This number includes HHAs with paid claims in 2011. 
***The Region C MAC reported that it prevented 220 improper payments because of proactive data analysis; however, it was 
unable to provide us with documentation to substantiate this, and we did not include these improper payments in our 
analysis. 
Source:  OIG analysis of MAC claims processing workload data and home health claims data, 2011. 
 
MACs referred 14 instances of potential fraud to benefit 
integrity contractors  
The Region A MAC referred 11 of 14 HHAs and the Region C MAC 
referred the remaining 3 HHAs to benefit integrity contractors.  Seven of 
the eleven HHAs that the Region A MAC referred to benefit integrity 
contractors allegedly altered advance beneficiary notices (ABN).52  The 
MAC uncovered this potential fraud through medical review.  The  
Region A MAC referred the remaining 4 HHAs on the basis of complaints 
from beneficiaries or other HHAs alleging that these HHAs billed for 
services that were not provided.  In 2011, Medicare paid these 11 HHAs 
approximately $61 million. 
The Region C MAC referred 3 HHAs to benefit integrity contractors for 
various reasons, such as consistently billing high numbers of therapy 
visits.  In 2011, Medicare paid approximately $2.2 million to two of these 
HHAs. 
 
52 An ABN must be issued when a provider believes that Medicare may not pay for an 
item or service that it usually covers because the item or service is not considered 
medically reasonable and necessary.  In these cases, the beneficiary must pay the 
provider directly for any noncovered services.  CMS, Advance Beneficiary Notice of 
Noncoverage, Part A and Part B.   
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  14 
   
   
In 2011, the four ZPICs we reviewed did not identify 
any HHA vulnerabilities and varied substantially in 
their efforts to detect and deter fraud 
ZPICs are responsible for preventing fraud by identifying program 
vulnerabilities.53  They are also responsible for detecting and investigating 
potential fraud identified through external and internal sources, as well as 
deterring Medicare fraud by recommending appropriate administrative 
actions to CMS or MACs or referring cases of potential fraud to law 
enforcement.   
In 2011, ZPICs did not identify any HHA-specific vulnerabilities.54  
Additionally, ZPICs in different geographic zones and fraud-prone areas 
did not perform similar levels of activities to detect and deter fraud among 
HHAs in 2011.   
The Zone 7 ZPIC initiated over half of investigations on HHAs 
in 2011 
In 2011, the four ZPICs in our review initiated investigations on 255 of 
6,796 (4 percent) HHAs located in these zones.  Table 2 shows the number 
and percentage of HHAs for which investigations were initiated by ZPIC 
zone. 
Table 2:  Number and Percentage of HHAs for Which ZPICs Initiated Investigations, 2011 
Number of   Percentage of  Percentage of 
HHAs for  HHAs for  Total HHAs 
Number of  Fraud-Prone 
Zone  Which  Which  With 
HHAs*   Areas  
Investigations  Investigations  Investigations 
Were Initiated  Were Initiated  Initiated 
ZPIC 1  1,115  44  4%  17%  Los Angeles 
ZPIC 4   2,886  31  1%  12%  Dallas, Houston 
ZPIC 5  1,351  33  2%  13%  Baton Rouge 
ZPIC 7**   1,444  147  10%  58%  Miami 
 
     Total  6,796  255  4%  100% 
*This number includes HHAs with paid claims in 2011.  However, some HHAs on which ZPICs initiated investigations in 2011 
may have submitted claims that were not paid during this timeframe and are therefore not included in this number. 
**The Zone 7 ZPIC reported that it initiated multiple investigations of the same HHAs.  We determined the number of unique 
HHAs for which investigations were initiated in this zone. 
Source:  OIG analysis of ZPIC benefit integrity workload data and home health claims data, 2011. 
 
53 Vulnerabilities may include issues such as providers receiving increased Medicare 
payments because of incorrect coding. 
54 ZPIC Zone 5 reported that it identified and submitted two vulnerabilities to CMS in 
May 2011 that were not specific to home health but had the potential to affect home 
health.  As of June 2012, this ZPIC reported that CMS had not responded to these 
vulnerabilities. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  15 
   
   
The Zone 7 ZPIC, which includes the HHA fraud-prone area of Miami, 
initiated investigations on 147 HHAs in 2011.  These investigations 
accounted for over half (58 percent) of all investigations initiated.  This 
ZPIC used investigative methods including site visits to determine 
whether HHAs were operational at their business addresses and 
beneficiary interviews to determine whether beneficiaries receiving home 
health services were homebound.  The other three ZPICs, which included 
the fraud-prone areas of Dallas, Houston, Los Angeles, and Baton Rouge, 
initiated  investigations on the remaining 108 HHAs; each initiated 17 
percent or less of total investigations. 
All ZPICs used external or internal sources to initiate investigations on 
HHAs.  Overall, ZPICs initiated more investigations on HHAs from 
external than internal sources in 2011.  Specifically, the investigations of 
192 of 255 (75 percent) HHAs were initiated from external sources.  
Examples of external sources included beneficiary complaints of 
kickbacks or billing for services that were not provided.  Internal sources 
included proactive data analysis of HHA claims and research that 
uncovered potential beneficiary sharing between HHAs and other 
providers.55  Appendix C provides the number and percentage of HHAs for 
which investigations were initiated from external and internal sources by 
ZPIC zone in 2011. 
The Zones 4 and 7 ZPICs recommended administrative actions 
and referred law enforcement cases for the majority of HHAs 
in 2011 
ZPICs recommended administrative actions to CMS or MACs to address 
potential fraud or to prevent and recover inappropriate payments.56  
Recommended administrative actions included recoupment of 
overpayments, prepayment edits, revocation of billing privileges, payment 
suspensions, unannounced site visits, provider education referrals, and 
requests for anticipated payment suppressions.  In addition, ZPICs referred 
cases to law enforcement agencies that could pursue civil, criminal, and 
administrative remedies for fraud.   
The Zones 4 and 7 ZPICs, which include the fraud-prone areas of Dallas, 
Houston, and Miami, recommended administrative actions and referred 
law enforcement cases for the majority of HHAs (219 of 248) in 2011.  
 
55 Beneficiary sharing occurs when multiple providers fraudulently bill Medicare for the 
same beneficiary. 
56 We determined the number of administrative actions recommended and law 
enforcement cases referred for unique HHAs within each zone.  ZPICs may have 
recommended multiple administrative actions and/or referred law enforcement cases for 
the same HHA.   
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  16 
   
   
Together, these two ZPICs recommended administrative actions and 
referred law enforcement cases for approximately eight times the number 
of HHAs of the two other ZPIC zones in our review, which also included 
fraud-prone areas.  
Table 3 shows the number and percentage of HHAs for which 
administrative actions were recommended and law enforcement cases 
were referred by ZPIC zone.  Appendix D provides the number and 
percentage of HHAs for which ZPICs recommended specific 
administrative actions and referred law enforcement cases in 2011. 
Table 3:  Number and Percentage of HHAs for Which ZPICs Recommended 
Administrative Actions and Referred Law Enforcement Cases, 2011 
Number of HHAs for  Percentage of HHAs 
Which ZPICs  for Which ZPICs 
Recommended  Recommended 
Number of 
Zone  Administrative  Administrative  Fraud-Prone Areas 
HHAs* 
Actions and Referred  Actions and 
Law Enforcement  Referred Law 
Cases**  Enforcement Cases  
ZPIC 1  1,115  19  8%  Los Angeles 
ZPIC 4   2,886  72  29%  Dallas, Houston 
ZPIC 5  1,351  10  4%  Baton Rouge 
ZPIC 7   1,444  147  59%  Miami 
     Total  6,796  248  100%   
*This number includes HHAs with paid claims in 2011.  However, some HHAs on which ZPICs initiated investigations in 2011   
may have submitted claims that were not paid during this timeframe and are therefore not included in this number.  
**We counted the unique HHAs that had administrative actions and/or law enforcement case referrals in 2011 because certain 
ZPICs recommended multiple administrative actions and/or referred multiple law enforcement cases for the same HHA.   
Source:  OIG analysis of ZPIC benefit integrity workload data and home health claims data, 2011. 
 
In 2011, Medicare inappropriately paid five HHAs with 
suspended or revoked billing privileges; additionally, 
CMS did not act on all revocation recommendations 
Medicare inappropriately paid four HHAs after they had been suspended 
and one HHA after its billing privileges had been revoked in 2011.  In 
addition, revocation review delays resulted in CMS not acting on                
5 revocation recommendations in 2011.  As a result, Medicare paid 
$651,777 in 2011 to two HHAs whose billing privileges had been 
recommended for revocation.   
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  17 
   
   
Medicare inappropriately paid approximately $137,000 to four 
suspended HHAs and one HHA that had its billing privileges 
revoked  
CMS approved ZPIC recommendations to suspend payments to 15 of 
16 HHAs in 2011.57  The HHAs were suspended for a variety of reasons, 
including misrepresentation of services billed to Medicare, improper 
certification of beneficiaries, or involvement in a conspiracy to commit 
fraud.  Medicare inappropriately paid $79,933 to 4 of these 15 HHAs in 
2011 after the suspensions were effective. 
The Region C MAC also revoked the billing privileges of 16 of 17 HHAs 
in 2011.58  Fourteen were revoked for not maintaining appropriate physical 
facilities (e.g., facilities were not located at the addresses on file with 
CMS or were not open during business hours).  The remaining HHAs 
billing privileges were revoked because they did not maintain appropriate 
physical facilities and the owners were alleged or convicted felons.59  
Medicare inappropriately paid $57,349 to one of the 16 HHAs in 2011 
after its billing privileges were revoked. 
CMS did not act on five revocation recommendations   
In 2011, the Zone 7 ZPIC recommended the revocation of 17 HHAs 
billing privileges in Florida.  These recommendations were sent directly to 
the Region C MAC, which took action on all of them.  Specifically, the 
Region C MAC approved 16 of these 17 revocation recommendations in 
an average of 12 days.   
In contrast, the Zone 4 ZPIC sent five revocation recommendations to 
CMS from May to September 2011 for HHAs in Texas.  However, CMS 
did not take action on these recommendations and, in October 2011, 
instructed the Zone 4 ZPIC to submit them to the Region C MAC.  As a 
result, Medicare paid two HHAs a total of $651,777 after receiving the 
recommendations that their billing privileges be revoked. 
As of May 2012, the Zone 4 ZPIC reported that it had submitted two 
revocation recommendations to the Region C MAC.  It also reported that 
the remaining revocation recommendations had not been submitted 
because of time and resource constraints.    
 
57 CMS approved the remaining payment suspension outside our review timeframe. 
58 The MAC did not revoke the billing privileges of one HHA because it voluntarily 
terminated its participation in Medicare before the recommended revocation date. 
59 If the owner of a provider or supplier has been convicted of a Federal or State felony 
offense that CMS has determined to be detrimental to the best interests of the program 
and its beneficiaries 10 years before enrollment or revalidation of enrollment, the billing 
privileges of the provider or supplier may be revoked.  CMS, Medicare Program 
Integrity Manual, Pub. No. 100-08, ch. 15,  15.27.2. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  18 
   
   
CONCLUSION AND RECOMMENDATIONS 
HHAs are considered to be particularly vulnerable to fraud, waste, and 
abuse.  CMS designated newly enrolling HHAs as high-risk providers in 
March 2011, citing their record of fraud, waste, and abuse.  Additionally, 
previous OIG work has identified questionable billing patterns among 
HHAs, particularly in specific fraud-prone areas.  Despite these risks, our 
evaluation found potential issues with CMSs and its contractors ability to 
identify and respond to potential fraud. 
In 2011, the two MACs we reviewed collectively prevented $275 million 
in improper payments and referred 14 instances of potential fraud.  
Further, the four ZPICs we reviewed did not identify any HHA 
vulnerabilities and varied substantially in their efforts to detect and deter 
fraud.  In 2011, Medicare inappropriately paid five HHAs with suspended 
or revoked billing privileges; additionally, CMS did not act on all 
revocation recommendations. 
We therefore recommend that CMS:  
Establish Additional Contractor Performance Standards for 
High-Risk Providers in Fraud-Prone Areas 
CMS should establish additional performance standards for contractor 
activities to ensure that they are providing oversight commensurate with 
risks posed by high-risk providers, including newly enrolled HHAs, in 
fraud-prone areas.  To do this, CMS could work with contractors to 
identify current fraud schemes in each jurisdiction and annually develop 
contractor performance standards specific to those fraud schemes.  
However, contractors would need to maintain flexibility to oversee all 
types of providers in their jurisdictions.  Therefore, these performance 
standards could guide contractors in focusing their activities on specific 
types of providers that are exhibiting high levels of potential fraud and that 
need particular oversight emphasis, such as HHAs as identified in this and 
previous OIG work.  While these standards should not be the only 
measure of contractor performance, they could provide important 
information on contractor performance and ensure contractors are 
factoring current fraud schemes into their oversight activities.   
Develop a System To Track Revocation Recommendations and 
Respond to Them in a Timely Manner 
CMS should develop a system to track revocation recommendations.  This 
system should flag recommendations to which CMS or its contractors 
have not responded within a specified timeframe (e.g., within 30 days of 
receipt) and require documentation to justify why any cases exceed this 
timeframe.  For revocation recommendations that exceed this timeframe, 
CMS should consider implementing safeguards (e.g., prepayment reviews, 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  19 
   
   
payment suspensions) to prevent payments to providers recommended for 
revocation while it determines whether to revoke their billing privileges.  
Finally, CMS should educate contractors on how to properly submit 
revocation recommendations to CMS or its contractors to ensure they are 
submitted and processed in a consistent and timely manner.   
Follow Up on and Prevent Future Inappropriate Payments 
Made to HHAs With Suspended or Revoked Billing Privileges 
CMS should follow up on these inappropriate payments made to HHAs to 
determine the reasons for them.  CMS should also ensure that edits are in 
place or are functioning properly to prevent inappropriate Medicare 
payments to HHAs with suspended or revoked billing privileges.  We have 
provided CMS separately with additional information on the HHAs with 
inappropriate payments identified in our report.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  20 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
In its comments on the draft report, CMS concurred with all three 
recommendations.  CMS acknowledged that home health services have 
historically been vulnerable to fraud, waste, and abuse.  For this reason, 
CMS indicated that it is taking additional steps to address vulnerabilities 
in the HHA enrollment and claims payment process using authorities 
granted under the Affordable Care Act.  CMS stated that it is building 
models in its Fraud Prevention System (FPS) that can detect and generate 
alerts for suspicious billing by all major provider types, including HHAs. 
With regard to our first recommendation, CMS stated that it has 
established categories for enrollment screening on the basis of risk of 
fraud.  In addition, CMS stated that it uses the FPS to identify high risk 
providers, and provides alerts on these providers identified as potentially 
fraudulent.  Program integrity contractors are required to review and 
investigate all FPS alerts, and CMS is modifying the statement of work for 
all ZPICs to clarify processes to be used in this work. 
With regard to our second recommendation, CMS stated that it has 
established guidelines to ensure that revocation recommendations are 
addressed in a timely manner.  Additionally, CMS stated that it has 
implemented a tracking system that includes revocation-specific tasks, 
status, request dates, contact dates, and other applicable information.   
With regard to our final recommendation, CMS stated that it will follow 
up and forward additional information on the HHAs with improper 
payments to the appropriate contractors.  CMS also stated that it has 
ensured that edits are in place and are functioning properly to prevent 
inappropriate payments to HHAs identified in our report.  According to 
CMS, when a revocation is entered into the Provider Enrollment, Chain, 
and Ownership System (PECOS), edits are triggered in the appropriate 
claims systems to prevent claims from being paid with dates of service on 
or after the date of revocation. 
We support CMSs efforts to address these issues and encourage continued 
progress.  For the full text of CMSs comments, see Appendix E.   
 
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  21 
   
   
APPENDIX A 
 
Map of Medicare Administrative Contractors 
 
A 
B 
D 
C 
 
 
Medicare Administrative Contactors, Regions, and Operational Dates: 
Region A, National Heritage Insurance Corporation, December 2010:  
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and 
Vermont.  
Region B,* CIGNA Government Services, June 2011:  Colorado, Delaware, 
District of Columbia, Iowa, Kansas, Maryland, Missouri, Montana, Nebraska, 
North Dakota, Pennsylvania, South Dakota, Utah, Virginia, West Virginia, and 
Wyoming. 
Region C, Palmetto Government Benefits Administrator, January 2011:  
Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, 
Mississippi, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina, 
Tennessee, and Texas. 
Region D,* Noridian Administrative Services, Not Yet Operational:  Alaska, 
American Samoa, Arizona, California, Guam, Hawaii, Idaho, Michigan, 
Minnesota, Nevada, New Jersey, New York, Northern Mariana Islands, Oregon, 
Puerto Rico, U.S. Virgin Islands, Washington, and Wisconsin. 
 
*This region was not included in our review because it was not fully operational 
during our study timeframe, which extended from January to October 2011. 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  22 
   
   
APPENDIX B 
Map of Zone Program Integrity Contractors  
2 
6 
3 
1 
5 
4 
7 
 
Zone Program Integrity Contractors, Zones, and Operational Dates: 
Zone 1, Safeguard Services, LLC, December 2010:  American Samoa, 
California, Guam, Hawaii, Nevada, and the Northern Mariana Islands. 
Zone 2,* AdvanceMed Corporation, February 2011:  Alaska, Arizona, Idaho, 
Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, Oregon, South 
Dakota, Utah, Washington, and Wyoming. 
Zone 3,* Cahaba Safeguard Administrators, April 2012:  Illinois, Indiana 
Kentucky, Michigan, Minnesota, Ohio, and Wisconsin. 
Zone 4, Health Integrity, LLC, February 2009:  Colorado, New Mexico,  
Oklahoma, and Texas.  
Zone 5, AdvanceMed Corporation, December 2009:  Alabama, Arkansas, 
Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, 
Virginia, and West Virginia. 
Zone 6,* Cahaba Safeguard Administrators, Not Yet Operational:  
Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, 
New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and 
Vermont. 
Zone 7, Safeguard Services, LLC, February 2009:  Florida, Puerto Rico, and  
U.S. Virgin Islands. 
 
*This zone was not included in our review because it was not operational during 
our study timeframe, which extended from January to October 2011. 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  23 
   
   
APPENDIX C 
Number and Percentage of Home Health Agencies for Which Zone Program Integrity  
Contractors Initiated Investigations From External and Internal Sources in 2011*  
Number of   Percentage of   Number of   Percentage of  
Zone   HHAs for  Total HHAs for  HHAs for  Total HHAs for 
Number of  
Program  Which   Which    Which   Which  
Home Health   Fraud-Prone 
Integrity   Investigations  Investigations  Investigations  Investigations 
Agencies   Areas 
Contractor  Were Initiated  Were Initiated  Were Initiated  Were Initiated 
(HHA)** 
(ZPIC) Zone   From External   From External   From Internal  From Internal 
Sources   Sources   Sources   Sources***  
ZPIC 1   1,115   28  11%   16  6%   Los Angeles 
ZPIC 4   2,886   26  10%   5  2%   Dallas, Houston 
ZPIC 5   1,351   30  12%   3  1%   Baton Rouge  
ZPIC 7   1,444   108  42%   39  15%   Miami 
     Total   6,796   192  75%   63  25%    
*Internal  sources may include proactive data analysis of claims, while external sources may include beneficiary complaints or referrals from  law 
   
enforcement and MACs. 

**This number includes HHAs with paid claims in 2011.  However, some HHAs on which ZPICs initiated investigations in 2011 may have 

submitted claims that were not paid during this  timeframe and are  therefore not included in  this number. 

***Column does not sum to  total because of rounding. 

The Zone 7 ZPIC reported  that it initiated  multiple investigations  of the same HHAs.  We determined the number of unique  HHAs for which 

investigations were initiated in this zone.  We used the source  of the first investigation  initiated  as the  source (i.e., external, internal) for any HHAs 

on which this ZPIC initiated multiple investigations. 

Source:  Office of  Inspector General analysis of ZPIC benefit integrity workload data and home health claims data, 2011. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)   24 
   
APPENDIX D 
Number and Percentage of Home Health Agencies for Which Zone Program Integrity Contractors Recommended Specific Administrative 
Actions and Referred Law Enforcement Cases in 2011 
Percentage of 
Number of HHAs 
Total HHAs for 
Number of Home  Number of  Number of  for Which ZPICs 
Number of  Number of  Number of  Which ZPICs 
Zone Program  Health Agencies  HHAs  HHAs  Recommended 
HHAs  HHAs  HHAs  Recommended 
Integrity  (HHA)  Recommended  Recommended  Administrative  Fraud-Prone 
Recommended  Recommended  Referred to  Administrative 
Contractor  Recommended  for Revocation  for Other  Actions and  Areas  
for Prepayment  for Payment  Law  Actions and 
(ZPIC) Zone  for Overpayment  of Billing  Administrative  Referred Law 
Edits  Suspension  Enforcement  Referred Law 
Recoupment  Privileges  Actions*  Enforcement 
Enforcement 
Cases**   
Cases 
ZPIC 1  11  7  0  2  0  2  19  8%  Los Angeles 
Dallas, 
ZPIC 4  58  0  5  8  8  2  72  29% 
Houston 
ZPIC 5  5  1  0  3  1  1  10  4%  Baton Rouge 
ZPIC 7  72  71  17  3  10  9  147  59%  Miami 
     Total  146  79  22  16  19  14  248  100%   
*ZPICs reported that other administrative actions included requests for unannounced site visits, referrals for provider education, and requests for anticipated payment suppressions.  In addition, while we did not include these 
administrative actions, ZPIC Zones 1, 4, and 7 added beneficiaries to existing autodeny edits.  ZPIC Zone 4 also added one provider to a new autodeny edit. 
**Rows do not sum to totals because we counted the unique HHAs that had administrative actions and/or law enforcement case referrals in 2011.  Certain ZPICs recommended multiple administrative actions and/or referred law 
enforcement cases for the same HHA. 
Source:  Office of Inspector General analysis of ZPIC benefit integrity workload data and home health claims data, 2011. 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  25   
  APPENDIXE 
Agency Comments 
c..__
~~!'#  ~c_._"'_s_e_rvi_c_
DEPARTMENT OF HEALlli & HUMAN s_E_R_v__ICES_  _ ___ __c_e_n_ro_rs_ro_r_M_ed_lca__re_&_M_o_d_ 
"'~ 	
Administrator 
Washington. DC 20201 
DATE:  NOV 0 5 2012 
TO: 	 Daniel R. Levinson 

Inspcc_tor Oeneral 

FROM: 	 Ma~1Tawooncr 

Acting Admiriistrator 

SUB.JECT: 	 Office of Inspector -General (010) Draft Report: "CMS and Contractor Oversight 
ofl-lome Health Agencies" (OEI-04-11-00220) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the OIG draft report entitled, eMS and Contractor Oversight of Home Health 
Agencies." The objectives of the draft report were to determine the extent to which: I) CMS and 
its contractors performed activities to prevent impn,per payments and to detect and deter 
potential fraud among home health agencies (HHA) in 2011, and 2) Hl!As with suspended or 
revoked billing privileges received inappropriate Medicare payments in 20 ll. 
As stated in the 010 report. Medicare paid $19.5 billion to 11,203 HHAs in 2010. HHA services 
have historically been vulnerable to fraud, wasie, and abuse. As such, CMS is taking additional 
steps to address potential vulnerabilities in ihe enrollment and claims payment process [;)r this 
supplier group using the authorities granted under the Affordable Care Act 1 Under the new 
screening regulations2, all newly enrolling HHAs are considered a high risk provider/supplier 
and are therefore subject to the highest level of screening, including unannounced silt! visits. As 
part ofCMS's revalidation efforts, all currently enrolled HHAs were sent revalidation notices 
prior to December 31, 2011, and are currently in process. In addition. all HHAs are subject to an 
unannounced physical site visit as part of the revalidation process. 
The Affordable Care Act also enhanced CMS's authority to suspend payments for credible 
allegations of fraud. CMS is using this new authority to coordinate administrative actions with 
law enforcement activities. For example, in February 2012, CMS announced the suspension of 
payments to 78 HHAs involved in an alleged fraud scheme .in Dallas that was part of the 
February 28,2012, Health Care Fraud Prevention and Enforcement Action Team (HEAT) Strike 
Force takcdown. ln October 2012, CMS suspended or took other administrative action against 30 
1 Section 6401 of the Affordable Care Act provided the Secretary with authority to perform catPgorical riskbased 
screening on providers and suppliers at enrollment and upon revalidation. 
'CMS 6028-FC entitled, "Medicare, Medicaid and Children's Health Insurance Programs; Additional Screening 
Requirements, Application Fees, Te.mporary Enrollment Moratoria, PaymPnt Suspensions and Compliance Plans for 
Providers and Suppliers" was published in the Federal Register on February 2, 2011. 
CMS and Contractor Oversight of Home Health Agencies (OEl-04-11-00220)  26   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  27 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  28 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Dwayne Grant, Regional 
Inspector General for Evaluation and Inspections in the Atlanta regional 
office, and Jaime Durley, Deputy Regional Inspector General.   
David Samchok served as the lead analyst for this study.  Other Office of 
Evaluation and Inspections staff from the Atlanta regional office who 
conducted this study include Rachel Daiber.  Central office staff who 
provided support include Kevin Farber, Scott Manley, and Debra Roush.  
 
CMS and Contractor Oversight of Home Health Agencies (OEI-04-11-00220)  29 
   
Office of Inspector General  
http://oig.hhs.gov  
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services  
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.