DEPARTMENTOFHEALTH &. HUMAN SERVICES Office of InspectorGeneral
Washington, D.C. 20201
,,-. 2009
F-t~,l.J. - .J
TO: Charlene Frizzera
Acting Administrator
Centers for Medicare & Medicaid Services
FROM: Daniel R. Levinson
Inspector General
SUBJECT: Memorandum Report: "Medicaid and Medicare Home Health Payments for
SkilledNursing and Home Health Aide Services," OEI-07-06-00641
This memorandum report determined, in five States, the extentto which both Medicaid and
Medicare may have made payments to home health providers for the same skilled nursing and
home health aide services for the same beneficiary during 2005. A companion study, "Duplicate
Medicaid and Medicare Home Health Payments: Medical Supplies and Therapeutic Services"
(OEI-07-06-00640), examined Medicaid and Medicare payments for medical supplies and
therapeutic services.
For 2005, we identified Medicaid payments amounting to $3.3 million for 68,765 service claims
that may have been coverable by Medicare. We matched Medicaid home health claims with
Medicare home health Prospective Payment System (PPS) episodes and reviewed beneficiaries'
case records for a sample ofclaims to determine whether the Medicare payments were
vulnerable to also being paid by Medicaid based on criteria establishedby State Medicaid
programs and the "Medicare Benefit Policy Manual." Vulnerable Medicaid payments were
defined by two criteria: (I) apaid Medicaid service had to fall within apaid Medicare episode of
care and (2) apaid Medicaid service had to occur when fewer than 8hours ofservices each day
and fewer than 28 hours ofservices eachweek were provided.
Payment policies created vulnerabilities that may have led to Medicaid and Medicare paying for
the same services. Medicaid paid nearly $2 million for skilled nursing and home health aide
services that were vulnerable to also being paid by Medicare in four ofthe five States reviewed.
Problems with coordination ofcare betweenproviders and lack ofclarity in the Medicare
coverage policy regarding billing for unskilled and skilled nursing services also contributed to
the vulnerabilities.
OEI-07-06-00641 Medicaidand MedicareHomeHealthPaymentsforSkilledNursingandHomeHealthAideSenices  
 
Page 2  Charlene Frizzera 
 
 
BACKGROUND 
 
Medicaid and Medicare Payment of Home Health Services 
States must offer home health services to Medicaid beneficiaries who meet the States criteria for 
nursing home coverage.1  Home health services may include skilled nursing, home health aide 
services, therapeutic services, and supplies.  Medicaid programs in the five reviewed States paid 
a total of $3.3 million for 68,765 claims for skilled nursing and home health aide services that 
Medicare could also have covered for dually eligible beneficiaries.2  Both Medicaid and 
Medicare may pay home health providers for the same types of home health services; however, 
both programs should not pay for the same skilled nursing and home health aide services for the 
same beneficiary during the same visit.  Each program has specific payment structures and 
limitations on the services covered.3  If services are not covered by Medicare, then Medicaid 
may pay for those services, up to the limits established by the State Medicaid agency.   
 
Medicare Coverage of Home Health Services 
To be covered as part of the Medicare home health benefit, services must be reasonable, 
medically necessary, and specified on a plan of care.4  The beneficiary must be confined to the 
home, under the care of a physician, and in need of intermittent skilled services.5  In addition, 
under the PPS coverage rules, skilled nursing and home health aide services must be part-time or 
intermittent, meaning that skilled nursing and home health aide services may be furnished any 
number of days each week as long as the combined hours do not exceed 8 hours each day and 
28 hours each week.  If beneficiaries require skilled nursing and home health aide services that 
exceed 8 hours each day or 28 hours each week, another payor (e.g., Medicaid) may pay for the 
services in excess of the Medicare limit.6  Medicare rules also specify a few services that may 
not be covered as skilled nursing, such as administering eye drops, or that may be covered as 
skilled nursing services only in certain situations.7 
 
Some skilled nursing and home health aide services in our study may not have met all Medicare 
coverage criteria.  We could not determine which services met other Medicare coverage criteria 
without performing a medical review.  Therefore, we refer to Medicaid payments that (1) overlap 
a Medicare payment and (2) occurred when fewer than 28 hours per week or fewer than 8 hours 
per day of skilled nursing and home health aide services were provided as vulnerable payments. 
                                                 
1 Social Security Act,  1902(a)(10)(D), 42 CFR  441.15. 
2 Dual eligibility occurs when an individual meets both Medicaid and Medicare eligibility requirements. 
3 Both Medicaid and Medicare cover only home health services ordered on a written plan of care for a specific 
beneficiary.  42 CFR  440.70(a)(2); Centers for Medicare & Medicaid Services (CMS), Medicare Benefit Policy 
Manual [Internet Only Manual], Pub. No. 100-02, chapter 7,  30.2.6.  A plan of care is the medical treatment plan 
that contains all diagnoses, services, medications, and treatments to be provided. 
4 CMS, Medicare Benefit Policy Manual [Internet Only Manual], Pub. No. 100-02, chapter 7,  20.1.1 and 
20.1.2. 
5 42 CFR  409.42. 
6 Social Security Act,  1861(m)(1) and 1861(m)(7)(B).  Additionally, 1861(7)(B)(m) of the Social Security Act 
further defines intermittent skilled nursing care as care either provided or needed on fewer than 7 days each week or 
fewer than 8 hours each day for periods of 21 days or less. 
7 CMS, Medicare Benefit Policy Manual [Internet Only Manual], Pub. No. 100-02, chapter 7,  40.1.2.4. 
OEI-07-06-00641      Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services   
 
Page 3  Charlene Frizzera 
 
 
METHODOLOGY 
 
State Selection 
We examined 2005 Medicaid and Medicare claims for beneficiaries in five States:  Florida, 
Maryland, North Carolina, Ohio, and Texas.  We selected States based on their total 2004 fee-
for-service home health expenditures, which ranged from $58,000 to $126 million.   
 
Interviews With Agency Officials 
We conducted structured interviews with State Medicaid agency staff in each of the selected 
States.  During these interviews, we collected information and documentation regarding the 
home health services that each State provided through its Medicaid program.  We contacted 
CMS and regional home health intermediary officials to verify Medicare policy before data 
collection and after data analysis to ensure our correct interpretation of existing policy. 
 
Claims Data and Analysis  
We matched final-action claims from the Medicaid Management Information Systems and the 
Medicare National Claims History file for all beneficiaries who had skilled nursing and home 
health aide service claims in 2005.  This resulted in a universe of 68,765 overlapping skilled 
nursing and home health aide service claims.   
 
From the universe of claims, we selected a random sample of 100 billed claims in three of the 
five States:  Florida, North Carolina, and Ohio.  Marylands population had only nine claims and 
Texass population had only five claims; all were included in the sample.  We removed 
28 Medicaid claims that had dates of services during denied Medicare episodes.  We received 
complete case records for 96 percent (274/286) of the sampled claims.  We reviewed case 
records for each sampled claim to determine how many hours of skilled nursing and home health 
aide services beneficiaries received by examining visit notes, plans of care, and agency staff 
logs.  We identified vulnerable Medicaid payments only in instances in which there were fewer 
than 28 hours of services provided in each week and fewer than 8 hours of services provided on 
the dates of each of the sampled claims.  Because of the lack of a standard definition for a week, 
all 7-day periods for each sampled claim had to meet these criteria for the sampled claim to be 
identified as a vulnerable payment.   
 
Limitations 
Because this study did not include a medical review of case records, we did not attempt to 
determine the medical necessity or medical appropriateness of any of the services provided or the 
extent to which the services were payable under a particular State Medicaid program or by 
Medicare.  The methodology addressed solely whether Medicaid payments were made when 
fewer than 8 hours of skilled nursing and home health aide services on the dates of each of the 
sampled claims were provided and fewer than 28 hours of skilled nursing and home health aide 
services per week were provided.   
 
OEI-07-06-00641      Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services   
 
Page 4  Charlene Frizzera 
 
 
Standards 
This inspection was conducted in accordance with the Quality Standards for Inspections issued 
by the Presidents Council on Integrity and Efficiency and the Executive Council on Integrity 
and Efficiency. 
 
RESULT 
 
Payment Policies Create Vulnerabilities That May Lead to Medicaid and Medicare Paying 
for the Same Services 
The complexity of payment policies for services provided to beneficiaries may lead to Medicaid 
and Medicare paying for the same home health services.  Payment systems should function 
efficiently with minimal intervention, but the claims information available to the Medicaid 
payors does not enable them to ensure the appropriateness of payments for services provided to 
dually eligible beneficiaries.  States inability to determine Medicare coverage of services, absent 
a medical review of the plan of care and corresponding home health visit records, further 
complicates efforts to ensure that Medicaid payments are appropriate. 
 
Medicaid may have paid nearly $2 million for services paid by Medicare.  Medicaid paid nearly 
$2 million for skilled nursing and home health aide services that were vulnerable to also being 
paid for by Medicare in four of the five States reviewed.  (See Table 1.)  These payments 
occurred when fewer than 28 hours of service a week were provided, which Medicare generally 
covers.  Twenty-six percent of the vulnerable claims, or 17,538 claims, were for skilled nursing 
services amounting to $866,036 in 2005.  The remaining 61 percent of vulnerable claims, or 
41,939 claims, were for home health aide services amounting to $1,105,350.   
 
      Table 1:  Vulnerable Medicaid Claims and Payments for Reviewed Services in 2005 
Paid Medicaid Claims  Projected  Percentage of  Projected 
State  Within Medicare  Vulnerable  Vulnerable  Vulnerable 
Episode  Claims  Claims  Payments 
Florida  48,821  47,760  98  $1,276,938 
Maryland  9  9  100  $1,523 
North Carolina  1,258  833  66  $85,094 
Ohio  18,672  10,875  58  $607,831 
Texas  5  0  0  $0 
   Total  68,765  59,477  87  $1,971,386 
Source:  Office of Inspector General analysis of claims data, 2008. 
 
As a result of our request for case records, three home health agencies (HHA) that submitted 
claims selected in our sample returned payments for claims to their State Medicaid programs.  
These HHAs determined themselves that the Medicaid payments were inappropriate because 
Medicare had already paid for the services.  State-specific point estimates and confidence 
intervals are found in the Appendix. 
 
High rates of vulnerable payments occurred regardless of the number of HHAs that provided 
care.  In 86 percent of reviewed case records involving two HHAs, the payments to the HHAs 
OEI-07-06-00641      Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services   
 
Page 5  Charlene Frizzera 
 
 
that billed Medicaid were vulnerable.  When multiple HHAs serve the same beneficiary during a 
Medicare PPS episode, they are required to share the PPS payment accordingly.  However, our 
case record review demonstrated that this coordination often did not occur.  For example, one 
HHA provided home health aide services and received the Medicare PPS payment while another 
HHA provided skilled nursing services and received Medicaid fee-for-service payments.  
Medicare PPS covers both home health aide and skilled nursing services; if the home health aide 
services met all Medicare coverage criteria, the Medicaid payment for these same services would 
have been duplicative.  In 84 of the 96 reviewed case records that included only one HHA, the 
Medicaid payments were vulnerable.  This may indicate lack of coordination of multiple services 
within a single HHA or misinterpretation of Medicare coverage policy.  HHAs in these cases 
should be aware that they are receiving both Medicaid and Medicare payments for the exact 
same services.  
 
Medicare coverage policy regarding skilled nursing services lacked clarity.  In 27 percent of 
vulnerable Medicaid payments for skilled nursing services, at least one skilled service and one 
unskilled service were provided during the same visit.  Some vulnerable payments may have 
resulted from misinterpretation of which skilled nursing services are covered by the PPS.  CMS 
officials stated that if any PPS-covered skilled nursing service is provided during the course of a 
visit, then the entire visit is included in the PPS payment, including any unskilled services 
provided.  Medicaid should not be billed for services covered by the PPS payments.  For 
example, the CMS Medicare Benefit Policy Manual, chapter 7, section 40.1.2.4(A)(2), 
explains that prefilling insulin syringes does not normally require the skills of a nurse.  However, 
if this unskilled service was performed during the course of a nursing visit in which at least one 
skilled service was provided (e.g., wound care, skilled observation), the entire visit is included in 
the PPS payment.  In this case, it would be inappropriate to seek separate payment from 
Medicaid for prefilling the insulin syringes.  Other unskilled services identified that were 
provided by nurses during the course of a skilled visit included prefilling medication planners 
and administering eye drops.  These services were billed to Medicaid despite not reaching the 
Medicare 8-hour threshold for skilled nursing services.   
 
CONCLUSION 
 
We found that the complexity of payment policies for services provided to dually eligible 
beneficiaries may lead to Medicaid and Medicare paying for the same home health services.  
Medicaid paid nearly $2 million for skilled nursing and home health aide services that were 
vulnerable to also being paid by Medicare in four of the five States reviewed.  Problems with 
coordination of care between providers and lack of clarity in the Medicare coverage policy 
regarding billing for unskilled and skilled nursing services also contributed to the vulnerabilities.   
 
The appropriateness of Medicaid payment for skilled nursing and home health aide services 
depends on several factors, including whether the services were covered by Medicare PPS and 
the total hours of services that a beneficiary received in certain time periods.  Claims data do not 
contain sufficient information to determine the appropriateness of Medicare coverage, limiting 
States abilities to prevent Medicaid payments for services covered by Medicare.   
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Page 6  Charlene Frizzera 
 
 
CMS could consider methods to better integrate Medicaid and Medicare claims processing to 
prevent duplicate payments without relying on medical review and provide greater clarity in the 
CMS Medicare Benefit Policy Manual to explain that unskilled services provided during a 
skilled nursing visit paid under the PPS are included in the PPS payment. 
 
This report is being issued directly in final form because it contains no recommendations.  If you 
have comments or questions about this report, please provide them within 60 days.  Please refer 
to report number OEI-07-06-00641 in all correspondence. 
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Page 7  Charlene Frizzera 
 
 
APPENDIX 
 
Table 2:  Vulnerable Skilled Nursing and Home Health Aide Service Claims and Payments (Point 
Estimates and Confidence Intervals) 
 
95-Percent Confidence 
State  Description  Sample Size  Point Estimate 
Interval 
Percentage of vulnerable claims  92  97.8%  92.4%99.7%* 
Number of vulnerable claims  92  47,760  45,09648,694 
Vulnerable Medicaid payments  92  $1,276,938   $1,128,221$1,425,656 
Percentage of vulnerable payments involving 
79  97.4%  91.2%99.7%* 
multiple providers 
Percentage of vulnerable payments involving 
33  21.2%  6.9%35.5% 
unskilled services during a skilled visit 
Florida 
Percentage of vulnerable skilled nursing claims  92  12.0%  5.2%18.7% 
Number of vulnerable skilled nursing claims  92  5,837   2,5439,132 
Vulnerable skilled nursing payments  92  $172,346   $60,757$283,934 
Percentage of vulnerable home health aide 
92  85.8%  78.6%93.1% 
claims 
Number of vulnerable home health aide claims  92  41,922   38,38545,459 
Vulnerable home health aide payments  92  $1,104,593   $947,188$1,261,998 
Percentage of vulnerable skilled nursing claims  9  100.0%  Not Applicable 
Maryland 
Vulnerable skilled nursing payments  9  $1,523   Not Applicable 
Percentage of vulnerable claims  77  66.2%  55.8%76.7% 
Number of vulnerable claims  77  833  702964 
Vulnerable Medicaid payments  77  $85,094   $68,573$101,614 
Percentage of vulnerable payments involving 
31  19.4%  5.5%33.2% 
multiple providers 
Percentage of vulnerable payments involving 
48  64.6%  51.0%78.2% 
unskilled services during a skilled visit 
North 
Carolina 
Percentage of vulnerable skilled nursing claims  77  64.9%  54.4%75.5% 
Number of vulnerable skilled nursing claims  77  817   685949 
Vulnerable skilled nursing payments  77  $84,337   $67,736$100,937 
Percentage of vulnerable home health aide 
77  1.3%  0%7.0%* 
claims 
Number of vulnerable home health aide claims  Estimate cannot be made because of small sample size. 
Vulnerable home health aide payments  Estimate cannot be made because of small sample size. 
Source:  Office of Inspector General analysis of claims data, 2008.       
* Confidence interval was calculated with an exact method based on the binomial distribution because of poor coverage properties of the 
standard method when almost no or all sample elements possess the characteristic of interest. 
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Page 8  Charlene Frizzera 
 
 
Table 2 Continued:   Vulnerable Skilled Nursing and Home Health Aide Service Claims and 
Payments (Point Estimates and Confidence Intervals) 
95-Percent Confidence 
State  Description  Sample Size  Point Estimate 
Interval 
Percentage of vulnerable skilled nursing claims  91  58.2%  47.9%68.6% 
Number of vulnerable skilled nursing claims  91  10,875  8,94912,801 
Vulnerable skilled nursing payments  91  $607,831   $488,642$727,020 
Ohio 
Percentage of vulnerable payments involving 
68  52.9%  40.8%65.1% 
multiple providers 
Percentage of vulnerable payments involving 
49  32.7%  19.2%46.1% 
unskilled services during a skilled visit 
Percentage of vulnerable claims  5  0.0%  Not Applicable 
Texas 
Vulnerable Medicaid payments  5  $0   Not Applicable 
Percentage of vulnerable claims  274  86.5%  82.6%89.6% 
Vulnerable Medicaid payments  274  $1,971,386  $1,801,015$2,141,757 
Number of vulnerable claims  274  59,477   57,06761,887 
Percentage of vulnerable payments involving 
178  85.6%  81.5%89.8% 
multiple providers 
Percentage of vulnerable payments involving 
130  26.6%  16.6%36.5% 
unskilled services during a skilled visit 
Overall 
Estimates  Percentage of vulnerable skilled nursing claims  274  25.5%  20.4%31.4% 
Number of vulnerable skilled nursing claims  274  17,538  13,75421,322 
Vulnerable skilled nursing payments  274  $866,036  $708,080$1,023,992 
Percentage of vulnerable home health aide 
274  61.0%  55.8%66.0% 
claims 
Number of vulnerable home health aide claims  274  41,939  38,43245,446 
Vulnerable home health aide payments  274  $1,105,350  $962,975$1,247,725 
Source:  Office of Inspector General analysis of claims data, 2008.       
* Confidence interval was calculated with an exact method based on the binomial distribution because of poor coverage properties of the 
standard method when almost all sample elements possess the characteristic of interest. 
 
OEI-07-06-00641      Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services