Department of Health and Human Services 

OFFICE OF 

 
INSPECTOR GENERAL 

 
 
 
 
 
 
 
 
 D
OCUMENTATION OF 

 
CO VERAGE REQUIREMENTS 

 
M H
FOR  EDICARE  OME 

H C  
EALTH  LAIMS
 
 
Daniel R. Levinson 
  
Inspector General
  
 
March 2012
  
OEI-01-08-00390 
  
   
EXECUTIVE SUMMARY:  DOCUMENTATION OF COVERAGE 
REQUIREMENTS FOR HOME HEALTH CLAIMS  
OEI-01-08-00390 
 
WHY WE DID THIS STUDY 
 
From 2002 to 2008, the number of home health agencies (HHA) grew by 39 percent from  
7,052 to 9,801. Medicare spending on home health increased 84 percent from  
$8.5 billion in 2000 to $15.7 billion in 2007.  The rise of home health spending leads to 
concerns about the potential for improper payments due to fraud and abuse. 
 
HOW WE DID THIS STUDY 
 
We reviewed medical records of home health care for a sample of 495 beneficiaries to 
determine whether Medicare coverage requirements were met.  We also analyzed Medicare 
claims to document the extent to which patients were under the care of the physician 
ordering home health services.  We calculated the proportion of claims that had a 
corresponding billing from a physician for visits with that beneficiary at any time 3 months 
before and 3 months after the episode of care.  
 
WHAT WE FOUND 
 
Our medical record review showed that in 2008, 98 percent of beneficiaries met the 
homebound requirement and needed skilled nursing care or therapy services and that 
beneficiaries were under the care of a physician.  HHAs submitted 22 percent of claims in 
error because services were not medically necessary or claims were coded inaccurately,  
resulting in $432 million in improper Medicare payments.  Also, HHAs upcoded (i.e., billed 
at a level higher than warranted) about 10 percent ($278 million) of claims and downcoded 
(i.e., billed at a level lower than warranted) about 10 percent ($184 million) of claims.   
 
WHAT WE CONCLUDED 
 
Identifying home health fraud and abuse is a significant challenge that requires 
concentrated and sustained efforts using a variety of methods.  Given the general concern 
about risks to the Medicare program in the home health area, further investigations 
beyond the medical record are needed to determine whether beneficiaries are eligible, 
services are furnished, and Medicare requirements for payment are met.  The Office of 
Inspector General will continue to monitor Medicare home health claims to determine 
whether the services are appropriate and merit payment.  
   
 
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

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

Methodology................................................................................................5 

Findings........................................................................................................8 

Medical records document that almost all home health       

beneficiaries met Medicare coverage requirements .........................8 

Home health agencies submitted 22 percent of claims in error 
            
in 2008, resulting in $432 million in improper payments ..............10 

Conclusion .................................................................................................12 

Agency Comments.........................................................................12 

Appendixes ................................................................................................13 

A: Detailed Sampling Methodology .............................................13 

B: Selected Point Estimates and Confidence Intervals .................15 

C: Agency Comments  ...................................................................19 

Acknowledgments......................................................................................21 

 
   
   
OBJECTIVES 
1. 	  To determine the extent to which home health medical records 
document compliance with Medicare coverage requirements. 
2. 	  To determine the appropriateness of payments for Medicare home  
health claims. 
BACKGROUND 
Medicare beneficiaries who are generally confined to their homes are 
eligible to receive certain medical services at home.1   Home health services  
include part-time or intermittent skilled nursing care; physical, occupational, 
and speech therapy; medical social work; and home health aide services.2   
Home health provides treatment for an illness or injury and helps  
beneficiaries regain their independence and become as self-sufficient as 
possible. 
Medicare Requirements for Home Health Services 
To qualify for home health services, Medicare beneficiaries must (1) be 
homebound; (2) need intermittent skilled nursing care or physical, speech, or 
occupational therapy; (3) be under the care of a physician; and (4) be under a 
plan of care that has been established and periodically reviewed by a 
physician.3  For a home health agency (HHA) to receive payment from  
Medicare, a physician must certify the beneficiarys need for home health 
services and must recertify the need at least every 60 days.4   
Homebound Status 
Medicare considers beneficiaries homebound if, because of illness or injury, 
they have conditions that restrict their ability to leave their places of  
residence. Homebound beneficiaries do not have to be bedridden, but 
should be able to leave their residences only infrequently with considerable 
and taxing effort for short durations or for health care treatment.5    
Intermittent Skilled Nursing or Therapy Services 
The Social Security Act defines part-time or intermittent services as 
skilled nursing and home health aide services furnished any number of days 
per week as long as the combined services are less than 8 hours each day and 
 
1
 Social Security Act,  1835(a)(2)(A). 
 
2
 Social Security Act,  1861(m); Centers for Medicare  &  Medicaid Services (CMS),  Medicare Benefits Policy 

Manual  (MBPM), Pub. No. 100-02, ch. 7,  40. 
 
3
 42 CFR   424.22. 
 
4
 Ibid. 

5 
 MBPM, ch. 7,  30.1.1.  

OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  1   
   
28 or fewer hours per week.6   A registered nurse or licensed vocational nurse 
must provide the skilled nursing care.7  Home health aide services include 
personal care, such as bathing and dressing, feeding, and simple dressing 
changes that do not require the skills of a licensed nurse.8   Therapy services  
must be performed by a qualified therapist or therapy assistant under the 
supervision of a qualified therapist.9  
Requirement To Be Under the Care of a Physician 
Medicare requires that beneficiaries be under the care of a doctor of 
medicine, osteopathy, or podiatric medicine.10  CMS expects the physician 
who signs the plan of care to see the beneficiary;11 however, prior to 
April 2011, CMS did not require the ordering physician to see the 
beneficiary in person as a condition of payment for home health care.12    
Established Plan of Care  
Medicare pays for home health services only if they are provided under a 
plan of care that a physician establishes, approves, and periodically 
reviews.13  A plan of care should list 12 items, including all pertinent 
diagnoses, functional limitations, frequency of visits to be made, and the 
types of services required.14   The physician establishes the plan of care and 
must review, sign, and date it at least once every 60 days.  If a beneficiary 
does not receive at least one covered home health visit within the 60-day 
episode, CMS considers the plan to be terminated.15  Medicare reimburses 
physicians for establishing and reviewing the plan of care.   
Home Health Prospective Payment System 
In October 2000, CMS implemented the home health prospective payment 
system (PPS). Under PPS, a standardized payment is made for each 60-day 
episode of care that a beneficiary receives from an HHA.  The PPS payment 
covers skilled nursing and home health aide visits, as well as covered 
therapy, medical social services, and routine medical supplies.16     
HHAs use certain elements from the Outcome and Assessment Information 
Set (OASIS) to determine the payment amount for each 60-day episode of 
 
6 
 Social Security Act  1861(m). 
7
 MBPM, ch.7,  40.1.1.  
8 
 MBPM, ch.7,  50.2.    
9 
 MBPM, ch.7,  40.1.1.  
10
 42 CFR  424.22(a)(iv). 
11 
 MBPM, ch.7,  30.3.  
12
 Patient Protection and Affordable Care Act  (P.L. 111-148) (ACA),  6407; CMS notice accessed at 
http://www.cms.gov on August 29, 2011.  
13
 42 CFR  424.22(a)(iii).  
14
 42 CFR  484.18; MBPM, ch.7,  30.2.1.  
15 
 MBPM, ch.7,  30.2.9.  
16
 65 Fed. Reg. 41128 (July 3, 2000). 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  2   
   
care for each beneficiary.  OASIS evaluates beneficiaries and measures 
outcomes using demographic, clinical, and functional data items.  Elements 
of OASIS contribute to a score that the HHAs use to assign the individual to 
a Home Health Resource Group (HHRG).  The HHRGs reflect beneficiaries  
health conditions and their needs for care in three distinct areas:  clinical 
severity, functional severity, and service utilization.  The assignment to a 
given HHRG represents the amount of care that the HHA expects a 
beneficiary to need. A change in the group assignment can change the 
payment that the HHA receives for care of that individual.  The HHA assigns 
the beneficiary to a Health Insurance Prospective Payment System (HIPPS) 
code that is based on the HHRG level. 
2008 Changes to Home Health PPS 
For home health care episodes paid prior to 2008, CMS adjusted the home 
health base payment by assigning beneficiaries to 1 of 80 HHRGs.17   As of 
January 1, 2008, CMS significantly refined the home health payment method 
with the goal of reducing overpayments.   Although HHAs continue to assign 
individuals to an HHRG using OASIS, the score now depends on the timing 
of the episode.  CMS created a case-mix model that differentiates payment 
based on whether the beneficiary is in an early episode (i.e., a first or second 
episode) or a late episode (i.e., third episode and beyond), as well as whether 
the beneficiary has received more than 20 therapy visits.  CMS also 
expanded the number of HHRGs from 80 to 153 to better capture the actual 
cost of care. 
Home Health Fraud 
In 2011, CMS assigned newly enrolling HHAs to the high-risk screening 
level because of program vulnerabilities that these entities pose to 
Medicare.18   As early as 1997, the Office of Inspector General (OIG) 
reported on fraud in HHAs. OIG found that 40 percent of total services in 
HHA claims reviewed did not meet Medicare reimbursement requirements.19   
As part of its review, OIG interviewed beneficiaries or beneficiaries family 
members, as well as the physicians who certified the plans of care.  OIG also 
requested medical records to determine whether beneficiaries were 
homebound and whether the home health services were medically necessary. 
Since that time, the Department of Health and Human Services (HHS) has 
changed Medicare payment requirements, suspended payments to some  
HHAs, and investigated and pursued criminal actions in its efforts to combat 
increasing Medicare fraud, waste, and abuse by HHAs.  
 
17
 72 Fed. Reg. 49762 (Aug. 29, 2007).  
18
 76 Fed. Reg. 5862, 5870 (Feb. 2, 2011). 
 
19

 OIG,  Review of Medicare Home Health Services in California, Illinois, New York, and Texas, 
A-04-96-02121, July 1997.  
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  3   
   
Recent Changes in Medicare Home Health Payment Requirements  
CMS makes additional payments, known as outlier payments, to compensate 
HHAs that supply services to beneficiaries who incur unusually large costs.  
However, in 2008 a number of HHAs in Miami-Dade County accounted for 
more outlier payments than did HHAs in the rest of the Nation combined.20   
In an attempt to mitigate vulnerabilities associated with outlier payments, in 
2010 CMS capped outlier payments to individual HHAs at 10 percent of 
each HHAs total home health payments.21    
To increase physician involvement with Medicare home health beneficiaries, 
as well as to provide additional clinical oversight for HHA-provided care, 
the ACA requires that physicians (or certain practitioners working with the 
physician) who certify beneficiaries as eligible for Medicare home health 
services have face-to-face encounters with those beneficiaries.22  Such 
encounters must occur within a 120-day window:  either within the 90 days 
before beneficiaries start home health care or up to 30 days after they start 
care. The signing practitioner must document who saw the patient and the 
date of the encounter; the practitioner must also describe how clinical 
findings support the beneficiarys eligibility for home health services.23 CMS 
gave HHAs until April 1, 2011, to comply with this requirement.24    
Health Care Fraud Prevention and Enforcement Action Team   
In 2007, HHS and the Department of Justice (DOJ) established the joint 
Medicare Fraud Strike Force, which was designed to combat fraud 
through the use of Medicare data analysis and an increased focus on 
community policing.25  Building on the success of the Strike Force, in 
2009 HHS and DOJ established an interagency Health Care Fraud 
Prevention and Enforcement Action Team to combat health care fraud 
nationwide.26  Now operating in 9 cities, Strike Force efforts have resulted 
in charges against 213 individuals or entities, 107 convictions, and      
$63.9 million in investigative receivables.27   
 
20
 OIG,  Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County and Other 

Geographic Areas in 2008, OEI-04-08-00570, December 2009. 
  
21
 74 Fed. Reg. 58078 (Nov. 10, 2009). 
 
22
 P.L. 111-148,  6407. 
 
23
 42 CFR  424.22(a)(1)(v); 75 Fed. Reg. 70372, 70464 (Nov. 17, 2010). 
 
24
 CMS notice accessed at http://www.cms.gov on August 29, 2011. 
 
25
 HHS,  Medicare Fraud Strike Force Operations Lead to Charges Against 53 Doctors, Health Care 

Executives and Beneficiaries for More than $50 Million in Alleged False Billing in Detroit (news release), 
   
June 24, 2009. Accessed at http://www.hhs.gov/ on June 25, 2009. 
  
26
 HHS,  Attorney General Holder and HHS Secretary Sebelius Announce New Interagency Health Care Fraud 

Prevention and Enforcement Action Team (news release), May 20, 2009.  Accessed at http://www.hhs.gov/ on 

June 19, 2009. 
  
27
 HHS,  Semiannual Report to Congress, Spring 2011. 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  4   
   
For example, on July 13, 2011, a manager and a registered nurse from an 
HHA pleaded guilty to participating in an alleged $25 million Medicare 
billing scheme.28   The two individuals falsified patient records to make it 
appear as though beneficiaries qualified for home health care and therapy 
services. 
CMS Anti-Fraud Activities 
In an evaluation of CMS-imposed Medicare payment suspensions in       
2007 and 2008, OIG found that the great majority of suspended providers 
exhibited characteristics that suggested fraud.29  Some of these suspensions 
were supported by information from beneficiaries.  For example, 
beneficiaries told law enforcement or Government contractors that they 
received home health services even though they were not homebound. 
Beginning in 2009, CMS and Zone Program Integrity Contractors (ZPIC) 
conducted a 2-year study regarding home health outlier payments.30   The 
study consisted of interviewing beneficiaries to verify that they meet home 
health coverage requirements and visiting HHAs to review medical records 
to ensure that a physician who has some sort of relationship with the 
beneficiary signed a plan of care.   
Overall, CMS and ZPICs found that not all beneficiaries were, in fact, 
homebound.  Many were not at home when site visits were conducted.  CMS 
and ZPICs also found that the physicians who signed the beneficiaries plans 
of care were not the beneficiaries regular physicians.  These findings, 
among other factors, prompted CMS to suspend 32 home health providers 
from the Medicare program.   
METHODOLOGY 
Scope 
Through review of the medical records, this evaluation determined the extent 
to which individual beneficiaries met Medicare coverage requirements for 
home health care.  It also determined whether Medicare home health claims  
submitted and paid in 2008 were appropriate and whether higher rates of  
inappropriate payments existed among HHAs in geographical areas with 
patterns of aberrant billing than among HHAs in other areas.  This study 
excluded episodes with four or fewer visits because they are reimbursed on a 
per-visit basis, as well as any claim  with a reimbursement of less than $25.  
 
28
 United States v. Nunez, S.D. Fla., No. 11-CR-20113.  
29
 OIG,  The Use of Payment Suspensions To Prevent Inappropriate Medicare Payments, OEI-01-09-00180, 
 
November 2010. 
 
30
 Through CMS-awarded task orders,  ZPICs detect and deter fraud, waste,  and abuse of Medicare dollars by 
 
conducting investigations; referring cases to law enforcement; and taking administrative actions, such as 

referring overpayments to claims processors. 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  5   
   
Data Sources 
We used the following three data sources to analyze Medicare home health 
claims and payments:  (1) the National Claims History File (NCH), (2) the 
Online Survey Certification and Reporting System (OSCAR), and (3) a 
medical record review of home health claims. 
NCH.  We used the NCH to select a sample for our medical record review.  
We calculated the proportion of claims that had corresponding billing from a 
physician for that beneficiary at any time 3 months before and 3 months 
after the episode of care. We also calculated the proportion of claims in our 
sample that documented whether the beneficiaries were under the care of the 
ordering physician. 
Online Survey Certification and Reporting System.  We downloaded OSCAR 
survey and deficiency data from the three most recent surveys and analyzed 
the number and trends of deficiencies associated with plans of care for 
beneficiaries.31   
Home Health Medical Record Review. Through a contract with an 
independent firm, we conducted a medical record review of home health 
records for a sample of 495 beneficiaries.   
Sample Selection 
We obtained data on 5,536,018 home health claims from the NCH that were 
submitted in calendar year 2008.  We used these data to select a stratified 
random sample of 495 home health claims.  We divided the universe of 
home health claims from which we drew our sample into four strata using a 
set of five payment characteristics established in a previous OIG report that 
analyzed aberrant home health outlier payments.32   See Appendix A for 
details on the sample selection. 
Medical Record Collection 
We provided the contractor with a list of claims.  For each claim, we 
included the beneficiarys name, dates of services, and the name and address 
of the HHA.   The contractor sent up to three written requests for medical 
records to each HHA and made additional telephone calls to each HHA, as  
needed. The contractor received 489 out of the 495 requested medical 
records, a 98.8-percent response rate.  The contractor was unable to obtain 
six medical records because the HHAs had closed and the contractor was 
unable to determine the records current locations; we dropped these medical 
 
31
 CMS oversees compliance with Medicare health and safety standards for HHAs through the survey or 

inspection process.  Performed by  States on behalf of CMS, these surveys include conducting investigations,
  
certifying and recertifying that HHAs  meet Medicares Conditions of Participation, and explaining requirements 

to providers with regard to applicable Federal regulations.
  
32
 OIG,  Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County and Other 

Geographic Areas in 2008, OEI-04-08-00570, December 2009. 
  
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  6   
   
records from our sample.  We followed OIG policies to protect personally 
identifiable information.   
Medical Record Review   
The contractor reviewed the OASIS assessment and other information in the 
home health medical record to determine whether HHAs correctly coded and 
documented each 60-day episode.  The contractor used Medicare policy on 
coverage requirements as well as professional judgment to verify that the 
beneficiary qualified for home health services and determine whether the 
HHA had accurately coded the OASIS.  Contractor staff provided a payment 
code based on their review of the medical record, which we then used to 
compare to the one billed by the HHA. 
Based on the medical review, we calculated the proportion of claims that did 
not meet the Medicare program requirements.  We also compared the 
proportion of inappropriate claims in each of the four strata, looking for 
differences among them.   
Medicare Home Health Cost Analysis  
We calculated the total dollar amount of claims that did not meet program  
requirements.  This analysis included only Medicare home health claims that 
the contractor determined did not meet program requirements.  In these 
situations, contractors reviewed the medical records to identify the 
appropriate diagnosis and calculated a new HIPPS code based on that 
information.  We then used CMSs fiscal year 2008 Home Health 
Prospective Payment System PC Pricer software to calculate the resulting  
Medicare reimbursement amounts.  For each claim, we calculated the 
reimbursement amount using the recalculated HIPPS code submitted by the 
contractor.  To calculate the total dollar amount of claims that did not meet 
program requirements, we then compared the recalculated dollar amount to 
the amount paid to the HHA.  
Limitations 
This review assessed the HHAs medical record for the beneficiary but did 
not determine whether that record accurately reflected the beneficiarys 
medical condition. We did not physically confirm that the beneficiary was 
homebound or determine whether the care provided was medically 
necessary.  
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. 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  7   
   
FINDINGS 
Medical records document that almost all home health 
beneficiaries met Medicare coverage requirements  
To qualify for home health care, a Medicare beneficiary must:  (1) be 
homebound, (2) need skilled nursing care or therapy services, (3) be under 
the care of a physician, and (4) be under a plan of care that has been 
established and reviewed by a physician. Our medical record review showed 
that 98 percent of beneficiaries were homebound and almost all required 
skilled nursing care and skilled services.  Our review also showed that 
98 percent of beneficiaries were under the care of a physician.  Finally, all 
medical records included a plan of care, but 36 percent lacked at least one 
specified element. 
Medical records show that 98 percent of beneficiaries were 
homebound and needed skilled nursing care or therapy services 
Our medical record review showed that in 2008, 98 percent of all 
beneficiaries met the criterion of being homebound.  Each medical record 
stated why the beneficiary was homebound and that the beneficiary 
continued to be confined to the home.  We were unable to determine whether 
the remaining 2 percent were homebound.  
In addition to indicating compliance with the homebound requirement, all 
medical records indicated that each beneficiary needed intermittent skilled 
nursing care, physical therapy, or speech therapy or had a continuing need 
for occupational therapy (see Table 1).  Furthermore, our medical record 
review determined that almost all medical records sufficiently documented 
that the skilled nursing care and therapy services were reasonable and 
necessary.   
Table 1: Extent of Documentation for Home Health Skilled Care and 
Therapy Services  
Percentage of Claims 
  Percentage of Claims 
Documenting That  
Type of Skilled Care and  Documenting That  
  Care/Service Was 
Therapy Service  Beneficiary Required 
Reasonable and  
Service  
  Necessary  
Skilled Nursing Care   92%   99%  
 
Physical Therapy  53%   100%  
 
Occupational Therapy  18%   100%  
 
Speech Therapy  3%   100%  
 Source:  OIG medical record review of home health  claims  for 2008.    
 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  8   
   
Medical records show that beneficiaries were under the care of a 
physician 
At the time of our review, CMS expected, but did not require, the physician 
who signed the plan of care to see the beneficiary at an unspecified interval 
of time.  However, CMS did not explain how one might establish the 
physician-beneficiary relationship. For the purposes of our analysis, we 
used the signature on the plan of care as evidence of a relationship between 
the ordering physician and the beneficiary. Our review showed physicians  
signatures on 98 percent of the plans of care, but 21 percent of those plans 
were missing the dates on which the physicians signed them.  HHAs can 
submit a request for advance payment based on verbal orders by the 
physician; however, the plan of care must be both signed and dated by a 
physician prior to final payment of the claim.  
To gain a better understanding of the relationship between the ordering 
physician and the beneficiary, we reviewed the home health record.  
Specifically, we reviewed physician orders, dates of phone calls, and 
progress notes to determine the extent to which the beneficiary was under 
the care of the ordering physician. Although 85 percent of the home health 
records included these items, only 11 percent of the records documented at 
least one face-to-face visit with the ordering physician.   
We also reviewed separate Medicare claims data from any time 3 months 
before and 3 months after the episodes of care to determine how many 
beneficiaries had face-to-face visits with the physicians who ordered home 
health services.33   We found that only 30 percent of beneficiaries had at least 
one visit during that 6-month period.  Although Medicare did not require 
such visits at the time of our review, the ACA has since created this 
requirement, and CMS expected HHAs to comply as of April 1, 2011.  
All medical records included a plan of care; however, 36 percent 
lacked at least one specified item 
In particular, 18 percent of plans did not address discharge planning and       
9 percent lacked information about rehabilitation potential (see Table 2 for a 
list of specified items).  A plan of care that is truly comprehensive matches 
beneficiaries needs with the appropriate level of services to improve their 
quality of life, maintain their independence, and avoid hospitalization or 
long-term care.  Shortfalls in any area of the plan of care, therefore, can 
adversely affect beneficiaries outcomes.      
 
33
 Our analysis of face-to-face encounters with the ordering physician differs from CMSs requirement in two 
ways.  First, we looked at all episodes of care, whereas  CMSs requirement is limited to the first episode of 
care.  Second, our  review included any visit 3 months before and 3 months after the episode of care,  whereas 
CMS requires the qualifying visit to occur within a shorter period3 months before or 30 days after the start of 
home health care.  
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  9   
   
 
Table 2: Specified Items Missing From Home Health Plans of Care  
 
Percentage of Plan of Care Item  
Plan of Care Item  
  Not Documented  
  Discharge plan  18%  
  Rehabilitation potential  9% 
  Instructions for timely discharge or referral   7%  
Frequency of visits to be made   6%  
 
Types of services, supplies, and equipment required  2%  
 
Prognosis  2%  
 
Functional limitations  1%  
 
Mental status  1%  
  Activities permitted  1%  
Nutritional requirements  1%  
 
All medications and treatments  1%  
 
Safety measures to protect against injury   0%  
 Source:  OIG medical record review of home health  claims, 2010.   
 
State surveys also show vulnerabilities in care planning.  These surveys aim 
to ensure that HHAs are meeting Medicares conditions of participation.  
From 2008 through 2010, State surveyors cited deficiencies related to care 
planning more often than any other deficiency.  In 2008, they cited 
12 percent of HHAs for not following a written plan of care established and 
periodically reviewed by a physician.  They also cited 9 percent of all HHAs 
because the plans of care were missing required items.  
Home health agencies submitted 22 percent of claims 
in error in 2008, resulting in $432 million in improper 
payment  
Our medical record review showed that HHAs submitted 22 percent of 
claims in error because services were not necessary or claims were coded 
inaccurately.   This $432 million in improper payments represented about 
2.5 percent of the total $17 billion in Medicare home health payments in 
2008. Two percent ($328 million) of claims were for services that were 
not medically necessary.  The beneficiaries associated with these claims  
were not homebound, not in need of skilled nursing care, or not under the 
care of a physician. 
Our medical record review also showed that HHAs upcoded about              
10 percent of claims, i.e., billed them at a level higher than the beneficiaries  
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  10   
   
conditions warranted. HHAs also downcoded about 10 percent of claims, 
i.e., billed them at a level lower than the beneficiaries conditions warranted 
(see Table 3).  Although estimated overpayments for upcoded claims were 
$278 million and estimated underpayments for downcoded claims were   
$184 million, we cannot reliably estimate the difference.  Table 3 shows the 
error rates.  
Table 3: Percentage of Miscoded Home Health Services, 2008  
 
Type of Error   Error Rate  
 
Incorrect code  20.2% 
 
 Upcoded   10.4% 
 
     Downcoded   9.8%  
 
Medically unnecessary services  2.1%  
 
Insufficient documentation   0%  
 
Total erro r rate*   21.8%  
Source:  OIG medical record review of home health  claims  for 2008.    
* Total error rate does not equal  the combined types of errors because 0.5 percent of claims had overlapping errors. 
Upcoding often resulted because HHAs assigned inappropriate diagnosis 
codes to the beneficiaries. When an HHA adds certain diagnosis codes to a 
beneficiarys primary diagnosis code, the payment will increase for that 
beneficiary.    Although a beneficiary may be accurately diagnosed with a 
disease, it is appropriate to list it for payment purposes only when the plan of 
care addresses the condition. For example, our review found that some  
HHAs inappropriately listed gastroesophageal reflux disease (GERD) as a 
diagnosis with no further documentation related to this diagnosis other than 
listing the GERD medication that the beneficiary was taking.  Conversely,  
the reviewers supported the GERD diagnosis as appropriate in cases that 
included documentation on diet and medication education along with an 
assessment that specifically addressed the GERD diagnosis.   
Additionally, we did not find different rates of miscoding among HHAs that 
exhibited aberrant billing patterns in  counties that OIG had identified in 
previous studies.  
CONCLUSION 
Our medical record review showed that HHAs nearly always document the 
information necessary to demonstrate compliance with Medicare coverage  
and payment requirements.  Our study identified only 2 percent of claims as 
being for services that were not medically necessary.  However, other OIG 
studies and investigations, as well as joint efforts between HHS and DOJ, 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  11   
   
  have demonstrated that home health is an area at increased risk for fraud.  In 
2011, CMS assigned newly enrolling HHAs to the high risk screening level 
because of program vulnerabilities that these entities pose to Medicare.  
The nature of the Medicare home health benefit relies on an HHAs  
documentation that a beneficiary is homebound and needs skilled nursing 
care or therapy.   The ACA recognized the need to enhance the physicians 
responsibility for certifying the need for home health services by requiring 
face-to-face contact with beneficiaries.   
Our review found that providers generally include adequate 
documentation in the medical record to support their claims for Medicare 
payment.  Because our review did not look further at whether records were 
accurate, whether beneficiaries were eligible for the benefit, or whether 
the services were actually furnished, we can make no judgment about the 
extent to which these claims were properly paid.  That determination 
would require additional investigation, such as site visits and interviews 
with physicians and beneficiaries. 
Identifying home health fraud and abuse is a significant challenge that 
requires concentrated and sustained efforts using a variety of methods.  
Given the general concern about risks to the Medicare program in the home  
health area, we conclude that further investigations beyond the medical 
record are needed to determine whether beneficiaries are eligible, services  
are furnished, and Medicare requirements for payment are met.  OIG will 
continue to monitor Medicare home health claims to determine whether the 
services are appropriate and merit payment. 
AGENCY COMMENTS  
In its comments on the draft report, CMS stated that it has begun using 
technologies and analytic tools to prevent fraudulent payments and identify 
risky providers and claims.  The agency also noted the importance of the 
new requirement for face-to-face interaction between the home health 
provider and beneficiaries. 
For the complete text of CMSs comments, see Appendix C. 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  12   
   
APPENDIX A   
Detailed Sampling Methodology  
In an earlier studyAberrant Medicare Home Health Outlier Payment 
Patterns in Miami-Dade County and Other Geographic Areas in 2008  
(OEI-04-08-00570)the Office of Inspector General (OIG) matched 
providers ZIP Codes to the corresponding counties and calculated the total 
number of home health providers in each county.  In this study, OIG 
calculated the total amount that Medicare paid for the home health claims by 
county, provider, and beneficiary and calculated the outlier amounts included 
in those payments.  Using this information, OIG calculated the following 
five payments and rates nationally, as well as that for each county and home  
health provider listed on the claims:34   
1. 	  average outlier payment per provider;35  
2. 	  average outlier payment per beneficiary;36  
3. 	  average outlier payment per claim;   
4. 	  outlier payment rates (i.e., outlier payments as a percentage of 
total home health payments); and  
5. 	  outlier payment rates for claims with a primary diagnosis 
related to diabetes (i.e., outlier payments for claims with a 
primary diagnosis related to diabetes as a percentage of total 
home health payments).37   
We define payments as aberrant if they are at least twice the national average 
for three or more of the above five calculations. 
The four mutually exclusive strata are: 
   Stratum 1:  100 claims with a total reimbursement less than $2,500, 
   Stratum 2:  200 claims with a total reimbursement greater than or equal 
to $2,500, 
   Stratum 3:  75 claims from providers not in stratum 1 or 2 and not 
located in aberrant counties identified in the previous OIG study, and  
 
34
 According to the U.S. Census Bureau, there were 3,141 counties or county equivalents in the United States in 
2007. There were 2,158 counties or county equivalents listed on the claims we reviewed.    
35
 This value is the equivalent of total outlier payments for an individual home health provider.   
36
 Some beneficiaries received services from  more than one home health provider.  These beneficiaries were 
counted more than once when calculating the average outlier payment per beneficiary for each home health 
provider.    
37
 Services related to diabetes may constitute a payment vulnerability in the Medicare program. For example,  
some home health providers received Medicare payments for reportedly providing insulin injections to 
beneficiaries who did not qualify for home health services because they were not confined to their homes.  
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  13   
   
   Stratum 4:  120 claims from providers that were not in stratum 1 or 2 
and that were located in aberrant counties identified in the previous OIG 
study.  (See Table A-1). 
 
Table A-1: Descriptions of Four Strata  
Number of Claims in 
Stratum  Stratum Description  Population  Sample Size  
Claims with total reimbursement       
1  < $2,500   2,515,212   100 
Claims with total reimbursement  
2   $2,500   2,111,072   200 
Claims from providers that were not 
in stratum 1 or 2 and not located in 
aberrant counties identified in the 
3  previous OIG study   502,356   75 
Claims from providers that were not 
in stratum 1 or 2 and were located in 
aberrant counties identified in the 
4  previous OIG study   407,378   120 
Total      5,536,018   495 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  14   
   
APPENDIX B 
Selected Point Estimates and Confidence Intervals 
 
Table B-1: Estimates Regarding Miscoded Claims and Inappropriate           
Payments 
95-Percent 
Point Estimate   
Type of Estimate   Sample Size   Confidence Interval  
($ in millions) 
($ in millions) 
Percentage of claims that 
489  10.4%   7.2%13.6%  
were upcoded in 2008  
Percentage of claims that 
489  9.8%   6.5%13.1%  
were downcoded in 2008 
Percentage of claims that 
489  79.8%   75.5%84.1%  
were appropriately coded  
Percentage of claims that 
489  20.2%   15.9%24.5%  
were inappropriately coded  
Percentage of claims for 
services that were medically   489  2.1%   0.9%4.6%  
unnecessary  
Percentage of claims that 
489  0.5%   0.1%3.2%  
had overlapping errors  
Percentage of claims that 
did not meet Medicare  489  21.8%   17.4%26.3%  
program requirements 
Total amount of   
inappropriate home health  489  $431.5   $285.9$576.5  
payments    
Amount of inappropriate 
489  $278.0   $184.1$371.8  
payments due to upcoding 
Amount of inappropriate 
payments due to  489  $184.3   $109.4$259.3  
downcoding  
Amount of overpayments 
due to medically   489  $328.0   $83.0$575.5  
unnecessary services 
Source:  Office of  Inspector General (OIG) medical record review of home health claims for 2008.    
 
 
 
 
 
 
 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  15   
   
Table B-2: Estimates Regarding Plan of Care Items 
Characteristic in Medical  95-Percent 
Sample Size   Point Estimate   
Records   Confidence Interval  
 
Contained a plan of care   489  100%   * 
 
Lacked at least one required 
489  35.5%   30.5%40.9%  
element 
 
Lacked documentation on 
489  17.9%   14.1%22.6%  
discharge plan 
 
Lacked documentation on 
489  9.4%   6.7%12.9%  
rehabilitation potential 
Lacked documentation on   
instructions for timely  489  7.0%   4.8%10.0%  
discharge or referral  
Lacked documentation on   
frequency of visits to be  489  6.3%   4.2%9.3%  
made  
Lacked documentation on   
types of services, supplies,  489  1.8%   0.9%3.5%  
and equipment required    
 
Lacked documentation on 
489  2.0%   0.9%4.6%  
prognosis 
 
Lacked documentation on 
489  0.6%   0.2%1.6%  
functional limitations 
 
Lacked documentation on 
489  0.6%   0.2%1.8%  
mental status 
 
Lacked documentation on 
489  1.1%   0.3%3.5%  
activities permitted 
 
Lacked documentation on 
489  1.1%   0.5%2.4%  
nutritional requirements 
Lacked documentation on   
all medications and  489  1.1%   0.4%3.0%  
treatments  
Lacked documentation on   
safety measures to protect  489  0.2%   0%1.4%  
against injury  
Source:  OIG medical record review of home health  claims  for 2008.    
*We are unable to calculate a confidence interval for this  point estimate.  We are confident that the point  estimate 
accurately  predicts the population  value. 
 
 
 
 
 
 
 
 
 
 
 
 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  16   
   
 
Table B-3: Estimates Regarding Requirements for Home Health Coverage  
95-Percent 
Requirement   Sample Size   Point Estimate   
Confidence Interval  
Beneficiaries were    
98.3%  96.5%99.2%  
homebound  489 
Beneficiaries had an   
1.7%  0.7%4.22%  
uncertain homebound status  489 
Beneficiaries received   
92.3%  89.1%94.6%  
skilled nursing care   489 
Skilled nursing care was   
99.4%  97.5%99.7%  
reasonable and necessary    489 
Beneficiaries received   
53.3%  48.5%58.1%  
physical therapy    489 
Physical therapy  was   
100%  * 
reasonable and necessary    489 
Beneficiaries received   
17.8%  14.2%21.6%  
occupational therapy  489 
Occupational therapy  was   
100%  * 
reasonable and necessary   489 
Beneficiaries received   
3.1%  1.96%4.92%  
speech therapy  489 
Speech therapy was   
100%  * 
reasonable and necessary   489 
Source:  OIG medical record review of home health  claims  for 2008.    
*We are unable to calculate a confidence interval for this  point estimate.  We are confident that the point  estimate 
accurately  predicts the population  value. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  17   
   
Table B-4: Estimates Regarding Physician Involvement With Home Health  
Beneficiaries  
95-Percent 
Type of Estimate   Sample Size   Point Estimate   
Confidence Interval  
Percentage of physicians   
who signed the plans of  489  98.0%  95.4%99.1%  
care    
Percentage of plans of care  
 
that were missing  the date 
489  21.1%  15.2%27.1%  
on which the physicians 
 
signed them 
Percentage of medical 
records indicating that the   
beneficiaries were under the  489  84.6%  80.6%88.5%  
care of the ordering   
physicians   
Percentage of medical 
 
records that documented at 
489  10.7%  7.2%14.1%  
least one visit by  the 
 
ordering physician   
Percentage of beneficiaries 
who did not have   
 
face-to-face visits with the 
 
ordering physicians during  30.0%  25.1%34.8%  
489 
the 3 months before or after 
 
their home health episodes 
of care  
Source:  OIG medical record review of home health  claims  for 2008.    
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  18  APPENDIXC 
Agency Comments 
/fP'_.., 
(-.::/-	 DEPARIMENT OF HEALTH & HUMAN SERVICES  Centers for Medicare & Medicaid Services 
Administrator 
Washington. DC 20201 
DATE:  JAN 272012 
TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 MaciJ.ytl "Th.venner 
Actin~dq).inistrator 
SUBJECT: 	 Office of Inspector General (OlG) Draft Report: "Documentation of Coverage 
Requirements for Medicare Home Health Claims" (OEI-01-08-00390) 
Thank you for the opportunity to review and comment on the OIG draft report titled, 
"Documentation of Coverage Requirements for Medicare Home Health Claims" (OEI-01-08
00390). The Centers for Medicare & Medicaid Services (CMS) appreciates the time and 
resources OIG has invested to review this issue. OIG's audit focused on a medical record review 
of home health records for a sample ofbeneficiaries to determine if Medicare coverage 
requirements were met. The objective ofthe audit was to determine the extent to which these 
records document compliance with Medicare coverage requirements and to determine payment 
accuracy for Medicare home health claims. OIG reported two findings to CMS for 
consideration. Its major findings stated the following:  1) medical records document that almost 
all home health beneficiaries met Medicare coverage requirements and 2) home health agencies 
submitted 22 percent ofclaims in error in 2008. 
The CMS is committed to reducing improper payments in the Medicare Fee-For-Service 
program. CMS will c.ontinue to use its availahle resources to ensure home health claims are paid 
in accordanc.e with Medic.are coverage requirements and billing policy. CMS considers the 
return on investment and other workload issues when determining the allocation ofthese 
resources to address vulnerabilities.  We focus our medical review resources on the most highly 
vulnerable areas identified through any number of sources, including but not limited to, using 
internal data analysis tools and 01G reports. 
The OlG reported findings on types of errors. OlG found that only 2 percent ofclaims were not 
medically necessary and determined that the majority ofthe estimated $432 million dollars in 
improper payments were due to coding errors (upcoded overpayments or downcoded 
underpayments). CMS recognizes the signitlcance of the estimated improper payments in this 
report. Therefore, we will share this report with our contractors to consider as they determine 
where to focus resources in the future. 
OEI-01-08-00390  Coverage Requirements for Medicare Home Health Claims  19   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  20   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Joyce Greenleaf, Regional 
Inspector General for Evaluation and Inspections in the Boston regional 
office, and Russell Hereford, Deputy Regional Inspector General.   
Danielle Fletcher served as the team  leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Boston regional office 
who contributed to the report include Tim Chettiath; central office staff who 
contributed include Clarence Arnold and Sandy Khoury.  
 
 
 
 
OEI-01-08-00390   Coverage Requirements for Medicare Home Health Claims  21   
Office of Inspector General 

http://oig.hhs.gov  
 
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to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 
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