Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

\ 

VARIATION AMONG HOME HEALTH


AGENCIES IN MEDICARE PAYMENTS


FOR HOME HEALTH SERVICES


@ SERVICE$ 

& “&* 

+ ‘f 

9 

g

< 

z

% 

% $

++‘~~d~~ >

JUNE GIBBS BROWN 

Inspector General 

JULY 1995 

OEI-04-93-00260 
OFFICE OF INSPECI’OR GENERAL 

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 SeMces’ (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 three OIG operating componen~ the Offke of Audit SeMces, the 

Offkx of Investigations, and the Office of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program and management problems and recommends courses to 

correct them. 

OFFICE OF AUDIT SERVICES 

The OIGS Office of Audit Services (OAS) provides all 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 in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIG’S Office of Investigations (01) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions, 

administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 

control units which investigate and prosecute fi-audand patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECI’IONS 

The OIGS Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department, 

the Congress, and the public. The findings and recommendations contained in these inspection 

reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, 

and effectiveness of departmental programs. 

OEI’SAtlanta Regional Office staff prepared this report under the direction of Jesse J. 

Flowers, Regional Inspector General. 

Atlanta Region 

Paula Bowker, Project Leader 

Ron Kalil, Team Leader 

Tammy Bomey, Statistician 

Christopher Koehler, DRIG 

Peggy Daniel, Program Analyst 

James Green, Contractor 

Headquarters 

Jennifer Antico, Program Specialist 

Brian Ritchie, Program Analyst 

Linda Moscoe, Program Analyst 

Barbara Tedesco, Statistician 
EXECUTIVE SUMMARY


PURPOSE 

To describe variation among home health agencies in reimbursement for home health 

services paid for by Medicare and assess potential causes of the variation. 

BACKGROUND 

Expenditures for Medicare home health care are increasing at an extraordinary rate. 

Medicare payments will total an estimated $14.4 billion in 1995, up from $3.3 billion in 

1990, an increase of over 4 fold in only 5 years. 

The Health Care Financing Administration (HCFA) is involved in a concerted effort 

to examine the home health care benefit, As part of that initiative, the Office of 

Inspector General (OIG) has developed a coordinated action plan to integrate 

investigations, audits, and inspections involving Medicare home health care. This 

inspection is part of that OIG coordinated effort. 

METHODOLOGY 

We analyzed HCFA data on Medicare reimbursement for home health sewices in 

calendar year 1993. The HCFA data represented services provided by 6,803 HI-L% to 

over 3 million beneficiaries. We arrayed the HHAs in ascending order based on their 

average reimbursement per beneficiary and divided them into four groups. We then 

analyzed a number of factors, including agency characteristics, beneficiary 

characteristics, and quality of services, and how those factors varied among the four 

groups. We called the groups lower, middle, high-1 and high-2. 

To place this analysis into an appropriate broader context, we incorporated into this 

report findings from other recent OIG work on this subject. Our recommendations 

are based on the entire body of OIG analysis of home health services. 

FINDINGS 

The Highest Group Of Home Health Agencies Receive@ On Averagq Five Times 

The Amount Of Medicare Reimbursement Per Beneficiary As The Lower Group 

Average reimbursement per beneficia~ among the groups varied significantly. In the 

high-2 group, the average reimbursement was $7,978. The average reimbursement in 

the lower group was $1,534. The HHAs in the high-1 and high-2 groups, which 

represented one third of all the HHAs analyzed, received more than half (51.5 

percent) of the nearly $9.7 billion reimbursed by Medicare in 1993. The two thirds of 

the HI-L% in the lower and middle groups provided home health semices at or below 

the national average reimbursement per beneficiary of $2,957. 

i 
Average Reimbursement Per Visit Was Similar Among HHf@ But The Number Of 

Visits Varied Widely 

The average number of visits nationally was 50 per beneficiary. The average number 

of visits per beneficiary by HHAs in the highest group was about five times greater 

than that by HHAs in the lower group. In the highest group that average was 141 

visits, as compared to 27 visits in the lower group. Nearly two thirds of all the HHAs 

averaged 33 visits per beneficiary, well below the national average of 50. 

The average reimbursement per visit nationally for all 6,803 HHAs in 1993 was $58.06. 

The average reimbursement per visit in each of the four groups of HHAs was within 

$2 of the national average. 

Higher Group Home Health Agencies Tended To Be Proprietary For-Profi~ Nonaffiliated Organizations Which Provided Seven Times More Aide Visits As The Lower 

Group And Which Employed A Higher Percentage Of Total FTEs As Aides 

Some agency characteristics, such as ownership and affiliation status, were good 

predictors of which HHAs received higher reimbursement per beneficiary. Higherreimbursement HHAs also had twice as many staff and four times the number of 

home health aides, on average, as lower group agencies. 

Quality Of Sewice And Beneficiary Characteristics Were Similar Among AU Four 

Groups Of HHAs And Did Not Appear To Explain The Variation In Average 

Reimbursement 

~ which provided home health services at a higher level of reimbursement per 

beneficiary did not have fewer deficiencies or complaints than lower reimbursement 

agencies. In fact, the percentage of HHAs in the highest group that had at least one 

complaint was more than three times the percentage of HHAs in the lower group. 

Agencies in the higher-reimbursement groups were also less likely to be accredited. 

Beneficiary characteristics such as age, gender, race, qualifying conditions and principal 

diagnostic codes did not explain the wide variation in average reimbursement per 

beneficiary. 

DISCUSSION 

The work performed in this inspection must be placed into the broadest conte~ 

including the battery of OIG work in home health performed over the past year. The 

findings from this inspection and all other OIG work in home health present a picture 

of a Medicare benefit which is vulnerable to fraud and abuse. For example, over the 

past year, we have identified numerous instances of inappropriate home health 

payments through audits of provider claims in Florida and Georgia. 

ii 
b	 In one case we found that 75 percent of the claims submitted by one HHA did 

not meet Medicare guidelines. 

b	 In another project we found that 26 percent of randomly reviewed claims in 

Florida did not meet Medicare guidelines. These claims were for beneficiaries 

who were not homebound, unnecessary visits, and visits that were never 

provided. 

We have also found several types of fraud among HHAs around the nation. Some of 

the fraud we found includes excessive services, services not rendered, use of unlicensed 

staff, cost report fraud, falsified plans of care, forged physician’s signatures, and 

kickback. Between 1990 and 1994, OIG investigations have led to 25 successful 

criminal prosecutions of I-II%% or their employees and the imposition of 3 criminal 

penalties. In 1993 and 1994 alone, 39 HHAs or their employees were excluded from 

participating in the Medicare or Medicaid program. 

We have also looked at how other payers manage home health benefits. For example, 

other payers tend to limit the benefit by capping the number of visits or services 

allowed per beneficial. They also emphasize case management and use copayments. 

RECOMMENDATIONS 

HCFA Should Explore Ways to Address Excessive Utilization and Inappropriate 

Variation in Reimbursement Among HHAs. 

The work of the OIG’S audit and investigations staff have identified instances of 

medically unnecessary care and inappropriate or fradulent billing by specific HHAs. 

The data in this report describes more broadly patterns of billing by certain HI+% 

which may indicate fraud or abuse. As such, we believe it is prudent for HCFA to 

take steps to investigate such patterns and place systematic controls on the home 

health benefit to prevent abuse. 

First. HCFA Should Intensifv its Efforts to Scrutinize Claims Submitted bv High Cost 

Agencies. 

HCFA has already begun this effort through its activities under Operation Restore 

Trust. We have provided information to HCFA about the agencies in our analysis 

which had higher than average per beneficiary reimbursement, for the purposes of 

targeting agencies for further review. 

Second, HCFA Should Exulore Wavs in Which to Prevent Unscrupulous Agencies 

from Enea~ing in Abusive Practices. 

In addition to targeting certain agencies for review, HCFA should work to develop 

mechanisms to prevent agencies from engaging in practices which result in 

inappropriate use of the home health benefit. 

...

111 
This can be done in a variety of ways, For example: 

b	 Involving Beneficiaries in Detecting and Reporting Unscrupulous Behavio~ 

through the use of Explanation of Medical Benefits (which HCFA is currently 

testing), confirmation of visits receive~ and certification of need and eligibility 

for home health care. 

b	 Involving Physicians in Detecting and Reporting Unscrupulous Behavior: now 

that HCFA is paying physicians for case management services delivered to 

home health patients, it is in a good position to use physicians to monitor the 

care provided to beneficiaries, report unscrupulous providers, and refer patients 

to agencies with a record of good practice. This will require educational 

outreach to the physician community. 

b	 Setting Higher Standards for Participation in the Medicare Program: HCFA is 

now considering its policies with regard to how agencies enter the Medicare 

program and obtain permission to bill for services, and under what conditions 

certain entities may be suspended or dropped from the program. 

HCFA Should Continue Its Efforts To Improve The Home Health Benefit and To 

Control Frau& Waste and Abuse. 

We support HCFA’S efforts in developing potential long term solutions towards 

benefit reform which will assist in preventing fraud and abuse by unscrupulous 

providers. These HCFA efforts include: 

b	 Outcome Measures: We urge HCFA to continue their work in developing 

outcome measures which can be used to assess the performance of individual 

home health agencies. 

b	 Pros~ective Pawn ent System: We believe that a home health prospective 

payment system might be the most effective long term model for restructuring 

the benefit and we encourage HCFA to continue their work in testing such a 

system. We believe, however, that it is important that a new system not 

“grandfather” in utilization patterns of the higher-reimbursement agencies. It is 

worth noting that this was an important issue when a prospective payment 

system was being developed for hospitals. 

Additional structural reform might also assist in preventing fraud, waste and abuse.


As we indicated in a prior report, “Home Health Agencies: Alternative Coverage and


Payment Policies,” issued in May 1995, HCFA may wish to consider adopting certain


practices of other third party payers.


We also believe that the use of aides deserves further examination, based on the data


presented in this report.


iv 
We plan to work together with HCFA and the Assistant Secretary for Planning and 

Evaluation (ASPE) on further analysis which can help shape these alternatives. 

Budget Implications 

The elimination of frau~ waste and abuse in the home health benefit can create 

significant cost savings for the program. Such an elimination would ultimately reduce 

the average number of visits for beneficiaries overal~ while ensuring that appropriate 

services are still delivered to beneficiaries in need. To estimate the potential impact 

of effective action, we developed the following calculations. 

b	 We estimated Medicare expenditures based on different levels of average 

number of visits per beneficiary nationwide. For example, if the national 

average number of visits had been 45 instead of 50, Medicare would have saved 

over $1 billion in 1993 in Medicare payments for home health services. 

b	 The average number of visits per Medicare beneficiary for almost two-thirds of” 

home health agencies (the lower and middle groups) in 1993 was 33. If the 

average number of visits by the remaining one-third of HHAs had also been 33 

visits per beneficiary, Medicare cost would have decreased by about $3.3 billion 

in 1993. 

w	 However, based on HCFA actuarial figures, the average number of visits per 

beneficiary is increasing annually. Based on our calculations for 1993 data, 

each time the national average number of visits per beneficiary increases by 

one, it costs the Medicare program an additional $191.4 million. If this upward 

trend in the number of visits were to continue unabated, the potential increase 

in the cost to Medicare would be substantial. 

b	 Using HCFA projections of $14.4 billion in Medicare home health care 

expenditures for 1995, an average number of 33 visits per HHA would result in 

a savings of nearly $5.0 billion. 

AGENCY COMMIWrS 

We received comments on the report from HCFA and ASPE. HCFA concurred with


our recommendations, but felt that the report did not fully distinguish between


variation that is appropriate and variation that suggests excessive utilization or


inappropriate reimbursement levels. HCFA concluded, however, that when


considered with the other OIG work in home health over the last several years, the


findings in this report do suggest enough of a pattern to recommend that HCFA


examine, and address where appropriate, excessive utilization and inappropriate


variation in reimbursement among HHAs.


ASPE concurred that the study showed clear evidence of patterns in home health


agency practices, and that such patterns should be investigated and more thoroughly


v 
--

understood. Noting that our data were limited, ASPE stated that recommendations 

for change should be approached cautiously. ASPE expressed concern for the welfare 

of beneficiaries, and stated that any recommendations which would directly impact 

them be eliminated. ASPE suggested two follow-up reviews to our study one a 

regression analysis on potential causes of variation in C@ and two an intensive review 

to target high-cost HHAs. 

We plan to work with HCFA and ASPE concerning additional efforts in this area, and 

have so indicated in the report. We have also made some revisions to the text of the 

report based on their comments, particularly in the focus of our recommendations. 

The full text of HCFA and ASPE comments is contained in appendix C. 

vi 
TABLE OF CONTENTS


PAGE 

EmEcmwE suMMARY 

INTROIXJCI’XON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...1


FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...7


“ Highest group HHAs received five times the reimbursement aslower groups . . 7


� Number ofvisits varied amongHHAs, but reimbursement did not . . . . . . . ...9


� Higher group HHAs tended to be proprietary for-profit, non-affiliated . . . . . . 11


� Quality of service did not appear to explain the variation . . . . . . . . . . . . . . . . 13


� Characteristics of beneficiaries were similar among all HHAs . . . . . . . . . . . . . 14


DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...16


RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...18


AGENCY COMMENTs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...20


APPENDICES


A Details Of Possible Causes OfVariation In Average Reimbursement . . . . . . . A-1


B: Calculation Of Estimated Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..B-l


C Agency Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..C-l 
INTRODUCTION


PURPOSE 

To describe variation among home health agencies in reimbursement for home health 

services paid for by Medicare and assess potential causes of the variation. 

BACKGROUND 

Home Hml.th Ck.re 

Home health care is nursing, therapeutic, medical social, or aide services which are


provided in a patient’s home. Home health care allows people with limited mobility to


live independently while still receiving professional health care services. Section 1861,


Title XVIII of the Social Security Act authorized Medicare Part A payments for home


health care services. If a beneficiary does not have Part A entitlement, home health


semices may be covered by Medicare Part B.


To receive Medicare reimbursement, home health agencies (HHAs) must provide a


skilled care service to a homebound beneficiary. Beneficiaries who need intermittent


skilled nursing services, physical therapy, speech therapy, and occupational therapy


may qualify for home health services under Medicare. Registered nurses and licensed


therapists must provide or supervise skilled services. Nursing and home health aide


sewices must be provided on an intermittent (i.e., not daily) or part-time (less than 8


hours per day) basis.


Beneficiaries may receive an unlimited number of home health visits. However,


Section 1861 of the Social Security Act authorizes the Department to set limits on


allowable costs incurred by a provider of services for which payment may be made


under the Medicare program. Under this authority, the Department has maintained


limits on HHA per-visit costs since 1979.


Home health agencies may supplement skilled services with medical social services and


home health aide services. Medical social services are provided by a qualified medical


social worker or a social work assistant under the supemision of a qualified medical


social worker. Medical social services are necessary to resolve social or emotional


problems which are expected to be an impediment to effective treatment of a


beneficiary’s medical condition. Home health aide services are hands-on personal care


or services which are needed to maintain a beneficiary’s health or to facilitate


treatment. Home health aide services include personal care (bathing, changing bed


linens, feeding, etc.), changing dressings for simple wounds, assistance with


medications, assistance with some therapy activities, and routine care of prosthetic and


orthotic devices.


1

1 
All home health services must be specified in a plan of care which a physician must 

sign. Physician certification must be updated every 62 days. According to current 

Medicare rules, physicians who sign a plan do not have to actually see the patient for 

whom the plan was written. This holds true for both the initial plan as well as 

subsequent updates. 

Growth Of Hotne Health Care 

Home health care spending by all insurers nationwide is skyrocketing. It is increasing 

at a greater rate than any other type of health care in the United States. In 1993, 

expenditures for home health care increased 23.8 percent over the previous year, 

according to HCFA’S Office of the Actuary. During that time, expenditures for all 

types of health care increased by 7.8 percent. Hospital and physician care increased 

by 6.7 percent and 5.8 percent respectively in 1993. 

Expenditures for home health care paid for by Medicare are also increasing at an 

extraordinary rate, beginning in 1989 with the settlement of a major court case, 

Duggan v. Sullivan, as illustrated by the following graphic. In this case, Medicare 

beneficiaries and others sued the Department claiming that the Department’s 

interpretation of “part time and intermittent” was in conflict with the intent of 

Congress and the wording of the law. The Department settled the litigation and 

revised the coverage guidelines as a result. 

MEDICARE HOME HEALTH EXPENDITURES 

Expendlture6 (In Blltlorm)

S16 I 

S14.4 

s14-

S1 s12-

slo- $9 

S8 - S7 

$6-

*4 

S4 - S3. 

*2 -

1990 1991 1982 1993 1994 1996 est 

YEAR 

2

Home health care is one of the fastest growing segments of health care paid for by 

Medicare. Medicare payments will total an estimated $14.4 billion in 1995, up from 

$3.3 billion in 1990, an increase of over 4 fold in only 5 years. The Health Care 

Financing Administration predicts that expenditures will continue to rise even more 

dramatically, reaching an estimated $18.8 billion in 1996. 

Hmlth Clue FtinchgAdmMtdon Revkws of Home Health Clrre 

The Health Care Financing Administration (HCFA) administers the Medicare 

program, and has funded a number of studies in recent years to examine home health 

care services. For example, HCFA has a demonstration study underway to test a 

prospective payment system for home health care. Another HCFA research team is 

developing and testing a set of outcome-based quality measures for home health care. 

This team expects to examine quality from the perspectives of providers, patients, 

regulators, and payers. HCFA is also sponsoring a three-year study to test a nursemanaged model of home health care. Firtally, HCFA conducts an annual survey to 

determine satisfaction of Medicare beneficiaries. 

The Administrator of HCFA also convened a task force to complete a comprehensive 

examination of home health care from both a policy and an operations perspective. 

The task force consists of staff from all HCFA components that deal in some way with 

home health. 

OtherHome Health Stud&s 

Considerable work has been done toward analyzing and understanding variations in 

the use of and reimbursement for home health services. For example, in a report to 

Congress in 1994, the Prospective Payment Assessment Commission (PROPAC) 

examined the variation in home health agency costs and the relationship between costs 

and Medicare reimbursement. 1 That report found that many factors affected agency 

costs, such as geography, economies of scale, and local market characteristics. The 

report concluded that, “...the current payment system may not be rewarding efficiency 

and may be overcompensating the less efficient agencies.” 

Authors Henry Goldberg and Robert Schmitz in their article “Contemplating Home 

Health PPS: Current Patterns of Medicare Semite Use,” analyzed home health care 

episodes as part of a HCFA prospective payment demonstration project. They found 

that, in general, rural agencies, proprietary agencies, larger agencies, new agencies and 

free-standing agencies had longer episodes than agencies that were urban, not-forprofit, small, older or hospital-based. They also found that the number of visits per 

beneficiary was the cause of the variation in reimbursement per episode. 

1 “InterimAnalysisof PaymentReform for Home Health SeMcesy CongressionalReport C-94-02. 

ProspectivePaymentAssessmentCommission.P. 31. 

3 
--

Other OIG Wo& In Home Health 

Because of the phenomenal growth in Medicare home health expenditures and 

concerns about possible fraud, waste and abuse, the HCFA Administrator asked the 

Office of Inspector General to join HCFA and its task force in a concerted 

examination of home health care. Accordingly, we developed a strategic home health 

plan that incorporated audits, investigations, and inspections of Medicare home health 

care policies and operations. 

This report describes the extent of the variation in average reimbursement per 

beneficiary among 6,803 home health agencies in 1993 and the relationship between a 

number of factors which could potentially cause that variation. 

METHODOLOGY 

To measure the variation in reimbursement for home health services to Medicare 

beneficiaries, we used average reimbursement per beneficiary. We used average 

reimbursement per beneficiary because use of averages is a recognized and easilyunderstood method of mathematically representing a large number of data elements. 

To determine the extent of variation among HHAs in Medicare average 

reimbursement per beneficiary for home health services, we first identified all HHAs 

in the United States that were certified to participate in the Medicare program. We 

used HCFA’S On-line Survey and Certification Reporting System (OSCAR) for 1993 

and identified 6,803 HHAs. 

We then identified all episodes of care reported by the 6,803 HHAs for Medicare 

beneficiaries. We used HCFA’S National Claims History data file and identified 

3,263,100 episodes of home health care in 1993. For our calculations of variations in 

HHA average reimbursement and visits per beneficiary, we considered each episode 

of home health care to be equivalent to one beneficiary. 

Next we attempted to divide the HHAs into three groups of approximately equal 

numbers of agencies, which we called lower, middle and higher (See Table 1). We 

arrayed the 6,803 HHAs in ascending order based on average reimbursement. We 

arbitrarily selected three groups as a basis for comparing agencies. However, using 

SAS software, we observed a skewed distribution for our dependent variable 

average reimbursement per beneficiary. Accordingly, we then divided the 6,803 HHAs 

into four groups for analysis. We called the four groups lower, middle, high-1, and 

high-2. 

We performed various statistical analyses on the 6,803 HHAs, including a univariate 

analysis and analysis of variance. Our use of the analysis of variance procedure was 

not as robust as it could have been because we could not assume the population 

variance among the four groups was equal. We did not validate the data obtained 

from HCFA data bases. 

4

The four groups are shown in table 1. Also displayed in table 1 are the percentage of 

the 6,803 HHAs in each of the four groups and the percentage and number of all the 

beneficiaries in the four groups. 

Lower Middle Higher Group Totals


Group Group


HHAs HHAs


Number of Hl+L% I 2.270 I 2.262 I 1.930 I 341 ! 6.803


Number of Beneficiaries I 843,833 I 1,347,085 I 948,826 I 123,356 I 3,263,100


Percent of HHAs 33.4% 33.3% 28.3% 5.0% I 100%


Percent of Beneficiaries 25.8% 41.3% 29.1% 3.8% 1OO$ZO


With few exceptions, only two factors primarily influence average reimbursement per


beneficiary. They are the cost per visit and the number of visits. We looked at both


of these.


Since these agencies differ in a variety of ways, we also examined other factors which


helped explain why the variation exists. We identified these factors through


discussions with HCFA staff, fiscal interrnedia~ staff, and provider staff. These


discussions were supplemented by reviewing statutes, regulations, and policies which


govern the delive~ of home health. In addition, we studied existing research reports,


audits, and other publications which focussed on home health.


Our objective in examining the other factors was to determine statistical relationships


between these factors and the HHAs’ average reimbursement per beneficiary. These


factors are characteristics of the beneficiaries served (including principal diagnoses for


those beneficiaries), characteristics of the HHAs, and quality of home health services


provided. All of the analysis of these data, however, needed to be considered in the


broader context of recent OIG work performed on this subject. We, therefore, drew


from recent OIG work on home health in developing the findings and


recommendations in this report.


Data Lbnitatbns and Future Wok 

We recognize that there are numerous potential data elements which could be used to 

measure the effect of beneficiary characteristics, agency characteristics, and quality of 

home health services on average HHA reimbursement per beneficiary. The data used 

5

in this report are inherently descriptive. As such, they do not purport to show causal 

relationships relating to the variation in average reimbursement among HHAs. 

For purposes of this report we used only those measures that were readily available 

through existing HCFA data sets. For example, in the absence of outcome measures, 

which we understand are being developed, we had to use available data. Those data 

were numbers of complaints and numbers of Survey and Certification deficiencies, as 

recorded by HCFA. We also used data from the two accrediting organizations to 

identi~ HHAs which were accredited. Though complaints, deficiencies and 

accreditation status may not be optimal, we believe they are reasonable proxies for 

quality. 

There were no readily available data on other factors which could influence average 

reimbursement per beneficiary. For example, the lack of readily available data on 

case mix, the presence of a caregiver in the home of the beneficiary, and the use of 

other services in lieu of home health (such as SNFS), did not allow us to use those 

factors as possible influences on reimbursement or to establish their statistical 

relationship to reimbursement. 

In addition, there are other factors that maybe important to consider in explaining 

HHA variation which are not discussed in this report. Factors such as geographic 

location and operations of fiscal intermediaries may play a role. We will consider 

these potential influences in future OIG home health activities. 

We conducted our inspection in accordance with the QualityStandardsfor Inspections 

issued by the President’s Council on Integrity and Efficiency. 

6

FINDINGS


THE HIGHEST GROUP OF HHAs RECEIVED ON AVERAGE FIVE TIMES 

THE AMOUNT OF MEDICARE REIMBURSEMENT PER BENEFICIARY AS 

THE LOWER GROUP 

Average Reimbursement For Home Health Agencies Varied Widely Among The 

6@3 Home Health Agencies 

b The average reimbursement per beneficiary for the four groups ranged from 

$1,534 to $7,978. 

b Table 2 shows significant variation in average reimbursement per beneficiary 

among the four groups of HHAs. The average reimbursement per beneficiary 

for the high-2 group was about 5.2 times greater than the average 

reimbursement for the lower group. The average reimbursement to HHAs in 

the high-1 and middle groups were 2.7 and 1.6 times greater than in the lower 

* groups. 

HHAs 

Average 

Average Reimbursement 

Beneficiary 

Range of Average 

Reimbursement per 

Beneficiary 

Arrayed into Four Groups 

Medicare Reimbursement 

Lower Middle 

Group Group 

HHAs HHAs 1 I 

Based on Their 

per Beneficiary 

Higher Group 

... ..:,; ,. .“:$ High-1 High-z ,. 

per $1,534 $2,514 $4,198 $7,978 

$1,982 $3,164 

<$1,982 >$6,484 

$3;63 $;84 

“’ ‘ 

> 

Total 

Average

.,,:‘: :: .:..: .:.: ; 

: :.:.
 y”;;::: 

$2,957

w The HHAs which comprised the two high groups represented one third 

H

of all 

the agencies, served one third of the beneficiaries, but received 51.5 percent of 

the $9.65 billion reimbursed by Medicare in 1993 for home health services. In 

addition, the 341 HHAs in the high-2 group, which represented only 5 percent 
of all the HHAs, received 10 percent of the total Medicare reimbursement for 

home health services in 1993. The two-thirds of the HI-I& in the lower and 

middle groups received 48.5 percent of the 1993 Medicare reimbursement. 

Most HHAs Provided Home Health Care At Less Than The National Average 

Reimbursement Per Medicare Beneficiary 

b	 The chart below shows that sixty-three percent (4,253) of the HHAs provided 

home health semices at or below the national average reimbursement of $2,957 

per beneficiary. 

b	 Thirty-seven percent (2,550) of the HHAs provided home health services above 

the $2,957 national average reimbursement per beneficiary. 

Almost Tw~Thirds Of HHAs Provided Home Health Services For Less 

Than The National Average Reimbursement Per Beneficiary 

# of HHAs 6000 

4263 

4000 

3000 2650 

/ 

2000 

1000 

0 

S2065 S44S1 

HHAs” Avg Reimbursement Per Beneficiary 

i-i HAs Arrayed 6eiow & Above 

Nationai Mean of S2.957 

8

AVERAGE REIMBUMEMENT PER VISIT WAS SIMILAR AMONG ~ 

BUT THE NUMBER OF VISITS VARIED WIDELY 

Average Number Of Visits By HHAs In The Highest Group Was About Five Times 

Greater Than That By HHAs In The Lower Group 

b	 In 1993, the 6,803 HHAs provided 164.5 million home heaJth visits to 3.26 

million Medicare beneficiaries. The average number of visits per beneficiary 

for all 6,803 HHAs was 50. See table 3. 

b	 The average number of visits ranged horn 27 visits per beneficiary in the lower 

group of HHAs to 141 visits per beneficiary in the high-2 group of HHAs. 

Lower Middle Higher Group 

Group Group 

HHAs HHAs I ! I 

.,”’”,’ High-1 High-2 ,. 

Average Number of 27 41 72 141 

Visits Per Beneficiary 

b	 Table 4 shows that the ratio of average visits by the top 3 groups of HHAs to 

the visits by the lower group is directly correlated to the ratio of average 

reimbursement by the top 3 groups to that in the lower group. To illustrate, 

HHAs in the high-2 group averaged 5.2 visits per beneficiary to every one visit 

by HHAs in the lower group. Likewise, average reimbursement for high-2 

HHAs was $5.2 for eve~ $1 received by HHAs in the lower group. 

IIGROUPS OF HHAs I 

I 

REIMBURSEMENT 

I I 

mm I II 

Average Ratio Average Ratio 

High-2 $7,978 5.2 141 5.2 

High-1 $4,198 2.7 72 2.6 

Middle $2,514 1.6 41 1.7 

9

--

Over 60 Percent Of HHAs Made Less Than The National Average Number Of Visits 

Per Beneficiary 

b	 The chart below shows that 62 percent (4,228) of the HHAs averaged 33 visits 

per beneficiary. This average is well below the national average of 50 visits per 

beneficiary. 

�	 Thirty-eight percent (2,575) of the HHAs averaged 81 visits per beneficiary 

well abo;e the national average of 50. 

Almost ‘IkmThirds Of HHAs Provided Fewer Than The 

National Average Number Of Visits Per Beneficiary 

# of HHAe 

6000 

422e 

/ 

4000 

3000 

2000 

1000 

0 

as 

HHAu” Avg # of Vlaitis Per eem-flolary 

HI-3A* Arrayed Below & Above National 

Mean Number of 60 ViSitu 

The Average Reimbursement Per Visit Was Fairly Consistent Across All Four Groups 

As illustrated in table 5, the average reimbursement per visit varied among the four 

groups by only about $2 to $4. 

10

Higher Group 

Average


Reimbursement per $56.06 $60.82 $58.28 I $56.71


Visit


HIGHER GROUP HHAs TENDED TO BE PROPRIETARY FOR-PROFIT, NONAFFILIATED ORGANIZATIONS 

Some Agency Characteristics Were Good Predictors Of Which HHAs Received 

Higher Reimbursement And Provided Higher Numbers Of Visits 

b	 The percentage of proprietary for-profit agencies rose from 27 percent in the 

lower group to 85 percent in the high-2 group, as illustrated in table 6. 

b	 The percentage of voluntary non-profit and public/government HHAs 

decreased from the lower and middle groups to the higher groups. 

Type of Ownership	 Lower Middle Higher Group 

Group Group HHAs 

HHAs HHAs 

IIProprietary For-Profit I 26.7% I 37.5% \ 65.4% I 85.4% 

IIVoluntaxy Non-Profit I 43.8% I 44.8% I 24.1% I 11.7% 

Public/Government 29.5% 17.7% 10.5% 2.9% 

TOTALS 100% 100% 100% 100% 

11

b	 The majority of HHAs in the two higher groups were non-dfiliated Only a 

small percentage of HHAs in the higher groups were affiliated with a hospital, 

skilled nursing facility or other medical service organization. See page A-2. 

b	 The percentage of non-affiliated HHAs rose from the lower group to the higher 

groups. See page A-3. 

b	 Over 41 percent of high-2 agencies had branches, as compared to 12.8 percent 

of the lower group HI-IA. See page A-4. 

The Two Higher Groups Provided Seven Times More Aide Visits A Lower Group 

Agencies And Employed A Higher Percentage Of Total ITEs As Aides 

b	 HHAs in the high-2 group provided 7 times more aide visits per beneficiary and 

four times more skilled nursing visits as those in the lower group, as table 7 

below illustrates. 

Home Health Aides 10.4 17.6 37.0 77.5 23.6 

Skilled Nursing 13.3 18.5 29.0 52.9 21.5 

Physical Therapy 2.8 3.9 4.4 7.3 3.9 

All Other Types 0.8 1.4 1.6 3.0 H 1.4 

Average Number for M 27.4 41.3 72.0 140.7 50.4 

Types of Visits 

12

b	 Over half of all visits performed by high-2 group agencies were aide visits. See 

page A-5. 

b	 High-2 group HHAs averaged 25home health aides (representing 40 percent 

oftheir work force) as compared toan averageof about 7forthe lower group 

(representing 28 percent of their work force). See page A-6. 

Home Health Agencies Generally Provided The Same Types Of SeMces 

b	 All HHAs in all four groups and 98 percent of HHAs in all four groups 

provided nursing services and home health aide services, respectively. See page 

A-7. 

b	 The majority of the agencies provided therapy services, regardless of group. 

See page A-7. 

QUALITY OF HHA SERVICES DID NOT APPEAR TO EXPLAIN THE 

VARIATION IN AVERAGE REIMBURSEMENT PER BENEFICIARY 

In the absence of outcome measures for Medicare home health services, we used 

several proxies for quality. Those proxies were the number of deficiencies and 

complaints recorded by the HCFA Survey and Certification Branch, and an HI-IA’s 

accreditation status. While we recognize that accreditation is an alternative to 

certification through the State survey mechanism, we believe that the popular 

perception is that agencies which are accredited hold the promise of providing better 

services. This may or may not be the case. 

HHAs That Provided SeMces At A Higher Level Of Reimbursement Did Not Have 

Fewer Deficiencies 

To participate in the Medicare program, HHAs must agree to be surveyed annually to 

determine if they are in compliance with Medicare conditions of participation. 

Conditions of participation are health, quality and persomel standards and are 

prescribed in the Code of Federal Regulations. There are 12 conditions of 

participation. Annual suweys of compliance with the conditions are performed by 

State survey agencies under contract with HCFA. HCFA expects HHAs to correct 

deficiencies identified by a State survey within 60 days of being notified of them, or 

sooner if a question of “adequate and safe care” is raised. 

When we arrayed HCFA’S Survey and Certification data on HHA deficiencies, we 

found no significant difference among the agencies in the four groups. This is 

illustrated by table 8. The rows which refer to deficiencies contain data about both 

types of deficiencies, that is, conditions deficiencies and standards deficiencies. 

Conditions are broad, refer to systems, or address jeopardy to a beneficiary’s health or 

safety. Standards are components of conditions. 

13

Lower Middle Higher Group HHAs 

Deficiency Status Group Group 

HHAs HHAs 

% HHAs With 1 To 6 Deficiencies \ 45.5% ] 43.8% I 46.8% I 42.8% 

9Z0HHAs With 7 Or More 8.l?ZO 11.0% 12.5% 16.4% 

Deficiencies 

% HHAs with Current Condition 3.3% 3.5% 4.3% 7.0% 

Deficiencies 

YOHHAs with Current Standards 53.4% 54.6% 59.2?lo 58.7% 

Deficiencies 

The Percentage Of HHAs In The Highest Group That Had At Least One Complaint 

Was More Than Three Times The Percentage of HHAs In The Lower Group 

b	 Nearly 60 percent of HHAs in the high-2 group had at least one complaint, as 

compared to about 17 percent of I-II%% in the lower group. See page A-8. 

Agencies In The Highest Group Were Much k Likely To Be Accredited Than 

Those In The Lower Groups 

b	 Both average reimbursement and average number of visits per beneficiary of all 

accredited HHAs were lower than the average reimbursement and average 

number of visits of non-accredited HHAs. See pages A-9 through 

A-Il. 

CHARACTERISTICS OF BENEFICIARIES SERVED BY HHAs WERE SIMILAR 

AMONG ALL FOUR HHA GROUPS 

b	 Little difference existed among the four groups of HHAs in the age of 

beneficiaries served. See page A-12. 

b	 There was a slight increase in the percentage of episodes for female 

beneficiaries and nonwhite beneficiaries from the lower group to the higher 

groups. See pages A-13 and A-14. 

14

b	 The percentage of deaths while in care of an HHA increased slightly from the 

Iowergroup tothe higher groups. Seepage A-15. 

b	 The percentage of episodes for beneficiaries who were Medicare-eligible 

because they were aged, disabled or in end-stage renal disease was quite similar 

among the four groups. Seepage A-16. 

b	 Lastly, an analysis of principal diagnostic codes, a proxy for medical condition, 

did not suggest that beneficiaries inthe higher groups were any sicker orinany 

greater need ofmedical services than those beneficiaries inthe lower and 

middle groups. See pages A-17 through A-21. 

15

DISCUSSION


This report shows wide variation among 6,803 home health agencies (HHAs) in the 

average reimbursement per Medicare beneficiary in 1993. The major reason for the 

variation was the average number of visits per beneficiary that HHAs provided. Some 

HHAs made substantially more visits per beneficiary, on average, than others. 

The work performed in this inspection must be placed in the broadest context, 

including the battery of OIG work in home health which has been performed over the 

past year. The findings horn this inspection coupled with the findings from other OIG 

work present a picture of a Medicare benefit which is vulnerable to fraud and abuse. 

While variation in reimbursement among HHAs is not inherently bad, our analyses 

certainly suggest that excessive numbers of visits are being provided by some HHAs in 

some cases. Again, this conclusion is strengthened when considered with other OIG 

findings regarding abuse of the benefit and outright fraud. Examples of findings from 

other OIG work will make this clearer. 

Over the past year, we have identified numerous instances of inappropriate home 

health payments through audits of provider claims in Florida and Georgia. For 

example, an audit of one HHA in Florida revealed that of $45.4 million claimed in 

1993, well over half, $25.9 million, did not meet reimbursement requirements. Seventy 

five percent of the claims submitted did not meet Medicare guidelines. We found: 

b visits claimed were never made; 

b visits were made to persons who were not homebound; 

b visits which physicians denied having authorized were made; and 

b visits were made to beneficiaries who did not want the services. 

In another project in Florida, we randomly selected HHA claims in the state and 

found that 26 percent of claims did not meet Medicare guidelines. Inappropriate 

claims included: 

b visits to beneficiaries who were not homebound; 

b visits to beneficiaries who did not need the services that were delivered; and 

b visits claims for services not provided. 

Based on these audit findings, we recommended that HCFA require physicians to have 

knowledge of beneficiaries’ condition prior to certi~g a plan of care, require fiscal 

intermediaries which review Florida claims to noti~ beneficiaries when claims are paid 

16

on their behalf, and require fiscal intermediaries to perform in-depth reviews of claims 

horn HHAs in Florida. 

In an audit of an HHA based in Georgia, we found the agency claimed approximately 

$14 million in unallowable costs during one cost reporting year. Those unallowable 

costs included expenses for 

b theater tickets, 

b alcoholic beverages, 

b bags of Vidalia onions for legislators, and 

b gourmet popcorn for physicians. 

We have found several types of fraud among HHAs, including 

b cost report fraud, 

b excessive services, 

b services not rendered, 

b use of unlicensed staff, 

b falsified plans of care, 

b forged physicians’ signatures, and 

b kickbacks. 

Our investigative work has led to indictments and possible exclusions from the 

Medicare program. Between 1990 and 1994, OIG investigations led to 25 successful 

criminal prosecutions of HHAs or their employees and the imposition of 3 civil money 

penalties. In 1993 and 1994 alone, 39 HHAs or their employees were excluded from 

participating in the Medicare or Medicaid program. 

We have also looked at how other payers manage home health benefits. In our 

inspection report, “Home Health Agencies: Alternative Coverage and Payment 

Policies,” we describe mechanisms used by other payers. For example, other payers 

tend to structurally limit their benefit by capping the number of services or visits 

allowed per beneficiary. They also emphasize case management, post payment review, 

and ensure beneficiary participation through copayments. In addition they encourage 

beneficiaries to report cases of inappropriate services, abuse and fraud. 

17

RECOMMENDATIONS


HCFA Should Ikplore Ways to Address Excessive Utilization and Inappropriate 

Variation in Reimbursement Among HHAs. 

The work of the OIG’S audit and investigations staff have identified instances of 

medically unnecessary care and inappropriate or fradulent billing by specific HHAs. 

The data in this report describes more broadly patterns of billing by certain HI-L% 

which may indicate fraud or abuse. AS such, we believe it is prudent for HCFA to 

take steps to investigate such patterns and place systematic controls on the home 

health benefit to prevent abuse. 

First, HCFA Should Intensifv its Efforts to Scrutinize Claims Submitted bv Hi~h Cost 

Apencies. 

HCFA has already begun this effort through its activities under Operation Restore 

Trust. We have provided information to HCFA about the agencies in our analysis 

which had higher than average per beneficia~ reimbursement, for the purposes of 

targeting agencies for further review. 

Second. HCFA Should Explore Wavs in Which to Prevent Unscrwmlous Agencies 

from EnEagin~ in Abusive Practices. 

In addition to targeting certain agencies for review, HCFA should work to develop 

mechanisms to prevent agencies from engaging in practices which result in 

inappropriate use of the home health benefit. 

This can be done in a variety of ways. For example: 

b	 Involving Beneficiaries in Detecting and Reporting Unscrupulous Behavior: 

through the use of Explanation of Medical Benefits (which HCFA is currently 

testing), confirmation of visits received, and certification of need and eligibility 

for home health care. 

b	 Involving Physicians in Detecting and Reporting Unscrupulous Behavior: now 

that HCFA is paying physicians for case management services delivered to 

home health patients, it is in a good position to use physicians to monitor the 

care provided to beneficiaries, report unscrupulous providers, and refer patients 

to agencies with a record of good practice. fiis wifl require educational 

outreach to the physician community. 

b	 Setting Higher Standards for Participation in the Medicare Program: HCFA is 

now considering its policies with regard to how agencies enter the Medicare 

program and obtain permission to bill for sewices, and under what conditions 

certain entities may be suspended or dropped from the program. 

18 
HCFA Should Continue Its Efforts To Improve The Home Health Benefit and To 

Control Frau@ Waste and Abuse. 

We support HCFA’S efforts in developing potential long term solutions towards 

benefit reform which will assist in preventing fraud and abuse by unscrupulous 

providers. These HCFA efforts include: 

b	 Outcome Measures: We urge HCFA to continue their work in developing 

outcome measures which can be used to assess the performance of individual 

home health agencies. 

b	 Pros~ective Pa vrnent Svstem: We believe that a home health prospective 

payment system might be the most effective long term model for restructuring 

the benefit and we encourage HCFA to continue their work in testing such a 

system. We believe, however, that it is important that a new system not 

“grandfather” in utilization patterns of the higher-reimbursement agencies. It is 

worth noting that this was an important issue when a prospective payment 

system was being developed for hospitals. 

Additional structural reform might also assist in preventing fraud, waste and abuse.


As we indicated in a prior report, “Home Health Agencies: Alternative Coverage and


Payment Policies, “ issued in May 1995, HCFA may wish to consider adopting certain


practices of other third party payers.


We also believe that the use of aides deserves further examination, based on the data


presented in this report.


We plan to work together with HCFA and the Assistant Secretary for Planning and


Evaluation (ASPE) on further analysis which can help shape these alternatives.


Budget Implications 

The elimination of fraud, waste and abuse in the home health benefit can create 

significant cost savings for the program. Such an elimination would ultimately reduce 

the average number of visits for beneficiaries overall, while ensuring that appropriate 

services are still delivered to beneficiaries in need. To estimate the potential impact 

of effective action, we developed the following calculations. 

b	 We estimated Medicare expenditures based on different levels of average 

number of visits per beneficiary nationwide. For example, if the national 

average number of visits had been 45 instead of 50, Medicare would have saved 

over $1 billion in 1993 in Medicare payments for home health services. 

k	 The average number of visits per Medicare beneficia~ for almost two-thirds of 

home health agencies (the lower and middle groups) in 1993 was 33. If the 

average number of visits by the remaining one-third of HHAs had also been 33 

19 
--

visits per beneficia~, Medicare cost would have decreased by about $3.3 billion 

in 1993. 

F	 However, based on HCFA actuarial figures, the average number of visits per 

beneficiary is increasing annually. Based on our calculations for 1993 data, 

each time the national average number of visits per beneficiary increases by 

one, it costs the Medicare program an additional $191.4 million. If this upward 

trend in the number of visits were to continue unabated, the potential increase 

in the cost to Medicare would be substantial. 

b	 Using HCFA projections of $14.4 billion in Medicare home health care 

expenditures for 1995, an average number of 33 visits per HHA would result in 

a savings of nearly $5.0 billion. 

AGENCY COMMENTS 

We received comments on the report from HCFA and ASPE. HCFA concurred with


our recommendations, but felt that the report did not fully distinguish between


variation that is appropriate and variation that suggests excessive utilization or


inappropriate reimbursement levels. HCFA concluded, however, that when


considered with the other OIG work in home health over the last several years, the


findings in this report do suggest enough of a pattern to recommend that HCFA


examine, and address where appropriate, excessive utilization and inappropriate


variation in reimbursement among HHAs.


ASPE concurred that the study showed clear evidence of patterns in home health


agency practices, and that such patterns should be investigated and more thoroughly


understood. Noting that our data were limited, ASPE stated that recommendations


for change should be approached cautiously. ASPE expressed concern for the welfare


of beneficiaries, and stated that any recommendations which would directly impact


them be eliminated. ASPE suggested two follow-up reviews to our study one a


regression analysis on potential causes of variation in cost, and two an intensive review


to target high-cost HHAs.


We plan to work with HCFA and ASPE concerning additional efforts in this area, and 

have so indicated in the report. We have also made some revisions to the text of the 

report based on their comments, particularly in the focus of our recommendations. 

The full text of HCFA and ASPE comments is contained in appendix C. 

20

APPENDIX A 

DETAILS REGARDING POSSXBLECAUSES OF THE 

VARIATION IN AVEIUIGE REIMBURSEMENT PER BENEFICIARY 

AMONG HOME HEALTH AGENCIES 

A-1 
ORGANIZATIONAL AFFILIATION 

THE MAJORITY OF AGENCIES IN THE TWO HIGHER GROUPS WERE 

NON-AFFILIATED HHAs 

When we compared organizational affiliation, we found that the distribution of 

agencies affiliated with various types of larger, umbrella health care-related 

organizations was quite similar from one group to the next, except for the high-2 

group. In the high-2 group, nearly twice the percentage of agencies are in the “other” 

category, which is the non-affiliated category. 

Lower Middle Higher Group 

FACILITY TYPE Group Group HHAs 

HHAs HHAs 

Government & Voluntarv* I 1% I 1% I 1% I I?zo II 

Official Health Agency** 23% 13% 12940 12!Z0 I 

Rehabilitation I o% I o% I o% I o% II 

Hospital-Based I 35% I 36% I 20% I 4% II 

SNF-Based 2% 1% 1% 1% 

I t 1 t II 

Other/Non-affiliated I 31% I 39% I 60% I 80% II 

TOTALS 1009?0 100% 100% 100% 

* Government and voluntary is a type of official health agency which is a 

governmental HHA that also receives voluntary support. 

** Official health agency is usually a county or local public health department. 

A-2

ORGANIZATIONAL AFFILIATION (Cent) 

THE PERCENTAGE OF NON-AFFILIATED HHAs IUSES FROM THE LOWER 

TO HIGHER GROUPS 

The array of affdiated versus non-affiliated agencies is visually summarized in the 

following bar charts. Affiliated HHAs are those that are run by or are part of a 

visiting nurses association, a government or voluntary agency, an official health agency, 

a rehabilitation facility, a hospital, or a skilled nursing facility. Non-aflliated agencies 

are those defined by the HCFA as “other.” 

100% 

80% 

60% 

40% 

20% 

o% 

4 Groups 

HHA FACILITY TYPES


Affiliated
vs. Non-Affiliated


% of HHAs 

80% 

tzz 

— 

61% 60% l%

31% 

LOW MIDDLE HIGH-1 HIGH-2 

HHA GROUPS 

_ Affiliated = Non-Affiliated 

of HHAs by Average 

Reimbursement per Beneficiary 

A-3

BRANCHES


FORTY-ONE PERCENT OF THE HHAs IN THE HIGHEST GROUP HAD 

BRANCHES, OVER 3 TIMES THE PERCENTAGE OF HHAs IN THE LOWER 

Lower Middle Higher Group 

Group Group HHAs 

HHAs HHAs 

High-1 High-2 

Percent of HHAs with 12.8% 20.7% 30.4% 41.470 

Branches = I 

A-4

TYPE OF HHA VISIT 

OVER HALF OF ALL VISITS PROVIDED BY HIGHER GROUP HHAs WERE 

HOME HEALTH AIDE VISITS 

HHAs in the lower group provided nearly sixty percent of all their visits as skilled 

nursing and physical therapy visits while figher @oup agencies provided less than half 

of their visits in those categories. 

Type of Visit Lower Middle Higher Group Total 

Listed in Descending Group Group HHAs Average 

Order by Utilization HHAs HHAs 

I Percentage of Total Visits 

Home Health Aides I 38.1% I 42.6% I 51.4% I 55.1% II 46.9% 

Skilled Nursing I 48.6% I 44.8% I 40.3% I 37.7% II 42.7% 

Physical Therapy 10.2% 

1 I 

9.3% 

1 

6.1% 

! ‘“2’ H== 

Occupational Therapy 1.4% 1.5% 0.8% 0.5% ~ 1.1% 

Speech Pathology 0.9% 

r I 

0.7% , 0.5% 

1 0.5% Ik 

Social Services 0.8?Z0 1.1% 0.9% 

! loO% lk 

TOTALS 100% 100% 100% 10070 100% 

A-5

PROFILE OF FI’Es 

HIGHER GROUP AGENCIES HAD A DISPROPORTIONATELY HIGHER 

NUMBER OF HOME HEALTH AIDES 

Average Number of FTE Lower Middle Higher Group HHAs 

by Categories Group Group 

Registered Nurses 

Licensed Practical Nurses 

Physical Therapists 

Occupational Therapists 

Speech Therapists 

Social Workers 

Aide Workers 

Pharmacists 

Dietitians I 

All Other Staff I 

Average Total F’I’EsPer 

HHA In Each Group 

9.5 (41%) 14.8 (38%) 16.0 (31%) 15.6 (25%) 

2.0 (9%) 2.0 (5%) 5.2 (10%) 8.9 (14%) 

0.9 1.8 1.7 1.2 

0.2 0.5 0.4 0.4 

0.1 0.3 0.3 0.3 

0.5 0.8 0.8 1.2 

6.5 (28%) 12.9 (33%) 19.2 (37%) 25.1 (40%) 

0.02 0.04 0.03 0.03 

0.05I 0.06 I 0.06 I 0.20 

3.4 I 5.9 I 7.9 I 9.6 

23.2 39.0 51.5 62.5 

A-6 
TYPES OF SERVICES 

HHAs IN ALL FOUR GROUPS ARE PROVIDING, IN G~ THE SAME 

TYPES OF SERVICES 

HHAs in all four groups provided nursing services and over 98 percent of all HHAs 

provided home health aide services. Well over half of all the agencies provided 

different types of therapy semices, that is, physical, occupational, and speech, as well. 

Details of the percentage of each type of service provided by all four groups, both by 

HHA employees and by contract, are in the following table. 

Type of Semite HHAs Lower Middle Higher Group HHAs 

Provide Group Group 

HHAs HHAs 

Nursing / 100% / 100% I 100% I 100% 

Physical Therapy 86.6% 93.89% 90.8% 90.9% 

Occupational Therapy 64.O?ZO 74.8% 71.7940 66.6% 

Speech Therapy 71.7% 83.1% 74.5% 76.5% 

Medical Social Worker 62.7% 78.5% 81.5% 82.4% 

Home Health Aide I 98.4% I 99.5% I 99.3% I 98.8% 

Interns & Residents I 1.0% I 1.0% I 1.2% I 1.5% 

Food Services I 25.5% I 27.3% I 20.5% ] 21.1% 

Pharmacy I 12.8% I 15.7?40 I 13.2% I 12.0% 

Medical Equipment 17.3% 16.2% 15.7% 15.8% 

t I I I 

Vocational I 1.8% \ 1.4% I 1.5% I 2.6% 

Laboratory 13.9% 16.5% 16.7% 20.5% 

I 1 1 1 

Other 23.2% 22.7% 26.7% 29.9% 

A-7

COMPLAINTS 

THE PERCENTAGE OF HHAs IN THE HIGHEST GROUP THAT HAD AT 

LEAST ONE COMPLAINT WAS THREE TIMES THE PERCENTAGE OF HHAs 

IN THE LOWER GROUP 

Anyone may lodge a complaint against an HHA. That is, the beneficiary, a friend or 

family member of the beneficiary, or an employee of an HHA is free to lodge a 

complaint. HHAs are required by Medicare regulations to inform all home health 

recipients of a hotline telephone number they or any other interested party may use to 

complain. 

As the following figure illustrates, the percentage of HHAs with current complaints 

against them was nearly 57, as compared to nearly 17 percent in the lower group of 

HHAs. 

PERCENT OF HHAS 

WITH CURRENT COMPLAINTS 

% of HHAs 

70% 

60s 66.9% 

60% 

40% 

so% 

20% 16.7% 

10% 

o% m 

LOW MIDDLE HIGH-1 HIQ’H-2 

HHA QROUPS 

4 C3roups of HHA8 by Average 

Reimbursement per BonefIoiary 

A-8

ACCREDITATION 

AGENCIES IN THE HIGHEST GROUP WERE MUCH LESS LIKELY TO BE 

Accredited THAN THOSE IN THE LOWER GROUPS 

An W may choose to achieve or continue their Medicare certification either 

through participation in a State agency survey or through a process called “deeming.” 

Two not-for-profit organizations have been granted authority by HCFA to deem 

HHAs through an accreditation process. The two organizations are the Community 

Health Accreditation Program (CHAP), a subsidiary of the National League for 

Nursing, and the Joint Commission on Accreditation of Healthcare Organizations 

(JCAHO). Agencies that achieve accreditation from CHAP or JCAHO will be 

“deemed” compliant with Federal standards, that is the conditions of participation. 

Lower Middle Higher Group 

TYPE OF Group Group 

ACCREDITATION HHAs HHAs 

Percent of HHAs


CHAP Accredited 1.3% 1.8% 1.1% .6%


A-9

ACCREDITATION (Cent) 

AVERAGE REIMBURSEMENT PER BENEFICIARY OF ALL ACCREDITED 

HHAs WAS LOWER THAN THE AVERAGE REIMBURSEMENT PER 

BENEFICIARY OF NON-ACCREDITED AGENCIES 

One might assume that, due to the expense incurred for accreditation, agencies which 

elect to seek accreditation would have a higher average reimbursement per beneficiary 

than agencies which are not accredited. In other words, agencies which seek 

accreditation might tend to fall in the higher groups of HHAs. We found, however, 

that the average reimbursement per beneficiary receiving home health services in 

accredited HHAs was $300 less than beneficiaries receiving services from a nonaccredited EEL% 

Accredited HHAs Provide 

Less Costly Services 

Avg Reimbursement Per Bonoflclary

S3600 

SStoel 

/ / 

S2703 S3000 / / 

S2600 

S2000 

s 1600 

s 1000 

S600 

so 

Accredited HklA~ Non-Auaredlt.d HHAs 

A-10

ACCREDITATION (cent) 

AVERAGE NUMBER OF VISITS PER BENEFICIARY OF ALL Accredited 

HHAs WAS LOWER THAN AVERAGE NUMBER OF VISITS PER 

BENEFICIARY OF NON-ACCREDITED AGENCIES 

The average number of visits per beneficiary receiving home health services from an 

accredited HHA was 44. The average number of visits per beneficiary receiving home 

health services from a non-accredited HI-IA was 54. The mean for the entire 6,803 

HHAs was 50 visits per beneficiary. 

Accredited HHAs Provide Fewer Visits 

Avg Numb.r of Visit. Per Bonoflciary 

44 

/ 

Aeorodlted HHAs Nlon-Acoredlt.d HHA= 

A-11

AGE OF BENEFICIARY 

LITI’LE DIFFERENCE EXISTED AMONG THE FOUR GROUPS OF HHAs IN 

THE AGE OF THE BENEFICIARIES THEY SERVED 

When we compared the average age of beneficiaries being seined by the HHAs in the 

four groups, we found a very small variation among the groups. 

Percent of Home 

Health Episodes for 

Medicare Beneficiaries 

Age <65 

Age 65-79 

Age >79 

Lower Middle Higher Group


Group Group


HHAs HI-W


6.3% 6.8% 7.5% 8.5% 

53.1% 51.2% 49.770 48.89to 51.1% 

40.6% 42.0% 42.8% 42.79Z0 41.9% 

Total I 100% I 100% I 100% I 100% 100% 

Average Age of 76.4 76.7 76.5 75.7 76.5 

Beneficiary When 

Home Health Service 

Began 

A-12

GENDER OF BENEFICIARY


THERE WAS A SLIGHT INCREASE IN THE PERCENTAGE OF EPISODES 

FOR FEMALE BENEFICIARIES FROM THE LOWER GROUP TO THE 

HIGHER GROUPS 

As illustrated by the table below, the percentage of females increased by about 3


percentage points from the lower group to the high-1 group and by about 4


percentage points from the lower group to the high-2 group. On the other hand, the


percentage of males decreased by about 2 percentage points from the lower group to


the high-1 group and by about 4 percentage points from the lower group to the high-2


group.


A-13

RACE OF BENEFICIARY 

THE PERCENTAGE OF EPISODES FOR NON-WHITE BENEFICIARIES 

INCREASED FROM THE LOWER GROUP TO THE HIGHER GROUPS 

The percentage of episodes for non-white beneficiaries nearly doubled from the lower


group to the high-2 group, as illustrated by the following table. On the other hand,


the percentage of episodes for white beneficiaries decreased by about 7 percentage


points from the lower group to the high-1 group and by about 11 percentage points


from the lower group to the high-2 group.


Percent of Home Lower Middle Higher Group Total


Health Episodes for Group Group


Beneficiaries HHAs HHAs


White 

1 

88.4% 

1 

85.6% 

I 

81.3% 1 

77.3% lk=­

11Non-White ] 11.8% \ 14.4% I 18.7% I 22.7% II 15.3% 

II
 Total I 100% I 100% I 100% I 100% [ 100% 

A-14


.— 
DEATHS WHILE IN CARE


THERE WAS A SLIGHT DIFFEREN CE IN THE PERCENT OF DEATHS 

WHILE IN CARE OF A HOME HEALTH AGENCY BETWEEN THE LOWER 

GROUP AND THE HIGHER GROUPS 

When we examined home health services that were truncated by death of the 

beneficiary, we found only a slight difference. 

Lower Middle Higher Group Total


Group Group HHAs


HHA


Percent of Medicare


Beneficiaries Who Died 2.4% 2.7% 3.2% 3.5% 2.8%


During a Home Health


Episode


A-15

ELIGIBILITY OF BENEFICIARY 

THE PERCENTAGE OF EPISODES FOR BENEFICIARIES WHo WERE 

MEDICARE-ELIGIBLE BECAUSE THEY WERE AGED, DISABLED OR IN 

END-STAGE RENAL DISEASE WAS SIMILAR AMONG GROUPS 

We found only a slight difference among the groups, as shown below. 

Percent of Episodes Lower Middle Higher Group Total 

for Beneficiaries Group Group Average 

Who Are: HHAs HHAs I 

Disabled 5.1% 5.4% 6.1% 6.4?Z0 5.6% 

ESRD 1.7% 2.0% 1.9% 1.8% -+ 1.970 1 I [ I 

Total 100% 100% 100% 100% i= 

A-16


i 
AVERAGE MEDICARE REIMBURSEMENT PER BENEFICIARY INCREASED 

GREATLY FROM THE I.XXVERGROUP AGENCIES TO THE HIGHER 

GROUP AGENCIES WITHIN EACH DIAGNOS’IK! CODE 

We arrayed all diagnostic codes by total reimbursement by the Medicare program to 

the 6,803 HHAs in our inspection. The following table shows the 15 diagnostic codes 

with the highest reimbursement amounts representing 52.4 percent of total Medicare 

expenditures for home health in calendar year 1993. 

ICD-9-CM Lower Middle Higher Group Total 

Diagnostic Code Group Group Average 

HHAs HHAs 

Diabetes Mellitus $1,575 $2,752 $4,988 $8,386 $3,652 

Heart Failure $1,423 $2,172 $3,380 $6,047 $2,537 

Chronic Ulcer of Skin $2,714 $4,145 $5,981 $8,908 $4,610 

Cerebrovascular $1,946 $2,798 $3,916 $5,831 $3,049 

Disease ‘F 

Hypertension , $1,177 $1,860 $2,959 $5,071 t $2,513 

Puhnonary Disease 

Osteoarthrosis 

Urinary System 

Symptoms 

Fracture of Neck 

of Femur 

Cardiac Dysrhythmias 

Other Urinary Tract 

Disorders 

General Symptoms 

Osteoporosis 

Other Forms of Heart 

Disease 

Pneumonia 

$1,474 $%215 $3,327 $5,103 II $2,498 

$1,027 $1,509 $2,273 $3,979 $1,692 

$2,461 $3,473 $4,815 $7,156 $3,685 

$1,327 $1,946 $2,691 $3,935 $2,056 

$1,124 $1,723 $2,689 $4,352 $2,055 

$1,486 $2,062 $3,001 $4,765 $2,501 

$1,224 $1,983 $3,035 $5,108 $2,287 

$1,882 $2,984 $4,124 $7,083 $3,035 

$1,069 $1,558 $2,560 $4,710 $1,834 

$1.045 $1.523 $2.152 $3.045 $1.629 

A-17


I 

II 
Even when adjusting forsize of the~such differences remain. Forexample, we 

analyzed patterns of payment for the three principal diagnoses which accounted for 

almost one quarter of all 1993 Medicare expenditures, diabetes, heart failure, and skin 

ulcers, concentrating only on large HHAs (those with at least 1,000 beneficiaries). 

These results were consistent with those shown on the previous page. Using the 

principal diagnosis of diabetes we found that large HHAs with over $5,000 average 

reimbursement per beneficiary were reimbursed an average of $7,17* large HHAs 

with an average reimbursement per beneficiary of $3,000 to $5,000 were reimbursed 

an average of $4,433; large HHAs with an average reimbursement per beneficiary of 

$1,000 to $3,000 were reimbursed an average of $2,293; and all other large HHAs 

were reimbursed an average of $1,481. 

A-18

AVERAGE REIMBURSEMENT PER VISIT IN EACH DIAGNOSTIC CODE DID 

NOT VARY MUCH AMONG THE FOUR GROUPS OF HHAs 

When we analyzed the average reimbursement per visit in the top 15 diagnostic codes, 

we found little variation. 

[CD-9-CM Lower Middle Higher Group 

Diagnostic Code Group Group 

HHAs HHAs 

Diabetes Mellitus I $52.29 ! $56.88 I $57.51 ! $53.13 

Heart Failure $55.39 $59.56 $55.26 $61.37 

Chronic Ulcer of $57.78 $64.02 $62.22 $58.65 $61.92 

Win 

Cerebrovascular $56.07 $62.22 $60.20 $52.52 $59.66 

Disease 

Hypertension 1 

$47.91 

I 

$52.55 

I 

$53.81 

I 

$55.65 $53.35 

Pulmonary Disease 

Osteoarthrosis 

Urinary Systems 

Symptoms 

Fracture of Neck 

of Femur 

Cardiac 

Dysrhythmias 

$54.79 $60.01 $58.42 $59.36 $58.50 

$58.03 $64.62 $59.88 $56.72 $60.98 

$55.83 $61.19 $57.73 $60.44 $58.84 

$58.18 $65.34 $64.58 $52.06 $62.93 

$55.35 $57.82 $57.01 $57.30 $57.11 

Other Urinary Tract $55.20 $58.79 $55.96 $57.19 $56.86 

Disorders 

General Symptoms $55.54 $59.25 $56.85 $56.57 $57.46 

Osteoporosis I $56.21 I $61.73 I $59.68 I $60.40 $60.05 

Other Forms of $56.62 $61.59 $58.83 $57.17 $59.29 

Heart Disease 

Pneumonia I $58.26 I $63.98 I $61.31 I $44.51 $60.38 

A-19

THE NUMBER OF VISlT?3PER BENEFICIARY IN EACH DIAGNOSTIC CODE 

INCREASED GREATLY FROM THE LOW GROUP TO THE HIGHER 

GROUPS 

We found that the average number of visits in the highest group HHAs was from 3 to 

5 timesgreaterthan the average number of visits in the lower group agencies. 

ICD-9-CM Lower Middle Higher Group Total 

Diagnostic Code Group Group HHAs Average 

HHAs HHAs 

Diabetes Mellitus I 30 I 48 I 87 I 158 II 65 

Heart Failure I 26 I 37 I 61 I 99 II 44 

Chronic Ulcer of 47 65 96 152 75 

skin 

Cerebrovascular 35 45 65 111 51 

Disease 

Hypertension 25 35 55 91 47 

Puhnonary Disease 27 37 57 86 43 

Osteoarthrosis 18 23 38 70 ~1= 28 

Urinary Systems 44 57 83 118 63 

Symptoms 

Fracture of Neck 

of Femur 23 30 42 76 33 

Cardiac 20 30 47 76 36 

Dysrhythmias -l--

Other Urinary Tract 27 35 54 83 44 

Disorders 

General Symptoms 22 33 53 90 40 

Osteoporosis 34 48 69 117 55 

Other Forms of 19 25 43 82 31 

Heart Disease k 

Pneumonia I 18 I 24 I 35 I 68 II 27 

A-20

HIGH GROUP SERVED ONLY 5% OF THE BENEFICIARIES, BUT RECEIVED 

NEARLY 11% OF THE MEDICARE DOLLARS 

The 15 diagnostic codes in this analysis had the highest reimbursement of all 

diagnostic codes and in the aggregate represented nearly 52 percent of Medicare 

reimbursement for home health care in 1993. 

Percent of Beneficiaries 22.86% 39.75% 32.35% 5.04%


Receiving Home Health


Services in the Top 15


Diagnostic Codes


Percent of Total 12.67% 33.64% 42.76% 10.93% 100%


Reimbursement to the


HHAs for the 15 Top


Diagnostic Codes


A-21

--

APPENDIX B


CALCULATION OF ESTIMATED SAVINGS 

The formula we used for estimating savings to Medicare that would result from 

reducing the average number of visits is illustrated with the following example. Our 

calculations are based on a universe of 3.26 million beneficiaries receiving care from 

6,803 home health agencies in 1993. The average number of visits per beneficiary 

made by the HI-L% was 50. 

Our calculations show that decreasing the average number of visits per beneficiary 

nationally by one visit results in a savings of more than $190 million. In our example 

below, we used an average of 45 visits per beneficiary a reduction of about 5 from 

the national average of 50.4. By reducing the average number of visits from 50.4 to 

45, Medicare would save over $1 billion. 

Average Cost Per Home Health Visit: $58.66 

Average # of Visits Per Beneficiary Episode x 45 

Average Cost Per Beneficiary Episode $2,639.70 

Total Beneficiary Episodes X 3.263.100 

Total Reimbursement Cost (Q45 Visits $8,613,605,070 

Total Reimbursement Cost @50.4 Visits $9.648,423.752 

Annual Savings to Medicare $1,034,818,682 

B-1

APPENDIX C 

AGENCY COMMENTS 

HEALTH CARE FINANCING ADMINEIRATION 

ASSISTANT SECRETARY FOR PIANNIN G AND EVALUATION 

c-1 
f

~ ,lm~ % .

4+ 1~ DEPARTMENT OF HEAL’THa liuMAN 

%%,

%.,m> 4’

DATE 

TO	 June Gibbs Brown 

Inspector General 

FROM	 Bruce C. Vlade +M 

Administrator 

SUBJECT	 Office of lns~ector General 

Health Agen~ies in Medicare 

(OEI-04-93-00260) 

5ERV1CES Health Care Financine Admifiistratior 

The Administrator 

Washington, D.C. 20201 

(C)IG) Draft Report: “Vtiation Among FIome 

Payments for Home Health Services” 

This drallreport,which provides information on the extent and causes of variation in 

Medicare payments for borne health care, helps to identify the problems we are 

addressing together as part of Operation Restore Trust. 

We concur with OIG’S recommendations whh one comment: We believe the report 

should fully distinguish between variation that is appropriate andvariation that suggests 

excessive utilization or inappropriate reimbursement levels. 

Our specific comments on the report’s recommendations are attached. Thank you for the 

oppofinity to review and comment on this report. 1 look forward to working with you in 

the future on these issues. 

Attachment 
)lealth Care Financirw Administration’s (HCm) Comments on Office 

sp~ (O= DraftReno~ Variation A.moqg 

H~e~ vments for 

(I Home Health .SSmices (OEI-04-93-002~O\ 

13CFA shouldexplore ways to address excessive utilization and inappropriate variation in 

reimbursement among HI-L%, 

We concur. brough the Medicare Home Health Initiative, HCFA is explofig ways to 

restructure the benefit and payment policy to address the problems identified by OIG 

and us. We will consider the suggestions offered by OIG to address excessive utilkation. 

HCJ?A currenfly has a demonstration that pays for home health prospectively, on a per 

episode basis. TM method of payment would resolve the problem of cwerutilization of 

visits regardless of the type of visit. This payment method would also eliminate the need 

for agency limits, as suggested in the report. Even though we are a number of years 

from implementing this type of prospective payment system (PPS), any system which sets 

parameters for number of visits by specific conditiort would be as extensive a project as a 

per episode PPS. 

OIG Recommendation 2 

HCFA should continue its efforts to improve the home health benefit and to control 

fraud, waste, and abuse. 

ResPon~ 

We concur, AS mentioned ti tbe report, HCFA is striving to achieve a well managed 

home health benefit and to control fraud, waste, and abuse through the Me~care Home 

Health Initiative and varkmsagencywkie fraud and abuse detectiort and enforcement 

activities. We apprmi~te, and will pay heed @ 01(?s advice to consider options that 

maintain the quality of services and that do not financially punish beneficiaries for 

abusive, excessive, or fraudulent practices of providers. 
.,.. 

Page 2 

Additional C.ommen~ 

We do not Believe that the (31G methodology allows onc to firmly draw a conclusion 

that the variation i,n Medicare payments among HHAs, as found by OIG, is a result of 

inappropriate utMzMion, waste, fraud, and abuse. As 01(3 itself concedes: 

. The data used in its report are inherently descriptive and, as such, do not 

purport to show causal relationships relating to the variation in 

,reimbursement among HHAs. 

. A host of other, nonobserved, factors may contribute to variation in 

reimbursemen~ including severity of ihess and case mix, payer m~ and 

the role of other caregivers in the home. 

Further, the report does not fully distinguish between variation that is appropriate and 

variation that suggests excessive utilization or inappropriate reimbursement leveis. 

Nevertheless, the report’s findings, taken in conjunction with the battery of OIG work in 

home health performed over the past year, do suggest enough of a pattern to 

recommend that HCFA examine, and address where proper, excessive utilization and 

inappropriate variation in reimbursement among HHAs. 
3

,+,:W<l, ,,
 *.+ ‘f 

; 

9

-. Jg DEPARTMENT OF HEALTH a HUMAN SERVICES officeof the SecretatV 

“* ‘*l*,d,o > Washington, D.C. 20201 

JUNE 22, 1995 

TO:	 June Gibbs Brown 

Inspector General 

FROM:	 Assistant Secretary for 

Planning and Evaluation 

SUBJECT: O~G Drafi Repo~ “V~ation Among Home Health Agencies in Medicare 

payments for Home Health Services,” OEI-04-93-00260 - COMMENTS 

We are pleased to have the opportunity to comment on such an important report. The study 

shows clear evidence of patterns in home health agency practice where visit and reimbursement 

rates vary significantly from agency to agency, and appear to have an upward trend in certain 

agency groupings (non-affiliated). This report is significant, and as such, the findings should 

stimulate additional close review which are essential to efforts to control fraud and abuse in 

“Operation Restore Trust.” 

This report clearly demonstrates patterns that should be investigated and more thoroughly 

understood. We understand that this report is a quick effort to try to identi~ reasons for 

variation. However because the data are limited, particularly the data on patient characteristics 

and severity of illness, we suggest that you proceed cautiously when offering recommendations 

for change. Strong unsubstantiated recommendations may prove harmful to patients if 

incorrectly interpreted. 

Accordingly, we make several suggestions regarding revisions to this report: 

�	 First, eliminate the recommendations that affect patients directly (i.e., agency visit limits 

and beneficiary limit pp. 17-18) and instead suggest a follow-up study to determine a 

cause and effect relationship with a regression analysis factoring in agency patterns and 

essential patient characteristics (kg., age, gender, severity of illness). 

. 

� Second, the findings identifi interesting agency patterns that could be used to streamline 

government oversight. Agencies that fall outside the patterns found in the study should 

be targeted for intensified review. The government representatives could use the 

following mechanisms to target specific agencies and cases: 

,, 

1. Establish visit triggers for intensified review by intermediaries to assess 

appropriate volume and levels of cme based on selective criteria, e.g., more than 50, 100, or 150 

visits should have intensive review by qualified case-managers to look at fi.mctional status, 

medications, diagnosis, age, gender, and home environment. 
Page 2-- June Gibbs Brown 

2. Increase efforts by auditors, program integrity and fraud and abuse teams to 

capture agency mismanagement of the benefit. Target agencies that are outliers. For exampie, 

non-aftlliated agencies with high visit averages and branch ofllces, or agencies with high 

reimbursement averages, complaints and deficiencies. 

� Third, we suggest that all references to determining causality be eliminated. The 

pqose of the study is stated as “to determine the ~1~ of variation . ..” 

(P. 1) but in fact it did not measure any cause and effect relationships. Other causal 

statements throughout the text should be eliminated to avoid misinterpretations of the 

findings. 

Prepared by: RuthI 260-0370