DEPARTMENT OF HEALTH &. HUMAN SERVICES Office of Inspector General

Washington, D.C. 20201

~,.. ,,-. 2009 -tlJ - .J

TO: Charlene Frizzera

Acting Administrator

Centers for Medicare & Medicaid Services

FROM: Daniel R. Levinson

Inspector General

SUBJECT: Memorandum Report: "Medicaid and Medicare Home Health Payments for

Skilled Nursing and Home Health Aide Services," OEI-07-06-00641

This memorandum report determined, in five States, the extent to which both Medicaid and

Medicare may have made payments to home health providers for the same skilled nursing and

home health aide services for the same beneficiary during 2005. A companion study, "Duplicate

Medicaid and Medicare Home Health Payments: Medical Supplies and Therapeutic Services"

(OEI-07-06-00640), examined Medicaid and Medicare payments for medical supplies and

therapeutic services.

For 2005, we identified Medicaid payments amounting to $3.3 million for 68,765 service claims

that may have been coverable by Medicare. We matched Medicaid home health claims with

Medicare home health Prospective Payment System (PPS) episodes and reviewed beneficiaries'

case records for a sample of claims to determine whether the Medicare payments were

vulnerable to also being paid by Medicaid based on criteria established by State Medicaid

programs and the "Medicare Benefit Policy Manual." Vulnerable Medicaid payments were

defined by two criteria: (I) a paid Medicaid service had to fall within a paid Medicare episode of

care and (2) a paid Medicaid service had to occur when fewer than 8 hours ofservices each day

and fewer than 28 hours ofservices each week were provided.

Payment policies created vulnerabilities that may have led to Medicaid and Medicare paying for

the same services. Medicaid paid nearly $2 million for skilled nursing and home health aide

services that were vulnerable to also being paid by Medicare in four ofthe five States reviewed.

Problems with coordination of care between providers and lack of clarity in the Medicare

coverage policy regarding billing for unskilled and skilled nursing services also contributed to

the vulnerabilities.

OEI-07-06-00641 Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Senices
Page 2 – Charlene Frizzera 

 

BACKGROUND 

Medicaid and Medicare Payment of Home Health Services 

States must offer home health services to Medicaid beneficiaries who meet the States’ criteria for 

nursing home coverage.1

 Home health services may include skilled nursing, home health aide 

services, therapeutic services, and supplies. Medicaid programs in the five reviewed States paid 

a total of $3.3 million for 68,765 claims for skilled nursing and home health aide services that 

Medicare could also have covered for dually eligible beneficiaries.2 Both Medicaid and 

Medicare may pay home health providers for the same types of home health services; however, 

both programs should not pay for the same skilled nursing and home health aide services for the 

same beneficiary during the same visit. Each program has specific payment structures and 

limitations on the services covered.3 If services are not covered by Medicare, then Medicaid 

may pay for those services, up to the limits established by the State Medicaid agency. 

Medicare Coverage of Home Health Services 

To be covered as part of the Medicare home health benefit, services must be reasonable, 

medically necessary, and specified on a plan of care.4

 The beneficiary must be confined to the 

home, under the care of a physician, and in need of intermittent skilled services.5

 In addition, 

under the PPS coverage rules, skilled nursing and home health aide services must be part-time or 

intermittent, meaning that skilled nursing and home health aide services may be furnished any 

number of days each week as long as the combined hours do not exceed 8 hours each day and 

28 hours each week. If beneficiaries require skilled nursing and home health aide services that 

exceed 8 hours each day or 28 hours each week, another payor (e.g., Medicaid) may pay for the 

services in excess of the Medicare limit.6 Medicare rules also specify a few services that may 

not be covered as skilled nursing, such as administering eye drops, or that may be covered as 

skilled nursing services only in certain situations.7

Some skilled nursing and home health aide services in our study may not have met all Medicare 

coverage criteria. We could not determine which services met other Medicare coverage criteria 

without performing a medical review. Therefore, we refer to Medicaid payments that (1) overlap 

a Medicare payment and (2) occurred when fewer than 28 hours per week or fewer than 8 hours 

per day of skilled nursing and home health aide services were provided as vulnerable payments. 

1

 Social Security Act, § 1902(a)(10)(D), 42 CFR § 441.15. 

2

 Dual eligibility occurs when an individual meets both Medicaid and Medicare eligibility requirements. 

3

 Both Medicaid and Medicare cover only home health services ordered on a written plan of care for a specific 

beneficiary. 42 CFR § 440.70(a)(2); Centers for Medicare & Medicaid Services (CMS), “Medicare Benefit Policy 

Manual” [Internet Only Manual], Pub. No. 100-02, chapter 7, § 30.2.6. A plan of care is the medical treatment plan 

that contains all diagnoses, services, medications, and treatments to be provided. 

4

 CMS, “Medicare Benefit Policy Manual” [Internet Only Manual], Pub. No. 100-02, chapter 7, §§ 20.1.1 and 

20.1.2. 

5

 42 CFR § 409.42. 

6

 Social Security Act, §§ 1861(m)(1) and 1861(m)(7)(B). Additionally, §1861(7)(B)(m) of the Social Security Act 

further defines intermittent skilled nursing care as care either provided or needed on fewer than 7 days each week or 

fewer than 8 hours each day for periods of 21 days or less. 

7

 CMS, “Medicare Benefit Policy Manual” [Internet Only Manual], Pub. No. 100-02, chapter 7, § 40.1.2.4. 

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METHODOLOGY 

State Selection 

We examined 2005 Medicaid and Medicare claims for beneficiaries in five States: Florida, 

Maryland, North Carolina, Ohio, and Texas. We selected States based on their total 2004 feefor-service home health expenditures, which ranged from $58,000 to $126 million. 

Interviews With Agency Officials 

We conducted structured interviews with State Medicaid agency staff in each of the selected 

States. During these interviews, we collected information and documentation regarding the 

home health services that each State provided through its Medicaid program. We contacted 

CMS and regional home health intermediary officials to verify Medicare policy before data 

collection and after data analysis to ensure our correct interpretation of existing policy. 

Claims Data and Analysis 

We matched final-action claims from the Medicaid Management Information Systems and the 

Medicare National Claims History file for all beneficiaries who had skilled nursing and home 

health aide service claims in 2005. This resulted in a universe of 68,765 overlapping skilled 

nursing and home health aide service claims. 

From the universe of claims, we selected a random sample of 100 billed claims in three of the 

five States: Florida, North Carolina, and Ohio. Maryland’s population had only nine claims and 

Texas’s population had only five claims; all were included in the sample. We removed 

28 Medicaid claims that had dates of services during denied Medicare episodes. We received 

complete case records for 96 percent (274/286) of the sampled claims. We reviewed case 

records for each sampled claim to determine how many hours of skilled nursing and home health 

aide services beneficiaries received by examining visit notes, plans of care, and agency staff 

logs. We identified vulnerable Medicaid payments only in instances in which there were fewer 

than 28 hours of services provided in each week and fewer than 8 hours of services provided on 

the dates of each of the sampled claims. Because of the lack of a standard definition for a week, 

all 7-day periods for each sampled claim had to meet these criteria for the sampled claim to be 

identified as a vulnerable payment. 

Limitations 

Because this study did not include a medical review of case records, we did not attempt to 

determine the medical necessity or medical appropriateness of any of the services provided or the 

extent to which the services were payable under a particular State Medicaid program or by 

Medicare. The methodology addressed solely whether Medicaid payments were made when 

fewer than 8 hours of skilled nursing and home health aide services on the dates of each of the 

sampled claims were provided and fewer than 28 hours of skilled nursing and home health aide 

services per week were provided. 

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Standards 

This inspection was conducted in accordance with the “Quality Standards for Inspections” issued 

by the President’s Council on Integrity and Efficiency and the Executive Council on Integrity 

and Efficiency. 

RESULT 

Payment Policies Create Vulnerabilities That May Lead to Medicaid and Medicare Paying 

for the Same Services 

The complexity of payment policies for services provided to beneficiaries may lead to Medicaid 

and Medicare paying for the same home health services. Payment systems should function 

efficiently with minimal intervention, but the claims information available to the Medicaid 

payors does not enable them to ensure the appropriateness of payments for services provided to 

dually eligible beneficiaries. States’ inability to determine Medicare coverage of services, absent 

a medical review of the plan of care and corresponding home health visit records, further 

complicates efforts to ensure that Medicaid payments are appropriate. 

Medicaid may have paid nearly $2 million for services paid by Medicare. Medicaid paid nearly 

$2 million for skilled nursing and home health aide services that were vulnerable to also being 

paid for by Medicare in four of the five States reviewed. (See Table 1.) These payments 

occurred when fewer than 28 hours of service a week were provided, which Medicare generally 

covers. Twenty-six percent of the vulnerable claims, or 17,538 claims, were for skilled nursing 

services amounting to $866,036 in 2005. The remaining 61 percent of vulnerable claims, or 

41,939 claims, were for home health aide services amounting to $1,105,350. 

 Table 1: Vulnerable Medicaid Claims and Payments for Reviewed Services in 2005

State 

Paid Medicaid Claims 

Within Medicare 

Episode 

Projected 

Vulnerable 

Claims 

Percentage of 

Vulnerable 

Claims 

Projected 

Vulnerable 

Payments 

Florida 48,821 47,760 98 $1,276,938 

Maryland 9 9 100 $1,523 

North Carolina 1,258 833 66 $85,094 

Ohio 18,672 10,875 58 $607,831 

Texas 5 0 0 $0 

 Total 68,765 59,477 87 $1,971,386 

Source: Office of Inspector General analysis of claims data, 2008. 

As a result of our request for case records, three home health agencies (HHA) that submitted 

claims selected in our sample returned payments for claims to their State Medicaid programs. 

These HHAs determined themselves that the Medicaid payments were inappropriate because 

Medicare had already paid for the services. State-specific point estimates and confidence 

intervals are found in the Appendix. 

High rates of vulnerable payments occurred regardless of the number of HHAs that provided 

care. In 86 percent of reviewed case records involving two HHAs, the payments to the HHAs 

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that billed Medicaid were vulnerable. When multiple HHAs serve the same beneficiary during a 

Medicare PPS episode, they are required to share the PPS payment accordingly. However, our 

case record review demonstrated that this coordination often did not occur. For example, one 

HHA provided home health aide services and received the Medicare PPS payment while another 

HHA provided skilled nursing services and received Medicaid fee-for-service payments. 

Medicare PPS covers both home health aide and skilled nursing services; if the home health aide 

services met all Medicare coverage criteria, the Medicaid payment for these same services would 

have been duplicative. In 84 of the 96 reviewed case records that included only one HHA, the 

Medicaid payments were vulnerable. This may indicate lack of coordination of multiple services 

within a single HHA or misinterpretation of Medicare coverage policy. HHAs in these cases 

should be aware that they are receiving both Medicaid and Medicare payments for the exact 

same services. 

Medicare coverage policy regarding skilled nursing services lacked clarity. In 27 percent of 

vulnerable Medicaid payments for skilled nursing services, at least one skilled service and one 

unskilled service were provided during the same visit. Some vulnerable payments may have 

resulted from misinterpretation of which skilled nursing services are covered by the PPS. CMS 

officials stated that if any PPS-covered skilled nursing service is provided during the course of a 

visit, then the entire visit is included in the PPS payment, including any unskilled services 

provided. Medicaid should not be billed for services covered by the PPS payments. For 

example, the CMS “Medicare Benefit Policy Manual,” chapter 7, section 40.1.2.4(A)(2), 

explains that prefilling insulin syringes does not normally require the skills of a nurse. However, 

if this unskilled service was performed during the course of a nursing visit in which at least one 

skilled service was provided (e.g., wound care, skilled observation), the entire visit is included in 

the PPS payment. In this case, it would be inappropriate to seek separate payment from 

Medicaid for prefilling the insulin syringes. Other unskilled services identified that were 

provided by nurses during the course of a skilled visit included prefilling medication planners 

and administering eye drops. These services were billed to Medicaid despite not reaching the 

Medicare 8-hour threshold for skilled nursing services. 

CONCLUSION 

We found that the complexity of payment policies for services provided to dually eligible 

beneficiaries may lead to Medicaid and Medicare paying for the same home health services. 

Medicaid paid nearly $2 million for skilled nursing and home health aide services that were 

vulnerable to also being paid by Medicare in four of the five States reviewed. Problems with 

coordination of care between providers and lack of clarity in the Medicare coverage policy 

regarding billing for unskilled and skilled nursing services also contributed to the vulnerabilities. 

The appropriateness of Medicaid payment for skilled nursing and home health aide services 

depends on several factors, including whether the services were covered by Medicare PPS and 

the total hours of services that a beneficiary received in certain time periods. Claims data do not 

contain sufficient information to determine the appropriateness of Medicare coverage, limiting 

States’ abilities to prevent Medicaid payments for services covered by Medicare. 

OEI-07-06-00641 Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services 
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CMS could consider methods to better integrate Medicaid and Medicare claims processing to 

prevent duplicate payments without relying on medical review and provide greater clarity in the 

CMS “Medicare Benefit Policy Manual” to explain that unskilled services provided during a 

skilled nursing visit paid under the PPS are included in the PPS payment. 

This report is being issued directly in final form because it contains no recommendations. If you 

have comments or questions about this report, please provide them within 60 days. Please refer 

to report number OEI-07-06-00641 in all correspondence. 

OEI-07-06-00641 Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services 
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APPENDIX 

Table 2: Vulnerable Skilled Nursing and Home Health Aide Service Claims and Payments (Point 

Estimates and Confidence Intervals) 

State Description Sample Size Point Estimate 95-Percent Confidence 

Interval 

Percentage of vulnerable claims 92 97.8% 92.4%–99.7%* 

Number of vulnerable claims 92 47,760 45,096–48,694 

Vulnerable Medicaid payments 92 $1,276,938 $1,128,221–$1,425,656 

Percentage of vulnerable payments involving 

multiple providers 79 97.4% 91.2%–99.7%* 

Percentage of vulnerable payments involving 

unskilled services during a skilled visit 33 21.2% 6.9%–35.5% 

Percentage of vulnerable skilled nursing claims 92 12.0% 5.2%–18.7% 

Number of vulnerable skilled nursing claims 92 5,837 2,543–9,132 

Vulnerable skilled nursing payments 92 $172,346 $60,757–$283,934 

Percentage of vulnerable home health aide 

claims 92 85.8% 78.6%–93.1% 

Number of vulnerable home health aide claims 92 41,922 38,385–45,459 

Florida 

Vulnerable home health aide payments 92 $1,104,593 $947,188–$1,261,998 

Percentage of vulnerable skilled nursing claims 9 100.0% Not Applicable 

Maryland 

Vulnerable skilled nursing payments 9 $1,523 Not Applicable 

Percentage of vulnerable claims 77 66.2% 55.8%–76.7% 

Number of vulnerable claims 77 833 702–964 

Vulnerable Medicaid payments 77 $85,094 $68,573–$101,614 

Percentage of vulnerable payments involving 

multiple providers 31 19.4% 5.5%–33.2% 

Percentage of vulnerable payments involving 

unskilled services during a skilled visit 48 64.6% 51.0%–78.2% 

Percentage of vulnerable skilled nursing claims 77 64.9% 54.4%–75.5% 

Number of vulnerable skilled nursing claims 77 817 685–949 

Vulnerable skilled nursing payments 77 $84,337 $67,736–$100,937 

Percentage of vulnerable home health aide 

claims 77 1.3% 0%–7.0%* 

Number of vulnerable home health aide claims Estimate cannot be made because of small sample size. 

North 

Carolina 

Vulnerable home health aide payments Estimate cannot be made because of small sample size. 

Source: Office of Inspector General analysis of claims data, 2008. 

* Confidence interval was calculated with an exact method based on the binomial distribution because of poor coverage properties of the 

standard method when almost no or all sample elements possess the characteristic of interest. 

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OEI-07-06-00641 Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services 

Table 2 Continued: Vulnerable Skilled Nursing and Home Health Aide Service Claims and 

Payments (Point Estimates and Confidence Intervals)

State Description Sample Size Point Estimate 95-Percent Confidence 

Interval 

Percentage of vulnerable skilled nursing claims 91 58.2% 47.9%–68.6% 

Number of vulnerable skilled nursing claims 91 10,875 8,949–12,801 

Vulnerable skilled nursing payments 91 $607,831 $488,642–$727,020 

Percentage of vulnerable payments involving 

multiple providers 68 52.9% 40.8%–65.1% 

Ohio 

Percentage of vulnerable payments involving 

unskilled services during a skilled visit 49 32.7% 19.2%–46.1% 

Percentage of vulnerable claims 5 0.0% Not Applicable 

Texas 

Vulnerable Medicaid payments 5 $0 Not Applicable 

Percentage of vulnerable claims 274 86.5% 82.6%–89.6% 

Vulnerable Medicaid payments 274 $1,971,386 $1,801,015–$2,141,757 

Number of vulnerable claims 274 59,477 57,067–61,887 

Percentage of vulnerable payments involving 

multiple providers 178 85.6% 81.5%–89.8% 

Percentage of vulnerable payments involving 

unskilled services during a skilled visit 130 26.6% 16.6%–36.5% 

Percentage of vulnerable skilled nursing claims 274 25.5% 20.4%–31.4% 

Number of vulnerable skilled nursing claims 274 17,538 13,754–21,322 

Vulnerable skilled nursing payments 274 $866,036 $708,080–$1,023,992 

Percentage of vulnerable home health aide 

claims 274 61.0% 55.8%–66.0% 

Number of vulnerable home health aide claims 274 41,939 38,432–45,446 

Overall 

Estimates 

Vulnerable home health aide payments 274 $1,105,350 $962,975–$1,247,725 

Source: Office of Inspector General analysis of claims data, 2008. 

* Confidence interval was calculated with an exact method based on the binomial distribution because of poor coverage properties of the 

standard method when almost all sample elements possess the characteristic of interest.