GAO 

United States Government Accountability Office

Report to the Ranking Member, 

Committee on Finance, U.S. Senate 

MEDICARE

Improvements Needed 

to Address Improper 

Payments in Home 

Health 

February 2009 

On May 12, 2009, we revised the report to correct the percentage 

growth in the number of home health agencies that billed Medicare. 

Specifically, revisions were made to relevant portions of the 

highlights; text on pages 1, 4, 11, and 13; figure 3 on page 14; and 

table 4 on pages 37 and 38. Text on page 3, as well as figure notes and 

table notes throughout the report, were revised to more clearly 

describe our methodology. 

GAO-09-185 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

February 2009

MEDICARE

Improvements Needed to Address Improper 

Payments in Home Health 

Highlights of GAO-09-185, a report to the 

Ranking Member, Committee on Finance, 

U.S. Senate 

Medicare spending on home health 

totaled $12.9 billion in 2006, up 

44 percent from 2002. Concerns 

have been raised that improper 

payments from practices indicating 

fraud and abuse may have 

contributed to Medicare home 

health spending and utilization. The 

Centers for Medicare & Medicaid 

Services (CMS), the agency that 

administers Medicare, is 

responsible for minimizing 

improper payments made on behalf 

of Medicare beneficiaries. GAO 

was asked to examine the growth 

in Medicare home health spending 

and utilization and the benefit’s 

vulnerability to improper 

payments. GAO focused on states 

with the highest growth in 

Medicare home health spending or 

utilization; fraudulent and abusive 

practices contributing to recent 

spending and utilization; and 

administrative issues that make it 

vulnerable to improper payments. 

GAO analyzed Medicare claims 

data; reviewed Medicare laws and 

regulations and CMS documents; 

and interviewed stakeholders and 

contractors that administer and 

protect the home health benefit. 

What GAO Recommends

CMS stated it would consider two 

of our four recommendations—to 

amend regulations to expand the 

types of improper billing practices 

that are grounds for revocation of 

billing privileges and to provide 

physicians who certify or recertify 

plans of care with a statement of 

services received by beneficiaries. 

CMS provided comments on, but 

neither agreed nor disagreed with 

our other two recommendations. 

California, Florida, Nevada, Oklahoma, Texas, and Utah were identified as 

experiencing the highest growth in Medicare home health spending or 

utilization from 2002 through 2006. These states ranked among the three 

highest in one or more of four spending and utilization indicators. Florida and 

Texas were among the top three on three or more indicators. Texas, Florida, 

and Nevada—the states with the highest percentage growth in Medicare home 

health spending from 2002 through 2006—had more than double the national 

spending growth rate of 44 percent during this period. 

 

Upcoding—overstating the severity of a beneficiary’s condition—by home 

health agencies (HHA) and other fraudulent and abusive practices contributed 

to Medicare home health spending and utilization. For example, a CMS 

contractor found that only 9 percent of claims were properly coded for 670 

Houston beneficiaries who had the most severe clinical rating and who were 

served by potentially fraudulent HHAs. Court cases and Department of Health 

and Human Services Office of Inspector General actions illustrated that 

kickbacks and billing for services not rendered also contributed to Medicare 

spending and utilization. Stakeholders identified these practices as common 

types of home health fraud and abuse. 

Inadequate administration of the Medicare home health benefit leaves the 

benefit vulnerable to improper payments. Although CMS policy charges its 

contractors, known as Regional Home Health Intermediaries (RHHI), with the 

responsibility of screening applications from prospective Medicare HHAs, 

CMS does not require RHHIs to verify the criminal history of persons named 

on the application. CMS does not generally include physicians, who are in a 

position to detect certain types of improper billing, in the agency’s efforts to 

detect improper payments. For instance, CMS does not provide physicians 

responsible for authorizing home health care with information that would 

enable them to determine whether an HHA was billing for unauthorized care. 

Current CMS regulations provide for the removal of HHAs or HHA officials 

from Medicare for one type of abusive billing—billing for services that could 

not have been rendered. However, the agency has yet to address the removal 

of HHAs or HHA officials engaging in other types of abusive or improper 

billing. 

View GAO-09-185 or key components.

For more information, contact James C. 

Cosgrove at (202) 512-7114 or 

cosgrovej@gao.gov. 
Page i GAO-09-185

Contents 

Letter 1

Results in Brief 4 

Background 6 

Six States Identified as Experiencing Highest Medicare Home 

Health Spending or Utilization Growth from 2002 through 2006 11 

Upcoding and Other Fraudulent and Abusive Practices Contributed 

to Home Health Spending and Utilization 15 

Inadequate Screening, Monitoring, Investigation, and Enforcement 

Procedures Leave Home Health Benefit Vulnerable to Improper 

Payments 21 

Revalidation and Targeted Local Efforts Show Potential to Reduce 

Home Health Fraud and Abuse 25 

Conclusions 28 

Recommendations for Executive Action 29 

Agency Comments and Our Evaluation 30 

Appendix I Medicare Home Health Spending and Utilization 

Growth in the United States, 2002 through 2006 33 

Appendix II Comments from the Centers for Medicare & 

Medicaid Services 41 

Appendix III GAO Contact and Staff Acknowledgments 48 

Tables 

Table 1: Examples of Medicare Home Health Court Cases and OIG 

Actions 19 

Table 2: Percentage Growth in Medicare Home Health Spending 

from 2002 through 2006, States in Descending Order 33 

Table 3: Percentage Growth in the Percentage of Medicare 

Beneficiaries Who Used HHA Services from 2002 through 

2006, States in Descending Order 35 

Table 4: Percentage Growth in the Number of HHAs that Billed 

Medicare from 2002 through 2006, States in Descending 

Order 37 

 Medicare Home Health 
Table 5: Percentage of Outlier Cases, States in Descending Order, 

2006 39 

Figures 

Figure 1: States with the Highest Percentage Growth in Medicare 

Home Health Spending from 2002 through 2006 12 

Figure 2: States with the Highest Percentage Growth in the 

Percentage of Beneficiaries Who Used Home Health 

Services from 2002 through 2006 13 

Figure 3: States with the Highest Percentage Growth in the Number 

of HHAs that Billed Medicare from 2002 through 2006 14 

Figure 4: States with the Highest Percentage of Outlier Cases in 

2006 15 

Abbreviations 

CERT Comprehensive Error Rate Testing 

CMP civil monetary penalty 

CMS Centers for Medicare & Medicaid Services 

CON Certificate of Need 

HHA home health agency 

HHS Department of Health and Human Services 

MAC Medicare Administrative Contractors 

MedPAC Medicare Payment Advisory Commission 

OIG Office of Inspector General 

PPS prospective payment system 

PSC Program Safeguard Contractor 

RAP Request for Anticipated Payment 

RHHI Regional Home Health Intermediary 

USAO U.S. Attorneys’ Offices 

ZPIC Zone Program Integrity Contractors 

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Page ii GAO-09-185 Medicare Home Health
Page 1 GAO-09-185

 

United States Government Accountability Office

Washington, DC 20548 

 

February 27, 2009 

The Honorable Charles E. Grassley 

Ranking Member 

Committee on Finance 

United States Senate 

Dear Senator Grassley: 

In 2006, Medicare spent $12.9 billion for the 2.8 million beneficiaries 

receiving home health care—in-home services provided to beneficiaries 

who need care following discharge from a hospital or who have chronic 

conditions that require continuing but intermittent care. Spending on the 

Medicare home health benefit grew about 44 percent from 2002 through 

2006, despite an increase of just less than 17 percent in the number of 

beneficiaries using the benefit during that 5-year period. In addition, the 

number of home health agencies (HHA) that billed Medicare increased 

from 6,507 in 2002 to 8,412 in 2006, with more than half of the increase 

occurring in just two states—Florida and Texas. The Medicare Payment 

Advisory Commission (MedPAC)1

 reported higher profit margins for HHAs 

for this period compared to other types of Medicare providers as well. 

MedPAC estimated average profit margins of 15.4 percent for freestanding 

HHAs in 2006, compared with profit margins of 13.1 percent for skilled 

nursing facilities, 12.4 percent for inpatient rehabilitation facilities, and 5.9 

percent for outpatient dialysis centers. 

The rapid growth in Medicare home health spending and the growth in the 

number of HHAs have led to concerns about whether improper payments 

to HHAs contributed to the high home health spending. Improper 

payments can be due to mistakes on the part of HHAs, as well as fraud and 

1

MedPAC is an agency that advises Congress on issues affecting the Medicare program. 

 Medicare Home Health 
 

abuse.2 For example, improper payments can occur when an HHA submits 

claims on behalf of beneficiaries who do not meet Medicare’s coverage 

criteria, for services that are not reasonable and necessary, or for services 

that are not delivered. 

For the 12-month period ending September 30, 2007, the Comprehensive 

Error Rate Testing (CERT) program—a program that monitors payment 

accuracy in the Medicare fee-for-service program—estimated that 

approximately 1.4 percent of Medicare home health claims were 

improperly paid, resulting in more than $209 million of improper 

payments. However, fraudulent claims may not be reflected in the CERT 

error rate estimate. Because the program uses a random sample to select 

claims, reviewers are unable to see provider billing patterns that indicate 

potential fraud when making payment determinations.3

One of the responsibilities of the Centers for Medicare & Medicaid 

Services (CMS)—the agency that administers Medicare—is to minimize 

improper payments made on behalf of its beneficiaries. GAO previously 

reported on CMS’s lack of controls over the Medicare home health benefit 

and its susceptibility to improper payments, including fraud and abuse.4

 

2

Generally, fraud involves intentional acts of deception or representation to deceive with 

knowledge that the action or representation could result in gain. Abuse typically involves 

actions that are inconsistent with sound fiscal, business, or medical practices and result in 

unnecessary cost. Officials from the Centers for Medicare & Medicaid Services (CMS)—the 

agency that administers Medicare—and stakeholders, including officials with national and 

state associations of home health care providers and the Department of Health and Human 

Services (HHS) Office of Inspector General (OIG), use the broad term “fraud and abuse” to 

describe a wide range of activities for which sanctions may be imposed under the Social 

Security Act, including submitting claims that are known (or should be known) to be false 

or fraudulent, are for a pattern of services that are not medically necessary, or are for 

services that were not provided as claimed. In this report we use the term to describe these 

types of activities. 

3

For example, a recent report from the HHS OIG found that the CERT error rate for durable 

medical equipment may be understated because claims for items that were considered 

proper by the CERT contractor were found to be not medically necessary or not delivered 

when additional documentation was reviewed by an OIG contractor. See HHS OIG, Medical 

Review of Claims for the Fiscal Year 2006 Comprehensive Error Rate Testing Program, 

report A-01-07-00508 (Aug. 22, 2008). 

4

See GAO, Medicare: Home Health Services: A Difficult Program to Control, 

GAO/HRD-81-155 (Sept. 25, 1981); Medicare: Need to Strengthen Home Health Care 

Payment Controls and Address Unmet Needs, GAO/HRD-87-9 (Dec. 2, 1986); and 

Medicare: Home Health Utilization Expands While Program Controls Deteriorate, 

GAO/HEHS-96-16 (Mar. 27, 1996). 

Page 2 GAO-09-185 Medicare Home Health
 

GAO has designated Medicare a high-risk program since 1990 because of 

the program’s vulnerability to improper payments. 

You expressed questions about the recent growth in Medicare home health 

spending and utilization and about whether the Medicare home health 

benefit was vulnerable to certain types of improper payments, specifically 

those that may indicate fraud and abuse. In this report we examined both 

home health spending and utilization growth and the vulnerability of the 

Medicare home health benefit to improper payments. Specifically, we 

identified: (1) the states where home health spending or utilization growth 

has been the highest; (2) the fraudulent and abusive practices that may 

have contributed to home health spending and utilization; (3) aspects of 

the Medicare home health benefit’s administration that make it susceptible 

to improper payments; and (4) lessons learned from recent CMS initiatives 

to reduce fraud and abuse in the home health benefit. 

To identify the states with the greatest home health spending or utilization 

growth from 2002 to 2006, we analyzed Medicare home health claims data 

for the 50 states and Washington, D.C., on various indexes, including 

growth in total spending; growth in percentage of beneficiaries using the 

benefit; growth in the number of HHAs that billed Medicare; and the 

number of home health cases qualifying for outlier payments, which are 

additional payments for particularly expensive beneficiaries.5

 We assessed 

the reliability of the 2002 and 2006 claims data from CMS by reviewing 

existing information about the data and the systems that produced them, 

and interviewing a CMS contractor about the data. We determined that 

these data were sufficiently reliable for the purposes of this report. 

To identify the types of fraud and abuse that may have contributed to 

home health spending and utilization, we interviewed stakeholders, 

including CMS officials, CMS contractors responsible for processing home 

health claims and home health program safeguard activities, Department 

of Health and Human Services (HHS) Office of Inspector General (OIG) 

officials,6

 and officials with national and state associations of home health 

 

5

Medicare claims data for 2006 were the most recent data available when we began our 

work. The number of HHAs that billed Medicare by state was based on the location of the 

HHA. The other indexes were based on the location of the beneficiary residence. 

6

The OIG’s mission is to protect the integrity of HHS programs, as well as the health and 

welfare of the beneficiaries of those programs. The OIG’s duties are carried out through a 

nationwide network of audits, investigations, inspections, and other mission-related 

functions performed by OIG components. 

Page 3 GAO-09-185 Medicare Home Health
 

care providers. We analyzed Medicare home health claims for the 50 states 

and Washington, D.C., from 2006, specifically those claims for 

beneficiaries receiving home health care for diabetes because some 

stakeholders expressed concerns about the legitimacy of payments for 

diabetic beneficiaries. We also reviewed information from court cases and 

OIG actions related to Medicare home health fraud and abuse. 

To identify aspects of the Medicare home health benefit and its 

administration that make it susceptible to improper payments, we 

reviewed CMS policies and procedures and relevant Medicare laws and 

regulations. We also reviewed relevant MedPAC and OIG reports about the 

Medicare home health benefit. In addition, we conducted site visits to one 

of the three CMS contractors responsible for processing Medicare home 

health claims and one of the four CMS contractors responsible for 

Medicare home health program safeguard activities. We also interviewed 

stakeholders to get their insights into aspects of the Medicare home health 

benefit that make it susceptible to fraud and abuse. 

To identify lessons learned from recent CMS initiatives to reduce fraud 

and abuse in the home health benefit, we interviewed knowledgeable CMS 

officials and reviewed documentation regarding the identified initiatives. 

We also conducted site visits to the CMS contractors to learn about their 

involvement in CMS’s recent initiatives. 

We conducted our work from July 2007 through February 2009 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain 

appropriate, sufficient evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

We identified six states—California, Florida, Nevada, Oklahoma, Texas, 

and Utah—as experiencing the highest Medicare home health spending or 

utilization growth from 2002 through 2006. These six states were among 

the three highest in one or more of the four spending and utilization 

indicators we examined using Medicare claims data. Two of the seven 

states—Florida and Texas—ranked in the top three on three or more 

indicators. Texas, Florida, and Nevada—the states with the highest 

percentage growth in Medicare home health spending from 2002 to 2006—

had more than double the national spending growth, and Texas’s increase 

in spending was more than three times the national growth rate. 

Results in Brief 

Page 4 GAO-09-185 Medicare Home Health
 

Upcoding—overstating the severity of a beneficiary’s condition—by HHAs 

and other fraudulent and abusive practices contributed to Medicare home 

health spending and utilization. For instance, a CMS contractor found that 

only 9 percent of claims were properly coded for 670 Houston 

beneficiaries who had the most severe clinical rating and who were served 

by potentially fraudulent HHAs. In addition, court cases and OIG actions 

illustrated how other fraudulent and abusive practices, including payments 

to physicians for referrals, payments by HHAs to beneficiaries for use of 

their Medicare identification numbers, and billing for services not 

rendered, contributed to spending and utilization. Stakeholders also 

identified these practices as common types of home health fraud and 

abuse, although some stakeholders acknowledged that they were difficult 

to prove. 

Inadequate administration of the Medicare home health benefit leaves the 

benefit vulnerable to improper payments. Although CMS policy charges its 

contractors, known as Regional Home Health Intermediaries (RHHI), with 

the responsibility of screening applications from prospective Medicare 

HHAs, CMS does not require its contractors to verify the criminal history 

of persons named on the application. CMS regulations require that HHAs 

undergo revalidation—which requires providers to resubmit enrollment 

information for reverification—at least once every 5 years. However, 

HHAs are not routinely subjected to revalidation. CMS also generally does 

not include physicians, who are in a position to detect certain types of 

improper billing, in the agency’s efforts to detect improper payments. For 

example, CMS does not routinely provide physicians authorizing home 

health care with information that would enable them to detect whether an 

HHA was billing for unauthorized services. Furthermore, current CMS 

regulations provide for the removal of HHAs or HHA officials from 

Medicare for just one narrowly defined type of abusive billing—billing for 

services that could not have been rendered. 

In recent CMS and contractor initiatives, CMS learned that revalidation 

and targeted enforcement efforts adapted to local billing practices show 

the potential to reduce home health fraud and abuse. For example, 

beginning in late 2007, CMS initiated a demonstration project requiring all 

HHAs in Houston and the greater Los Angeles area to undergo revalidation 

by resubmitting the CMS enrollment application for screening. Those 

HHAs that failed to resubmit their application had their billing privileges 

revoked. As of October 2008, 37 HHAs—out of approximately 845, which 

billed for approximately $6.1 million in fiscal year 2007—had their billing 

privileges revoked as part of the demonstration for failure to resubmit 

their information for revalidation. A contractor’s efforts in Houston and 

Page 5 GAO-09-185 Medicare Home Health
 

Miami also showed the potential to save money by adapting to local 

patterns of fraud and abuse. For instance, in Miami, the contractor worked 

with physicians to identify HHA overpayments in excess of $9 million. 

To help reduce improper payments to Medicare HHAs, we are 

recommending that the Administrator of CMS take four actions. The 

recommended actions will enable CMS to more effectively screen HHAs 

and HHA officials participating in the Medicare program, more effectively 

partner with physicians to identify potentially fraudulent and abusive 

activities, and more effectively sanction providers engaging in improper 

billing practices. 

In comments on a draft of this report, CMS stated it would consider two of 

our four recommendations—to amend regulations to expand the types of 

improper billing practices that are grounds for revocation of billing 

privileges and to provide physicians who certify or recertify plans of care 

with a statement of services received by beneficiaries. CMS provided 

comments on, but neither agreed nor disagreed with our other two 

recommendations. In addition to its comments on our recommendations, 

CMS highlighted its recent initiatives to address improper payments to 

HHAs, but also noted that resource constraints prevented contractors 

from engaging in certain activities discussed in our report. CMS also stated 

that the report only briefly mentions Certificates of Need (CON) 

requirements that are in place in some states to control health care 

capacity increases, which CMS believes could stem the increase of HHAs 

in high vulnerability areas. However, it was beyond the scope of this 

report to evaluate whether CMS’s resources were adequate to conduct 

these activities and to assess the impact of CON requirements, which 

states impose. CMS also provided comments pertaining to specific 

sections of the report, and we incorporated these comments where 

appropriate. 

Medicare requires that covered services be reasonable and medically 

necessary.7

 To qualify for home health care, Medicare beneficiaries must Background 

 

7

Medicare-covered services generally must be reasonable and medically necessary for the 

diagnosis or treatment of illness or injury or to improve the functioning of a malformed 

body part. 

Page 6 GAO-09-185 Medicare Home Health
 

(1) be homebound;8 (2) need skilled nursing services on an intermittent 

basis,9

 or physical or speech therapy, or have a continuing need for 

occupational therapy; (3) be under the care of a physician; and (4) be 

receiving services under a plan of care established and periodically 

reviewed by a physician. Beneficiaries who qualify for home health care 

may also receive medical social services and home health aide services if 

these services are part of the beneficiary’s plan of care. 

HHA Requirements and 

Payments 

An HHA becomes a Medicare-certified provider by meeting a series of 

requirements. First, the HHA must submit an enrollment application for 

screening by a Medicare contractor. The enrollment application includes 

information about key officials,10 operating capital, and practice location. 

The Medicare contractor reviews the application and, if the application 

meets the standards, recommends approval to the HHA’s state survey 

agency and CMS. Second, a state survey agency reviews the HHA to 

determine if the HHA is compliant with the federal conditions of 

participation, or an approved accrediting organization can accredit the 

HHA. The conditions of participation for HHAs include requirements 

concerning organizational structure, administration, patient rights, 

medical supervision, and patient assessment. The HHA must also meet the 

statutory and regulatory requirements in the state in which it is located, 

which may include licensure requirements or approval under a CON.11

 

8

Homebound means the patient’s condition is such that the patient is generally confined to 

home, and consequently leaving home would require a considerable and taxing effort. If the 

patient leaves the home, the patient may still be considered homebound if the absences 

from the home are infrequent or of relatively short duration, or the absences are due to the 

need to receive health care treatment. See 42 U.S.C. §§ 1395f(a)(2)(C), (8); 1395n(a)(2)(A). 

9

Intermittent means skilled nursing care that is either provided or needed on fewer than 7 

days each week or fewer than 8 hours of each day for periods of 21 days or less (with 

extensions in exceptional circumstances when the need for additional care is finite and 

predictable). See 42 U.S.C. §1395x(m)(7). 

10Key officials must be named on an enrollment application. These individuals are owners, 

directors (if the HHA is a corporation), managing employees, partners, and authorized and 

delegated officials. An authorized official is an appointed official (for example, chief 

executive officer or chairman of the board) with the legal authority to enroll an 

organization in the Medicare program, make changes or updates to the organization’s 

status in the Medicare program, and commit the organization to fully abide by Medicare 

statutes and regulations. Delegated officials are those authorized to report changes and 

updates to the organization’s enrollment record. 

11State laws or regulations that require prior approval for state health care capacity 

increases are commonly referred to as CON requirements. 

Page 7 GAO-09-185 Medicare Home Health
 

Third, if the HHA passes the state survey or receives accreditation, the 

HHA must sign a provider agreement with CMS. If the provider agreement 

is accepted by CMS, the HHA is enrolled and obtains Medicare billing 

privileges. To maintain billing privileges, an HHA must revalidate its 

enrollment information every 5 years by resubmitting and recertifying the 

accuracy of its enrollment information.12

HHAs are paid using a prospective payment system (PPS) for 60 days of 

care, called an episode. The amount of payment is based on an assessment 

of the patient’s needs at the beginning of the episode. The payment for 

each beneficiary is based on the national average cost of home health care 

services, adjusted by the beneficiary’s categorization into a payment group 

and the costliness of patients in each payment group relative to the 

average payment. Classification into a payment group is based on the 

severity of the beneficiary’s condition along three domains—clinical, 

functional, and service use.13 HHAs receive an up-front payment for each 

episode, based on submission of a Request for Anticipated Payment 

(RAP), which is 50 or 60 percent of the expected total payment.14 The HHA 

receives the balance of the payment after the episode is complete. Special 

payment adjustments exist for HHAs with beneficiaries who have few 

visits during an episode or who have partial episodes, and for HHAs with 

outlier beneficiaries. CMS significantly refined the home health PPS 

effective January 1, 2008.15

 

12CMS may require an HHA to revalidate more frequently based on complaints or 

compliance concerns. Providers must also resubmit their enrollment application under 

certain circumstances, for example, if certain information, such as their address, changes, 

or if they wish to reactivate their Medicare billing privileges. As of January 20, 2009, CMS 

requires contractors to undertake additional verification activities for providers who are 

changing certain information or who are reactivating their Medicare billing privileges. 

13The clinical domain measures whether the beneficiary has one or more clinical 

conditions, such as presence of wounds, problems with vision, or pain. The functional 

domain measures the beneficiary’s ability to perform activities of daily living, such as 

bathing, dressing oneself, or walking. The service use domain is based on the number of 

therapy visits provided and the episode’s sequence in a series of consecutive episodes. 

14HHAs receive a 60 percent up-front payment for initial episodes and a 50 percent up-front 

payment for subsequent episodes for beneficiaries who receive multiple episodes of care. 

15See 42 C.F.R. pt. 484 (2007), 72 Fed. Reg. 49762 (Aug. 29, 2007). The refinements to the 

payment system were designed to make home health payments more accurate. Changes 

included revisions to and expansion of the patient classification system and replacement of 

the single 10-therapy-visit threshold with three graduated therapy thresholds. 

Page 8 GAO-09-185 Medicare Home Health
 

As of November 2008, CMS contracted with three Regional Home Health 

Intermediaries (RHHI) to process and pay home health claims.16 In 

processing and paying claims, RHHIs are responsible for minimizing 

improper payments. The RHHIs also are responsible for screening HHA 

enrollment applications and making recommendations to CMS and state 

survey agencies about whether the applications should be approved. 

CMS Contractor Roles and 

Responsibilities in Home 

Health 

As of November 2008, CMS contracted with four Program Safeguard 

Contractors (PSC) that are responsible for preventing, detecting, and 

deterring fraud in the Medicare home health benefit through benefit 

integrity investigations and referrals to law enforcement.17 PSCs 

coordinate their activities with the RHHI responsible for claims processing 

in their jurisdiction. PSCs also work with the OIG and other law 

enforcement organizations to pursue criminal or civil penalties. Specific 

activities undertaken by PSCs to identify and prevent fraud and abuse 

include analysis of claims data to identify improper billing that may 

indicate fraud or abuse and on-site visits to beneficiaries and providers. 

Medical review, performed either before or after a claim is approved for 

payment, is one way that RHHIs and PSCs ensure that claims are being 

paid correctly.18 Medical review involves obtaining HHA documentation, 

such as the beneficiary’s plan of care and medical records, to determine 

whether the beneficiary meets Medicare’s coverage criteria for home 

health services, whether the care provided was reasonable and necessary, 

and whether the claim was coded properly. 

 

16The RHHIs are responsible for processing claims and enrolling providers in a given 

jurisdiction. In November 2008, the three RHHIs were National Government Services, 

Palmetto GBA, and Cahaba Government Benefit Administrators, LLC. CMS is currently 

restructuring its operations by contracting with 15 Medicare Administrative Contractors 

(MAC) that will be responsible for claims processing, provider enrollment, provider 

customer service, and other activities within a given jurisdiction. Four of the 15 MACs will 

be responsible for home health. 

17Each PSC is responsible for a separate jurisdiction. The four PSCs were TriCenturion; 

New England Benefit Integrity Support Center; TrustSolutions, LLC; and Cahaba Safeguard 

Administrators, LLC. CMS is transitioning its benefit integrity work from PSCs to Zone 

Program Integrity Contractors (ZPIC). ZPICs will be responsible for benefit integrity for all 

aspects of the Medicare benefit, whereas PSCs work on specific parts of the Medicare 

benefit. Two ZPIC contracts were awarded in September 2008, and CMS estimates the 

transition to ZPICs will be complete by the end of calendar year 2009. 

18Prepayment medical reviews occur after the up-front payment has been made, but before 

the final payment for the episode. Postpayment reviews occur after the final payment. 

Page 9 GAO-09-185 Medicare Home Health
 

CMS and its contractors can take a series of actions against HHAs with a 

pattern of improper billing or that are suspected of engaging in fraud or 

abuse. Initially, an RHHI can educate an HHA about proper billing if the 

HHA’s billing pattern appears to be aberrant. RHHIs can flag a percentage 

of the HHA’s submitted claims for medical review if the HHA’s billing 

pattern appears aberrant or there is knowledge of abuse in the service 

area. RHHIs can also require the HHA to return any money it received in 

excess of the proper amount (called an overpayment) or hold payment for 

current claims while an overpayment is calculated if there is reason to 

believe that the HHA has engaged in fraud or has been overpaid in the past 

(called a payment suspension). Finally, if CMS or its contractors determine 

that an HHA billed Medicare for a service that could not have been 

provided on the date claimed, CMS can revoke the HHA’s Medicare billing 

privileges and it would be barred from re-enrolling in the Medicare 

program for 1 to 3 years. 

Actions in Response to 

Improper Billing 

If an HHA is suspected of engaging in fraud or other type of unlawful 

activity, PSCs must refer the HHA to the OIG. Under the Social Security 

Act, the OIG may take certain administrative actions against individuals 

and HHAs, including those found to have submitted false or fraudulent 

claims. The OIG may impose sanctions including the assessment of civil 

monetary penalties (CMP) and exclusion of an individual or organization 

from participation in federal health programs for a period of time. The 

Social Security Act also provides for criminal penalties for certain 

activities, including certain false statements and kickbacks, which are 

payments to physicians or others to induce referrals or in return for 

referrals.19 The OIG and PSCs may also refer cases to other law 

enforcement entities such as the Federal Bureau of Investigation or state 

law enforcement agencies. Upon investigation, these entities can decide 

whether to pursue civil or criminal prosecution. 

Past GAO Work We have reported for more than two decades on program weaknesses in 

Medicare’s home health benefit. Previous reports attributed improper 

billing in Medicare home health to 

 

19In general, the so-called anti-kickback statute provides for criminal penalties against 

those who knowingly and willfully solicit, receive, offer, or pay remuneration to induce or 

in return for referring an individual to a person for the furnishing or arranging for the 

furnishing of items or services for which payment may be made under a federal health care 

program. See 42 U.S.C. §§ 1320a-7b(b). 

Page 10 GAO-09-185 Medicare Home Health
 

• vagueness in the coverage criteria, particularly uncertainty over the exact 

meaning of terms such as homebound and intermittent care;20

• insufficient physician involvement and inadequate monitoring of 

beneficiary status;21

• insufficient information being submitted with the claims upon which to 

base a coverage decision;22 and 

• the difficulty RHHIs have in assessing, from paper review alone, whether a 

beneficiary meets the eligibility criteria, whether the services received are 

appropriate given the beneficiary’s current condition, and whether the 

beneficiary is actually receiving the services billed to Medicare.23

Medicare home health spending or utilization growth from 2002 through 

2006 was highest in California, Florida, Nevada, Oklahoma, Texas, and 

Utah. These states ranked among the top three in at least one of four 

spending and utilization indicators. Two states—Florida and Texas—

ranked in the top three on three or more indicators. 

States with the highest percentage growth in Medicare home health 

spending from 2002 through 2006 were Texas (144 percent), Florida 

(90 percent), and Nevada (88 percent). All three states had at least double 

the national growth rate of 44 percent, and Texas’s increase in spending 

was more than three times the national growth rate. (See fig. 1.) (See app. I 

for the growth rates for all individual states.) 

Six States Identified 

as Experiencing 

Highest Medicare 

Home Health 

Spending or 

Utilization Growth 

from 2002 through 

2006 

 

20See GAO/HRD-81-155 and GAO/HRD-87-9. 

21See GAO/HRD-81-155. 

22See GAO/HEHS-96-16. 

23See GAO/HEHS-96-16. 

Page 11 GAO-09-185 Medicare Home Health
 

Figure 1: States with the Highest Percentage Growth in Medicare Home Health 

Spending from 2002 through 2006 

Percentage

0

20

40

60

80

100

120

140

160

Texas Florida Nevada U.S. 

90% 88%

144%

44%

Source: GAO analysis of CMS data.

Note: Analysis based on location of beneficiary residence. If the analysis was based on HHA location, 

the top three states would remain the same but the growth rates would change slightly: Texas 

(143 percent), Florida (89 percent), Nevada (88 percent), and the U.S. average (43 percent). 

Texas (57 percent), Oklahoma (30 percent), and Florida (28 percent) had 

the highest percentage growth in the percentage of Medicare beneficiaries 

who used home health services from 2002 through 2006. The U.S. 

percentage growth was 12 percent. (See fig. 2.) (See app. I for the 

percentage growth in percentage of all Medicare beneficiaries who used 

home health services, for all individual states.) 

Page 12 GAO-09-185 Medicare Home Health
 

Figure 2: States with the Highest Percentage Growth in the Percentage of 

Beneficiaries Who Used Home Health Services from 2002 through 2006 

Percentage

0

10

20

30

40

50

60

Texas Oklahoma Florida U.S. 

12%

57%

30%

28%

Source: GAO analysis of CMS data.

Note: Analysis based on location of beneficiary residence. 

Texas (102 percent), Florida (100 percent), and Nevada (75 percent) had 

the highest percentage growth in the number of HHAs that billed Medicare 

from 2002 through 2006. In comparison, the national growth rate was 

29 percent. (See fig. 3.) (See app. I for the percentage growth in number of 

HHAs that billed Medicare for all individual states.) 

Page 13 GAO-09-185 Medicare Home Health
 

Figure 3: States with the Highest Percentage Growth in the Number of HHAs that 

Billed Medicare from 2002 through 2006 

Percentage

0

10

20

30

40

50

60

70

80

90

100

110

Texas Florida Nevada U.S. 

29%

100%

75%

102%

Source: GAO analysis of CMS data.

Note: Analysis based on location of HHA. 

States with the highest percentage of home health episodes that were 

outliers in 2006 were Florida (12 percent), Utah (11 percent), and 

California (7 percent). The percentage of outlier cases nationwide was 

4 percent. (See fig. 4.) (See app. I for the percentage of outlier cases for all 

individual states.) 

Page 14 GAO-09-185 Medicare Home Health
 

Figure 4: States with the Highest Percentage of Outlier Cases in 2006 

Source: GAO analysis of CMS data.

Percentage

0

5

10

15

Florida Utah California U.S. 

4%

11%

12%

7%

Note: Analysis based on location of beneficiary residence. 

Upcoding, or overstating the severity of a beneficiary’s condition, and 

other fraudulent and abusive practices were problems in some areas and 

contributed to Medicare home health spending and utilization. Data 

analyses that we, CMS, and one PSC conducted showed that upcoding and 

billing for unnecessary care contributed to spending and utilization.24

Stakeholders also told us that common types of upcoding and billing for 

unnecessary care in home health were billing for outlier cases when this 

level of care was not required, billing for beneficiaries who were not 

homebound, and billing for therapy visits that may have been medically 

unnecessary.25 Other fraudulent and abusive practices, including 

kickbacks, payments from HHAs to beneficiaries for use of their Medicare 

Upcoding and Other 

Fraudulent and 

Abusive Practices 

Contributed to Home 

Health Spending and 

Utilization 

 

24While HHA providers could bill for care that they do not realize is unnecessary, this 

report’s discussion of billing for unnecessary care refers to billing patterns that suggest the 

HHA is intentionally engaging in a fraudulent and abusive practice. 

25Under the PPS, one way that Medicare home health beneficiaries are grouped along the 

service utilization dimension is by the number of therapy visits. Prior to 2008, HHAs serving 

beneficiaries that received 10 or more therapy visits received higher payments than HHAs 

serving beneficiaries who received fewer visits. See Medicare Program: Prospective 

Payment System for Home Health Agencies, 65 Fed. Reg. 41,128 (July 3, 2000). 

Page 15 GAO-09-185 Medicare Home Health
 

identification numbers, and billing for services not rendered, also 

contributed to Medicare home health spending and utilization.26 Court 

cases and OIG actions illustrate how these practices contributed to 

improper HHA spending and utilization. In addition, stakeholders 

identified these practices as common types of home health fraud and 

abuse, although some stakeholders acknowledged that they were difficult 

to prove. 

Medicare home health spending and utilization was due in part to 

upcoding Medicare claims by billing for outlier cases that qualified for 

additional payments, although beneficiaries did not require this level of 

care. For example, in Miami-Dade County, a pattern of an unusually high 

number of outlier cases in 2007 indicated fraudulent upcoding of Medicare 

home health claims. According to one PSC’s analysis, in 2007, 57.5 percent 

of home health cases in Miami-Dade County were outlier cases, compared 

with 0.4 percent in Chicago, 8.6 percent in Dallas, 2.2 percent in Houston, 

and 2.2 percent in Atlanta.27 The PSC’s analysis showed that Miami-Dade 

HHAs received more than $550 million in outlier payments in 2007—an 

amount more than four times greater than the combined total paid to 

HHAs in Chicago, Dallas, Houston, and Atlanta, even though there were 

more people over age 65 in each of the other four metropolitan areas. 

The PSC also reported in its written analysis to CMS that many MiamiDade County HHAs provided daily skilled nursing visits to administer 

insulin injections for diabetic beneficiaries,28 which resulted in higher 

costs per beneficiary and outlier payments, although beneficiaries may not 

have required this level of care.29 In a November 2007 report to CMS, this 

PSC stated that Miami-Dade County beneficiaries and their caregivers had 

 

26While an HHA could unintentionally bill for a service that is not rendered, this report’s 

discussion of billing for services not rendered refers to billing patterns that suggest the 

HHA is knowingly engaged in a fraudulent and abusive practice. 

27Outlier payments may not exceed 5 percent of the national total of Medicare home health 

payments projected or estimated in a given fiscal year. 

28Medicare beneficiaries can receive skilled nursing services from an HHA for insulin 

injections if they cannot inject themselves and no other person is willing and able to 

administer the injections. 

29A recently enacted Florida law requires all HHAs to report to the state survey agency, on a 

quarterly basis, the number of insulin-dependent diabetic patients receiving insulininjection services from the HHA and the number of patients receiving home health services 

from that agency. The first report was due October 15, 2008, for the period from July 2008 

through September 2008. See Fla. Stat. Ann. § 400.474(6)(f)1.3. (West 2008). 

Page 16 GAO-09-185 Medicare Home Health
 

been coached in how to respond to investigators verifying whether the 

skilled nursing services for insulin injections were necessary. For 

example, according to the PSC representatives, some beneficiaries said 

that they were unable to administer their own injection due to poor vision, 

yet they were able to read the investigators’ business cards. 

Our study of 2006 Medicare home health data from U.S. counties with 100 

or more home health episodes confirmed the PSC’s analysis by indicating 

that, compared with the rest of the country, a large percentage of home 

health cases in Miami-Dade County involved diabetic beneficiaries. Nearly 

50 percent of all Medicare beneficiaries in Miami-Dade County who 

received home health services in 2006 had a diagnosis of diabetes. The 

average for all counties included in the analysis, about 16 percent, was 

significantly lower. Total Medicare payments for diabetes episodes in 

Miami-Dade County exceeded $221 million in 2006. This figure was almost 

double the diabetes-related payments in Los Angeles County, which had 

nearly twice as many Medicare beneficiaries using home health services as 

Miami. The average diabetes payment among all counties with at least one 

beneficiary who had a diabetes home health episode was less than 

$1 million. 

In addition to fraudulent and abusive practices involving outlier payments, 

stakeholders reported that before CMS amended its payment methodology 

in 2008, some HHAs billed for 10 or more therapy visits in order to qualify 

for additional Medicare payments, even though these visits may not have 

been medically necessary.30 CMS concluded that the 10-therapy-visit 

threshold, established during the implementation of the PPS in 2000, 

distorted service delivery patterns by creating financial incentives for 

HHAs to bill for 10 therapy visits. CMS analysis showed that, prior to 

implementation of the PPS, the highest concentration of therapy visits per 

episode ranged from 5 to 7 visits. After implementation of the PPS, the 

highest concentration of therapy visits grew to 10 to 13 visits per episode. 

Some stakeholders reported another type of fraud and abuse in which 

HHAs submitted claims for beneficiaries who were not homebound or 

who required fewer services than were provided. For example, several 

 

30Effective January 1, 2008, CMS amended its home health PPS. One change was the 

creation of additional therapy thresholds “to reduce the undesirable emphasis in treatment 

planning on a single therapy visit threshold, and to restore the primacy of clinical 

considerations in treatment planning for rehabilitation patients.” 72 Fed. Reg. 25356, 25363 

(May 4, 2007). 

Page 17 GAO-09-185 Medicare Home Health
 

Houston HHAs had an unusually high percentage of patients with the most 

severe clinical rating.31 One PSC interviewed 670 Houston beneficiaries 

who had the most severe clinical rating and who were patients of HHAs 

identified by the PSC as having aberrant billing patterns. The PSC found 

91 percent of claims for these beneficiaries to be in error. Nearly 

50 percent of the beneficiaries were not homebound and therefore were 

not eligible to receive any Medicare home health services. The 

investigators also found that while 39 percent of the beneficiaries they 

interviewed were eligible for the benefit, their clinical severity had been 

exaggerated. The PSC concluded that only 9 percent of claims for the 670 

beneficiaries were properly coded.32 In addition, the PSC found that other 

home health beneficiaries it interviewed were not homebound; for 

instance, some were mowing their lawns when investigators came to 

interview them. 

In addition, court cases and OIG actions illustrate how other fraudulent 

and abusive practices such as kickbacks, payments by HHAs to 

beneficiaries for use of their Medicare identification numbers, and billing 

for services not rendered contributed to Medicare home health spending 

and utilization. For example, in October 2004, a registered nurse who 

owned the two largest HHAs in California pled guilty to defrauding 

Medicare of $40 million by billing for services not rendered or medically 

unnecessary; falsifying medical records to support fraudulent claims; and 

paying kickbacks.33 In addition, a Pennsylvania HHA agreed to pay 

$300,000 and enter into a settlement agreement with the OIG to resolve its 

liability in May 2005 for alleged kickbacks. The HHA allegedly paid 

Pennsylvania and Florida physicians kickbacks in the form of loans, 

consulting fees, and rental space payments to induce them to refer 

beneficiaries requiring home health services or durable medical 

equipment, or both, paid for by Medicare. (See table 1 for examples of 

court cases and OIG actions.) 

 

31HHAs receive higher payments for claims for patients with this rating than they receive 

for claims for patients with less severe ratings. 

32The PSC found that the remaining claims were denied due to services that were not 

rendered, not reasonable or necessary, or for other reasons. 

33The HHA owner’s actions were investigated after a payroll clerk at one of the HHAs filed 

a lawsuit against the HHAs, the owner, and her husband. 

Page 18 GAO-09-185 Medicare Home Health
 

Table 1: Examples of Medicare Home Health Court Cases and OIG Actions 

Case/OIG action, 

state, date Description 

Court Case 

Florida 

March 2008 

Three defendants who owned four Miami health care corporations 

were convicted of defrauding Medicare of more than $14 million by, 

among other things, providing unnecessary medical services, home 

health services, and durable medical equipment. The owners were 

also found guilty of receiving kickbacks in exchange for beneficiary 

referrals. 

OIG Settlement 

Florida 

March 2008 

A Florida HHA agreed to pay $178,000 to settle a case in 

which it was alleged that the HHA paid kickbacks for beneficiary 

referrals. 

Court Case 

Louisiana 

December 2007 

The owner of a Louisiana HHA was found guilty of defrauding 

Medicare over a 5-year period and was ordered to pay more than 

$4.6 million in damages and penalties. Among other charges, the 

owner was convicted of making illegal payments to physicians for 

referrals. The physicians were members of the company’s advisory 

board. 

OIG Settlement 

Texas 

December 2007 

A Texas HHA agreed to pay $86,327 to settle a case in which it was 

alleged that the HHA paid kickbacks. The OIG alleged that the HHA 

supplied free nursing and community development services to 

providers in order to induce them to refer patients for home health 

services. 

Court Case 

California 

May 2006 

A California HHA owner was sentenced to 2 years in prison and 

ordered to pay Medicare $600,000 in restitution for Medicare fraud. 

The HHA owner pled guilty to, among other things, paying kickbacks 

to physicians to provide unnecessary services, billing Medicare for 

home health services that were medically unnecessary or not 

performed as claimed, and falsifying medical records to conceal the 

fraud. 

OIG Settlement 

Pennsylvania 

May 2005 

A Pennsylvania HHA agreed to pay $300,000 to settle a case in 

which it was alleged that the HHA had paid kickbacks under 

Medicare. The OIG alleged that from February 1997 through May 

1998, the HHA made payments in the form of loans, consulting fees, 

and monthly space rental payments to physicians in Pennsylvania 

and Florida to induce their referral of Medicare beneficiaries. 

OIG Settlement 

Florida 

February 2005 

A nationwide HHA agreed to pay $130,000 to resolve its liability for 

kickbacks allegedly paid by one of its franchisees. The OIG alleged 

that the franchisee paid commissions to nonemployees for each 

patient referred. The amounts of the commissions were allegedly 

based on the type of services utilized by the referred patients. 

Court Case 

California 

October 2004 

The owner of the two largest HHAs in California pled guilty to 

defrauding Medicare of approximately $40 million and filing false tax 

returns to conceal the illegal income. Among other things, the HHAs 

were alleged to have made illegal payments to marketers, 

physicians, patients, and nurses and then to have billed Medicare for 

services that were not medically necessary or not performed. 

Source: GAO analysis of information from U.S. Attorneys’ Offices and the HHS OIG. 

Note: Data are from the sources’ respective Web sites. 

Page 19 GAO-09-185 Medicare Home Health
 

Stakeholders, including industry representatives, also identified 

kickbacks, payments by HHAs to beneficiaries for use of their Medicare 

identification numbers, and billing for services not rendered as common 

types of home health fraud and abuse. For example, a CMS official and 

representatives from an RHHI, PSCs, and HHA associations told us that 

some HHAs offered physicians kickbacks. For instance, representatives 

from home health associations said that physician kickbacks were so 

common in some parts of Florida that many physicians expected payment 

for referrals and inquired how much the HHAs paid for referrals. 

Stakeholders also told us that, based on their experience, some HHAs 

hired physicians to serve as medical directors to disguise payments for 

referrals by those physicians and that some HHAs had as many as 20 or 30 

medical directors.34

In addition, stakeholders told us that some HHAs offered kickbacks to 

nurses, hospital discharge planners, and assisted living facility managers 

for beneficiary referrals. For example, a CMS official and a PSC 

representative told us that when some nurses were hired by a new HHA 

employer, the nurses moved their patients from their former HHA 

employer to the new one and received bonuses according to the number of 

beneficiaries they brought with them. The PSC representative said that 

beneficiaries were often very loyal to their nurses and often did not realize 

they were being shifted among HHAs. In another practice reported by a 

Florida home health association representative, HHAs allegedly paid 

managers at senior housing projects and assisted living facilities abovemarket rent in exchange for beneficiary referrals. 

According to stakeholders, HHAs that billed Medicare for services that 

were not rendered may have paid beneficiaries for use of their Medicare 

identification numbers. Stakeholders said that HHAs offered beneficiaries 

payments in the form of cash or other goods, such as cigarettes or alcohol. 

In addition, a CMS official told us that some Miami beneficiaries reported 

that HHA nurses had given them insulin injections that investigators 

suspected they did not actually receive. This official also reported that 

 

34CMS does not require HHAs to have medical directors and does not ask HHAs to specify 

the names and number of medical directors it employs on its enrollment application. 

However, Florida recently enacted a law that allows the state survey agency to deny, 

revoke, or suspend the license of an HHA that contracts with more than one medical 

director. The law also prohibits HHAs from giving remuneration to a physician unless there 

is a medical director contract in effect. The law, which went into effect July 1, 2008, also 

carries a $5,000 fine. See Fla. Stat. Ann. § 400.476(6)(h), (i). (West 2008). 

Page 20 GAO-09-185 Medicare Home Health
 

Miami HHAs have submitted claims for visits that were probably not 

provided, such as claims for visits that allegedly occurred when hurricanes 

were in the area. 

Stakeholders told us that kickbacks, payments to beneficiaries for illegal 

use of their Medicare identification numbers, and billing for services not 

rendered were difficult to prove. For example, one PSC representative 

noted that in the past, the PSC could have relied on either beneficiaries or 

physicians to testify about the HHA activity and thereby to act as a 

safeguard against fraud and abuse, but with all parties involved in the 

practices, this type of cooperation is less likely. An official from the OIG’s 

Miami Office of Investigations echoed these concerns, stating that some 

South Florida beneficiaries purportedly received more income in illegal 

HHA payments than from their monthly disability checks and therefore 

were less likely to be truthful about HHA fraudulent and abusive practices. 

Inadequate administration of the Medicare home health benefit leaves the 

benefit vulnerable to improper payments. Although CMS policy charges 

RHHIs with the responsibility of screening applications from prospective 

Medicare HHAs, CMS does not require RHHIs to verify the criminal history 

of persons named on the application. Furthermore, while CMS regulations 

require that HHAs undergo revalidation at least once every 5 years, HHAs 

are not routinely subjected to revalidation. CMS generally does not include 

physicians, who are in a position to detect certain types of improper 

billing, in CMS efforts to detect improper payments. CMS does not 

routinely provide physicians authorizing home health care with the 

information needed to detect billing for unauthorized services. 

Inadequate Screening, 

Monitoring, 

Investigation, and 

Enforcement 

Procedures Leave 

Home Health Benefit 

Vulnerable to 

Improper Payments 

Inadequate Screening May 

Allow Problem Providers 

to Enter Medicare 

Gaps in screening potential and current HHAs may allow problem 

providers to enter and remain in the Medicare program. Although CMS 

policy charges RHHIs with the responsibility of screening applications 

from prospective Medicare HHAs, CMS does not require RHHIs to verify 

the criminal history of persons named on the initial enrollment 

application.35 An application is subject to denial if an owner has been 

 

35Criminal history that must be reported on the enrollment application includes convictions 

and guilty pleas for selected felonies within 10 years of enrollment or reenrollment and 

convictions for misdemeanors. 

Page 21 GAO-09-185 Medicare Home Health
 

convicted of certain types of felonies within the past 10 years or if the 

application contains false or misleading information.36 Because RHHIs do 

not verify the criminal history responses, it is impossible for them to 

identify false or misleading information or owners who have been 

convicted of a felony within the past 10 years. 

CMS regulations require that HHAs resubmit and recertify the accuracy of 

their enrollment information every 5 years,37 but HHAs are not routinely 

subjected to this revalidation. CMS adopted the revalidation requirement 

in 2006 as a systematic means of collecting updated information about the 

nation’s Medicare providers and reexamining their enrollment eligibility. 

Revalidation requires that the HHA submit a new enrollment application 

and any supporting documentation, and the RHHIs to validate the 

information provided and, in some cases, to make an on-site inspection of 

the HHA. In the preamble to the rule establishing the revalidation 

requirement, CMS noted that revalidation will “ensure that Medicare 

beneficiaries are receiving services furnished only by legitimate providers 

and suppliers, and strengthen [CMS’s] ability to protect the Medicare Trust 

Funds.”38

Gaps in Monitoring Claims 

Make It Easy for Improper 

Payments to Occur 

CMS generally does not include physicians, who are in a position to detect 

certain types of improper billing, in CMS efforts to detect improper 

payments. CMS does not routinely provide physicians authorizing home 

health care with information that would allow the physicians to detect 

billing for unauthorized services. Physicians must authorize the type and 

frequency of home health visits but do not receive verification of the visits 

included in the HHA’s claim to ensure that those claimed were consistent 

with those authorized. Stakeholders reported to us numerous instances of 

HHAs billing for services unauthorized by the physician. 

 

3642 C.F.R. §§ 424.530(a)(3), (4) (2007). Other grounds for denial of enrollment include 

noncompliance with Medicare enrollment requirements and a determination by CMS 

that the provider is not operational. As of January 1, 2009, providers also may be 

denied enrollment if the owner has an overpayment at the time the application is filed 

that has not been repaid in full or has been placed under payment suspension. 42 C.F.R. 

§§ 424.530(a)(6), (7) (2008). 

3742 C.F.R. § 424.515 (2007). 

3871 Fed. Reg. 20754, 20758-9 (Apr. 21, 2006). 

Page 22 GAO-09-185 Medicare Home Health
 

RHHIs are responsible for monitoring home health claims, but limitations 

in the number of medical reviews they conduct leave the benefit 

vulnerable to improper payments, including payments resulting from fraud 

and abuse. Two of the three RHHIs told us they are limited by CMS budget 

constraints in the number of medical reviews they can conduct. In fiscal 

year 2007, 0.5 percent of the more than 8.7 million HHA claims processed 

were subjected to prepayment medical review by RHHIs. The RHHIs told 

us they primarily focus on those claims submitted by HHAs whose billing 

patterns exhibit differences from their peers on such measures as average 

number of nursing visits per episode, episodes per beneficiary, and cost 

per episode. The RHHIs reported to us that in fiscal year 2007 they denied, 

in whole or in part, 41 percent of nearly 44,000 claims reviewed prior to 

payment and 24 percent of the total submitted charges, for $23 million in 

savings. 

RHHIs rarely conduct postpayment medical reviews to recover funds 

previously paid in error, even when an HHA is identified as billing 

improperly through prepayment review. The RHHIs reported to us that in 

fiscal year 2007 they conducted postpayment medical review on 640 of the 

over 8.7 million claims processed, recouping $486,000 in overpayments. 

According to a CMS official, the emphasis on prepayment review is to 

avoid pursuing payments after they have been made. 

Challenges in Investigation 

and Enforcement Leave 

Home Health Benefit 

Vulnerable to Improper 

Payments 

Investigation and enforcement challenges restrict the number of HHAs 

that are investigated and sanctioned for improper billing. Substantiating 

improper payments for the home health benefit is time consuming and 

labor intensive. PSCs identify HHAs to investigate based on referrals from 

the RHHIs, other contractors, law enforcement entities, or from data 

analysis. Their investigations can be based either on claims already paid or 

on RAP submissions. For instance, one PSC noted that evidence to 

substantiate medically unnecessary services or possible upcoding is best 

gathered as close to the date the beneficiary was assessed as possible. 

This requires coordination between the RHHI and the PSC so that the PSC 

can assess the beneficiaries, in person, within days of submission of the 

RAP to the RHHI. Once improper billing is established, the PSC must also 

determine the amount of improper payments the HHA has already 

received.39 One PSC told us that a nurse could conduct medical review of 

 

39In fiscal year 2007, through medical review of 1,296 claims, the PSCs identified $28.1 

million in HHA overpayments for recoupment by the RHHIs. 

Page 23 GAO-09-185 Medicare Home Health
 

about four home health claims per week due to the amount of information 

that can comprise a 60-day episode. Once the PSC has gathered sufficient 

evidence, it may refer the HHA to the OIG. If the OIG does not accept the 

referral within a certain period of time, the PSC may present the case to 

other law enforcement agencies for further investigation. 

Current CMS regulations provide for the removal of providers or HHA 

officials from the program for abuse of billing privileges in limited 

circumstances. Those removed may not reenroll for a minimum of 1 year 

and a maximum of 3 years.40 Prior to August 26, 2008, the regulations 

provided for CMS to revoke a provider’s billing privileges, but only for 

reasons other than improper billing, such as conviction for certain felonies 

or submission of false or misleading information on the enrollment 

application. Effective August 26, 2008, CMS may also revoke a provider’s 

billing privileges for one narrowly defined type of abusive billing—

submission of claims for services that could not have been furnished on 

the date claimed. This would include claims for services provided to 

deceased beneficiaries and claims for services when the physician or 

beneficiary was not in the state or not in the country when services were 

furnished.41 Discussing the new provision, CMS stated that the expanded 

regulation was not intended to be used for isolated occurrences or 

accidental billing errors, but was directed at those “providers and 

suppliers who are engaging in a pattern of improper billing” and further 

explained that it would revoke billing privileges only when there were at 

least three instances of abusive billing. CMS also stated that it might 

propose other provisions related to revocation of provider and supplier 

billing privileges in the future.42

While the OIG may remove providers from the Medicare program for 

fraudulent billing, the OIG has rarely used its authority to exclude in the 

absence of conviction for fraud. If an HHA or individual is convicted of a 

crime related to the delivery of an item or service under Medicare, federal 

law requires the OIG to exclude them from participating in any federal 

health care program. The OIG also has the discretionary authority to 

exclude HHAs and individuals based on the OIG’s determination that the 

HHA paid kickbacks, submitted claims for services that were not provided 

 

4073 Fed. Reg. 36448, 36461 (June 27, 2008) (to be codified at 42 C.F.R. § 424.535(c)). 

4173 Fed. Reg. 36461 (June 27, 2008) (to be codified at 42 C.F.R. § 424.535(a)(8)). 

4273 Fed. Reg. 36455, 36457 (June 27, 2008). 

Page 24 GAO-09-185 Medicare Home Health
 

as claimed or were unnecessary, or submitted false or fraudulent claims. 

HHAs that furnish services in excess of the needs of patients or who make 

false representations of material facts in support of a claim may also be 

excluded under the OIG’s discretionary authority. The OIG has rarely used 

its discretion to exclude on the basis of fraudulent billing in the absence of 

a conviction for fraud. In calendar year 2007, less than half of 1 percent of 

all individual exclusions were for submitting false claims, submitting 

claims for services that were not medically necessary, or making false 

representations of material facts on a claim or documentation used to 

support a claim.43 Rather than exclude on the basis of an OIG 

determination or refer these cases for prosecution,44 the OIG may impose a 

CMP or seek a settlement. Under a settlement agreement, the provider or 

entity consents to the obligations specified by the OIG in exchange for the 

OIG’s agreement not to seek exclusion. 

In recent CMS and contractor initiatives, CMS learned that revalidation 

and targeted efforts adapted to local circumstances show the potential to 

reduce home health fraud and abuse. For example, as part of a 2-year 

demonstration, CMS is requiring all HHAs in Houston and the greater Los 

Angeles area to undergo revalidation at least once during the 

demonstration. As of October 2008, 37 HHAs (out of approximately 845) in 

the areas have had their billing privileges revoked for failure to resubmit 

their information. These 37 HHAs billed for approximately $6.1 million in 

fiscal year 2007. PSC efforts in Houston and Miami have also shown the 

potential to save Medicare money. The PSC needed to adapt its strategies 

to the different identified fraudulent and abusive practices in the two 

Revalidation and 

Targeted Local Efforts 

Show Potential to 

Reduce Home Health 

Fraud and Abuse 

 

43In calendar year 2007, the HHS OIG excluded 3,127 individuals. Ninety-eight percent of 

the exclusions of individuals in 2007 were based on a conviction, license revocation, or 

suspension. Less than 2 percent were based on default of student loan obligations. In the 

same year, the HHS OIG excluded 138 entities, including 12 entities on the basis of the 

OIG’s determination that the provider submitted false claims, submitted claims for services 

that were not medically necessary, or made false representations of material facts on a 

claim or documentation used to support a claim. None of the 12 was an HHA. 

44U.S. Attorneys, responsible for prosecuting Medicare fraud under both civil and criminal 

statutes, are unable to accept all matters and have a substantial backlog of pending cases. 

According to the Health Care Fraud and Abuse Control Program Annual Report for fiscal 

year 2006 by HHS and the Department of Justice, at the end of fiscal year 2006, the U.S. 

Attorneys’ Offices (USAO) had 1,677 health care fraud criminal matters pending (2,713 

defendants) and 1,268 civil health care fraud matters pending. A referral to the USAOs 

remains a pending matter until an indictment or information is filed or it is declined for 

prosecution. 

Page 25 GAO-09-185 Medicare Home Health
 

communities. For instance, in Miami the PSC worked with physicians to 

identify HHA overpayments in excess of $9 million. 

Revalidation Can Help 

Ensure Legitimacy of 

Home Health Providers 

An ongoing CMS demonstration project shows that revalidation may be an 

effective method of ensuring the legitimacy of HHAs. CMS is currently 

conducting a 2-year demonstration that, in part, requires HHAs to undergo 

revalidation at least once during the demonstration. The demonstration, 

which began in late 2007, is being conducted in two areas with a history of 

fraudulent home health activity—greater Los Angeles and Houston.45

HHAs that fail to resubmit their enrollment application within 60 da

receiving notice have their billing privileges revoked. As of October 2008, 

37 HHAs out of approximately 845 had their billing privileges revoked as 

part of the demonstration. These 37 HHAs billed for approximately 

$6.1 million in fiscal year 2007. According to a CMS official, all of these 

agencies failed to resubmit the enrollment application. 

ys of 

 

Other parts of the demonstration will give CMS the ability to evaluate 

other actions aimed at reducing and deterring fraudulent or abusive HHA 

billing. In addition to revalidation, the demonstration requires state survey 

agencies to conduct surveys of any HHA that underwent an ownership 

change within the previous 2 years. RHHIs will also conduct a site visit to 

all HHAs to verify that the HHA is located at the address identified on the 

application. Billing privileges will be revoked for HHAs that fail to report 

an ownership or address change; have key officials with a felony 

conviction within the prior 10 years as determined by a background check; 

or no longer meet all Medicare conditions of participation. As of May 2008, 

the RHHIs responsible for California and Texas had begun conducting site 

visits to HHAs to verify the address information on the enrollment 

applications; state surveys of HHAs with an ownership change had not 

begun. 

Targeted Local Efforts 

Show Potential to Deter 

Fraud and Abuse and Save 

Medicare Dollars 

One PSC’s recent efforts to detect and deter home health fraud and abuse 

in two areas show that targeted efforts based on local fraudulent and 

abusive practices can deter these activities and save the Medicare program 

money. In Houston, the PSC targeted those HHAs that billed more than 

50 percent of their claims at the most severe clinical level, because the 

45The greater Los Angeles area includes Los Angeles, Orange, Riverside, and San 

Bernardino counties in California. The Houston area is Harris County in Texas. 

Page 26 GAO-09-185 Medicare Home Health
 

PSC’s experience showed that such billing patterns were indicative of 

substantial upcoding. To identify potentially fraudulent claims, the PSC 

monitored the submission of RAPs for the targeted HHAs. Once enough 

beneficiaries were identified, the PSC sent teams of investigators, 

including nurses, to Houston for on-site interviews with beneficiaries to 

assess their health condition, including whether they were indeed 

homebound, and then compared these results with the information 

submitted by the HHA. Once an HHA reached a threshold percentage of 

submitting upcoded claims or claims for beneficiaries who were not 

homebound, the PSC worked with CMS to cancel the HHA’s RAP 

privileges, meaning that the agency would only be paid at the end of the 

episode following the submission of a valid claim. According to the PSC 

officials, the cancellation of RAP privileges was particularly effective in 

Houston because these HHAs relied on the RAP payments to cover their 

expenses. Medicare payments for claims at the most severe clinical level 

for 24 targeted HHAs decreased from nearly $1.9 million in January 2007 to 

$34,461 in September 2007. 

In Miami, the PSC identified a different practice that could not be 

addressed through the cancellation of RAP privileges; instead, the PSC 

worked with physicians to identify overpayments. This practice involved 

the submission of high numbers of outlier claims for beneficiaries with 

diabetes. The PSC told us that canceling RAP privileges would not have 

been appropriate in Miami because outlier payments are determined at the 

end of the episode; therefore, the HHAs in Miami were getting only a small 

amount of the total episode payment from the up-front payment that is 

based on the RAP submission. Also, the sheer volume of claims that nurses 

would have had to review in Miami was prohibitive. Instead of focusing on 

the suppression of RAP privileges, the PSC addressed the outlier problems 

in Miami through collaboration with referring physicians. The PSC sent 

letters to physicians that had referred beneficiaries whose care resulted in 

high HHA reimbursements from outlier claims with the names of the 

Medicare beneficiaries they had referred and the amount of payment the 

HHAs had received based on those referrals. According to the PSC 

officials, some of the referring physicians became concerned about the 

amount of money the HHAs had received and collaborated with the PSC. 

Some of the physicians indicated, for instance, that their signature had 

been forged or that they did not realize the amount of care they were 

authorizing. As a result of interviews with 31 of the physicians who 

responded to the letters, nearly 950 plans of care were disavowed by the 

physicians, resulting in overpayment assessments against HHAs in excess 

of $9 million as of March 2008. 

Page 27 GAO-09-185 Medicare Home Health
 

Despite the different strategies needed in Houston and Miami to address 

the fraud and abuse concerns, the PSC found that city site visits, which 

included beneficiary interviews, were necessary in both locations. 

According to a PSC official, beneficiary interviews are needed so that they 

have a basis on which to deny a claim. The official noted that medical 

reviews that use only the medical records provided by the HHA are limited 

because providers may know how to falsify records so that they can pass a 

review. The PSC conducted 10 weeks of site visits in Houston between 

March 2007 and February 2008, using between 6 and 24 staff per city site 

visit, attempting 959 beneficiary interviews and completing 670. In Miami, 

the PSC completed 118 beneficiary interviews during 6 week-long site 

visits between mid-November 2007 and early March 2008 and 31 interviews 

with physicians with high referral rates to targeted HHAs. 

In October 2008, CMS announced new initiatives to further address issues 

identified in Miami-Dade County. CMS officials from CMS’s Miami field 

office are conducting beneficiary interviews with beneficiaries from HHAs 

with either a high percentage of outlier episodes or a high dollar amount of 

outlier payments. The beneficiaries will be visited at home to determine if 

they qualified for the services they received and if they received all the 

services for which Medicare was billed. Additionally, CMS is considering 

implementing a trigger in Miami-Dade County that will flag an HHA for 

increased scrutiny when more than 5 percent of the HHA’s claims are 

outliers. Beneficiaries from these HHAs would be targeted for interviews 

and the HHA’s claims would also be targeted for pre- or post-payment 

medical review. According to CMS officials, as of December 2008, 13 HHAs 

were subject to a 180-day payment suspension based on CMS’s 

examination of outlier data. 

Gaps in CMS’s administration of the $12.9 billion Medicare home health 

benefit have left the agency vulnerable to improper payments, including 

payments for claims resulting from fraudulent and abusive practices. 

While we have reported for more than two decades about the lack of 

controls over the Medicare home health benefit, CMS’s administration of 

the benefit continues to be unable to prevent HHAs from billing for 

services that are not medically necessary or that are not rendered. 

Conclusions 

The screening process RHHIs use for HHAs that have submitted 

applications to participate in Medicare does not routinely include 

verification of the criminal history of applicants. Without this information, 

individuals and businesses that misrepresent their criminal histories or 

Page 28 GAO-09-185 Medicare Home Health
 

have a history of relevant convictions, such as for fraud, could be allowed 

to enter the Medicare program. 

Physicians certifying home health plans of care are not currently given the 

information needed for them to play a significant role in aiding CMS 

efforts to reduce home health care fraud and abuse. Physicians lack 

information about the care Medicare is billed for based on their 

authorization. The PSC’s experience in Miami showed that giving 

physicians more information about the care provided a beneficiary led to 

the identification of HHAs that were falsifying physician authorizations or 

providing levels of care in excess of patient needs. 

RHHI monitoring of home health claims relies on medical reviews, but 

these reviews could be improved to more effectively recoup potential 

overpayments. Currently, RHHIs focus medical review efforts on 

prepayment reviews. However, when prepayment medical reviews identify 

HHAs as billing improperly, only rarely do RHHIs perform postpayment 

medical reviews to recoup potential overpayments 

CMS rarely removes those HHAs or key officials at HHAs that engage in a 

pattern of abusive billing from Medicare. CMS recently issued regulations 

authorizing the revocation of Medicare billing privileges of providers 

engaging in one narrowly defined type of improper billing—billing for 

services that could not have been rendered. While this is a step in the right 

direction, CMS has yet to address the removal of HHAs or HHA officials 

engaging in other types of improper or abusive billing. 

Recent initiatives by CMS and PSCs show the potential of protecting 

Medicare dollars with concerted efforts tailored to local conditions. 

However, CMS has not taken advantage of opportunities to further prevent 

and deter fraud and abuse as well as effectively sanction those engaging in 

fraud and abuse. In the absence of greater prevention, detection, and 

enforcement efforts, the Medicare home health benefit will continue to be 

a ready target for fraud and abuse. 

To strengthen the controls on improper payments in the Medicare home 

health benefit, we recommend that the Administrator of CMS take the 

following four actions: 

Recommendations for 

Executive Action 

• Assess the feasibility of verifying the criminal history of all key officials 

named on an HHA enrollment application. 

Page 29 GAO-09-185 Medicare Home Health
 

• Provide physicians whose identification number was used to certify or 

recertify a plan of care with a statement of services the HHA provided to 

that beneficiary based on the physician’s certification. 

• Direct CMS contractors to conduct postpayment medical reviews on 

claims submitted by HHAs with high rates of improper billing identified 

through prepayment review. 

• Amend current regulations to expand the types of improper billing 

practices that are grounds for revocation of billing privileges. Grounds for 

revocation could include a pattern of submitting claims that are falsified, 

for persons who do not meet Medicare’s coverage criteria, or for services 

that are not medically necessary. 

CMS reviewed a draft of this report and provided written comments, 

which appear in appendix II. 

In responding to our draft report, CMS stated it would consider two of our 

four recommendations. CMS provided comments on, but neither agreed 

nor disagreed, our other two recommendations. In considering our 

recommendation that physicians who certify or recertify plans of care be 

provided a statement of services received by beneficiaries, CMS noted that 

this sort of physician cross-checking may not result in a payment change 

on most claims since home health payments are calculated on the basis of 

the number of days of care and the number of visits rather than by the 

services provided. CMS suggested an alternative approach in which it 

would target physician cross-checking for beneficiaries who receive a 

large number of therapy visits and outlier claims. While we believe that all 

physicians who certify or recertify plans of care should be provided a 

statement of services, CMS’s alternative approach would be a reasonable 

way to begin to implement this recommendation. CMS also stated that it 

would consider our recommendation to amend regulations to expand the 

types of improper billing practices that are grounds for revocation of 

billing privileges. 

Agency Comments 

and Our Evaluation 

CMS commented on, but neither agreed nor disagreed with our other two 

recommendations. In response to our recommendation that CMS assess 

the feasibility of verifying the adverse legal histories of key officials named 

on enrollment applications, CMS stated that GAO’s use of the term 

“adverse legal histories” was too broad. We have changed this term in our 

report to “criminal history.” In response to our recommendation that CMS 

direct its contractors to conduct postpayment medical reviews on claims 

Page 30 GAO-09-185 Medicare Home Health
 

submitted by HHAs with high rates of improper billing, CMS stated that 

contractors may already review these claims when they conduct reviews 

for HHAs with high utilization. CMS also commented that contractors 

must consider the costs and availability of resources when they prioritize 

their work. While we agree that contractors must prioritize their work, we 

believe that the claims submitted by HHAs already identified as having 

high improper billing rates would have a high probability of improper 

payments. 

CMS highlighted its recent initiatives to address improper payments to 

HHAs, noting that it has initiated new enrollment processes for Medicare 

providers, such as denying enrollment to providers with payment 

suspensions. It also commented that it has taken steps to address 

improper outlier payments in Miami and developed a demonstration 

project in California and Texas to address high-risk services and providers. 

Our draft report discussed the projects in Miami, California, and Texas and 

we added information about the new enrollment procedures. 

CMS noted that the report only briefly mentioned the CON requirement in 

some states. CMS believes CON requirements could stem the increase of 

HHAs in high vulnerability areas of the country. While this could be the 

case, CON requirements are a function of state laws or regulations, and 

therefore outside the scope of our report, which focused on CMS’s efforts 

to address improper payments. 

In addition, CMS commented that resource constraints prevented 

contractors from engaging in certain activities, such as conducting 

criminal background checks on persons named on the HHA enrollment 

applications. While some stakeholders told us that resource constraints 

were an issue, it was beyond the scope of this report to evaluate whether 

CMS’s resources were adequate to conduct these activities or to evaluate 

how CMS allocates its program integrity funds. 

CMS suggested we add a paragraph on the nature and extent of CMS’s 

activities involving physicians. We did not include this paragraph, which 

discussed several CMS initiatives involving ordering physicians. These 

initiatives either were related to durable medical equipment, which was 

outside our scope, or limited to the Miami area and already discussed in 

the appropriate section of our report. 

In response to our statement that CMS does not generally collect 

information on the names and number of medical directors an HHA 

employs, CMS stated that nearly every medical director qualifies as a 

Page 31 GAO-09-185 Medicare Home Health
 

managing employee and information on managing employees is collected 

on the enrollment application. We modified our statement to reflect that 

the form does not ask HHAs to specify the names and number of medical 

directors it employs. Therefore, CMS would have no way of knowing 

which managing employees were medical directors and if all medical 

directors had been named on the form. 

CMS also requested that the report indicate that the OIG should more 

robustly utilize its authority to exclude HHAs and impose monetary 

penalties. We did not include these comments in our report since they fall 

outside of our scope, which focuses on CMS’s efforts to address improper 

payments. 

CMS also provided technical comments, which we incorporated as 

appropriate. 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Administrator of CMS, 

committees, and others. The report also will be available at no charge on 

the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me 

at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix III. 

Sincerely yours, 

e 

Director, Health Care 

James C. Cosgrov

Page 32 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

For our analysis of 2002 and 2006 Medicare home health claims data for 

the 50 states and Washington, D.C., we used the following four spending 

and utilization indicators: percentage growth in Medicare home health 

spending from 2002 through 2006 (table 2), percentage growth in the 

percentage of Medicare beneficiaries who used home health services 

from 2002 through 2006 (table 3), percentage growth in the number of 

home health agencies (HHA) that billed Medicare from 2002 through 2006 

(table 4), and percentage of outlier cases in 2006 (table 5). 

Table 2: Percentage Growth in Medicare Home Health Spending from 2002 through 

2006, States in Descending Order 

State Growth in Medicare HHA spending (percent)

Texasa144

Floridaa90

Nevadaa 88

Oklahomaa65

Illinois 62

Indiana 44

Michigan 42

Louisiana 41

New Mexico 39

Mississippi 38

Idaho 34

Alaska 34

Californiaa34

Ohio 33

Arkansas 32

Georgia 31

Arizona 31

Tennessee 31

Alabama 30

Minnesota 30

Kansas 30

Massachusetts 30

New Hampshire 28

Colorado 27

Washington 26

South Carolina 24

Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

Page 33 GAO-09-185 Medicare Home Health 
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

State Growth in Medicare HHA spending (percent)

Utaha 24

North Carolina 23

Missouri 22

Virginia 22

Wisconsin 19

Nebraska 17

Connecticut 16

Iowa 15

Maryland 15

Delaware 14

Maine 13

New York 13

South Dakota 12

Vermont 12

Kentucky 12

Rhode Island 10

New Jersey 8

Wyoming 7

District of Columbia 2

Pennsylvania 2

Montana 1

Oregon 0

West Virginia -1

Hawaii -5

North Dakota -8

United States 42

Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS) data. 

a

These states ranked among the top three in at least one of four spending and utilization indicators. 

Note: Analysis based on beneficiary location. When the analysis was done using HHA location 

instead, spending growth changed by less than 5 percentage points for all but five states: Alaska, 

District of Columbia, Delaware, Kansas, and Missouri. The growth in spending in these states based 

on HHA location was 27 percent in Alaska, -14 percent in the District of Columbia, 1 percent in 

Delaware, 44 percent in Kansas, and 17 percent in Missouri. 

Page 34 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

Table 3: Percentage Growth in the Percentage of Medicare Beneficiaries Who Used 

HHA Services from 2002 through 2006, States in Descending Order 

State 

Growth in Part A beneficiaries 

who use HHA services (percent) 

Texasa57

Oklahomaa 30

Floridaa28

Nevadaa 25

Illinois 23

Louisiana 23

Minnesota 22

Michigan 19

Mississippi 18

Indiana 17

Alabama 15

Georgia 14

Tennessee 14

Ohio 14

Utaha12

Arkansas 10

Kansas 10

Idaho 10

North Carolina 9

Massachusetts 7

Wisconsin 7

New Mexico 5

New Hampshire 5

Connecticut 4

Alaska 4

Arizona 4

New York 4

Virginia 3

Kentucky 3

South Carolina 2

District of Columbia 2

Maine 2

Delaware 1

New Jersey 1

Page 35 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

State 

Growth in Part A beneficiaries 

who use HHA services (percent) 

Colorado 0

Iowa 0

Californiaa-1

Missouri -2

Pennsylvania -2

Maryland -3

Rhode Island -3

Vermont -5

Nebraska -6

West Virginia -6

Washington -6

Montana -6

North Dakota -7

Wyoming -8

Hawaii -12

Oregon -12

South Dakota -15

United States 12

Source: GAO analysis of CMS data. 

a

These states ranked among the top three in at least one of four spending and utilization indicators. 

Note: Analysis based on location of beneficiary residence. 

Page 36 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

Table 4: Percentage Growth in the Number of HHAs that Billed Medicare from 2002 

through 2006, States in Descending Order 

State Growth in number of HHAs (percent) 

Texasa 102

Floridaa100

Nevadaa75

District of Columbia 67

Michigan 62

Illinois 59

Utaha44

Ohio 42

Arizona 32

Californiaa 23

Oklahomaa21

Virginia 18

Colorado 17

New Mexico 16

Alaska 14

Delaware 14

Maryland 11

Indiana 10

Hawaii 8

Pennsylvania 8

Vermont 8

Massachusetts 8

Georgia 7

Nebraska 7

Missouri 5

Alabama 4

Washington 4

North Carolina 3

New Hampshire 3

Idaho 2

Kansas 2

Iowa 1

Minnesota 0

Oregon 0

Page 37 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

State Growth in number of HHAs (percent) 

West Virginia 0

Connecticut -1

Tennessee -1

South Carolina -1

Arkansas -2

New Jersey -2

Wisconsin -3

Rhode Island -4

Kentucky -6

Louisiana -6

New York -9

Mississippi -11

Wyoming -13

South Dakota -13

Maine -15

Montana -18

North Dakota -19

United States 29

Source: GAO analysis of CMS data. 

a

These states ranked among the top three in at least one of four spending and utilization indicators. 

Note: Analysis based on location of HHA. 

Page 38 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

Table 5: Percentage of Outlier Cases, States in Descending Order, 2006 

State Average percentage of outlier cases (percent) 

Floridaa 12

Utaha 11

Californiaa 7

New York 7

Texasa6

Connecticut 5

Massachusetts 4

Colorado 4

Oklahomaa4

Nevadaa3

New Hampshire 3

Wyoming 3

Wisconsin 3

Vermont 3

Ohio 3

Kansas 3

Arkansas 3

Rhode Island 3

Maine 3

Idaho 3

Iowa 3

Minnesota 3

Arizona 2

Montana 2

Virginia 2

Georgia 2

Nebraska 2

Delaware 2

Alaska 2

New Mexico 2

Missouri 2

District of Columbia 2

Indiana 2

Tennessee 2

New Jersey 2

Page 39 GAO-09-185 Medicare Home Health
Appendix I: Medicare Home Health Spending 

and Utilization Growth in the United States, 

2002 through 2006 

State Average percentage of outlier cases (percent) 

Pennsylvania 2

Kentucky 2

North Carolina 2

Louisiana 2

North Dakota 1

Maryland 1

West Virginia 1

Michigan 1

Alabama 1

Washington 1

South Dakota 1

Illinois 1

Oregon 1

South Carolina 1

Hawaii 1

Mississippi 0

United States 4

Source: GAO analysis of CMS data. 

a

These states ranked among the top three in at least one of four spending and utilization indicators. 

Note: Analysis based on location of beneficiary residence. 

Page 40 GAO-09-185 Medicare Home Health
Appendix II: Comments from the Centers for Appendix II: Comments from the Centers for Medicare & Medicaid Services 

Medicare & Medicaid Services 

Page 41 GAO-09-185 Medicare Home Health 
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Page 42 GAO-09-185 Medicare Home Health
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Page 43 GAO-09-185 Medicare Home Health
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Now page 5. 

Now page 5. 

Now page 5. 

Page 44 GAO-09-185 Medicare Home Health
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Now page 8. 

Now page 9. 

Now page 10. 

Now page 20. 

Now page 21. 

Page 45 GAO-09-185 Medicare Home Health
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Now page 21. 

Now page 21-22. 

Now page 22. 

Now page 22. 

Now page 24. 

Now page 28. 

Now page 28. 

Page 46 GAO-09-185 Medicare Home Health
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Page 47 GAO-09-185 Medicare Home Health
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 48 GAO-09-185

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact James C. Cosgrove, (202) 512-7114 or cosgrovej@gao.gov 

In addition to the contact named above, Christine Brudevold, Assistant 

Director; Lori Achman; Carrie Davidson; Joanna Hiatt; Julian Klazkin; 

Daniel Lee; Elizabeth T. Morrison; and Amanda Pusey made major 

contributions to this report. 

 Medicare Home Health 

Staff 

Acknowledgments 

(290613) 
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