United States General Accounting Office

GAO Report to the Ranking Minority Member,

Subcommittee on Labor, Health and

Human Services, Education, and Related

Agencies, Committee on Appropriations,

U.S. Senate

June 1997 MEDICARE

Need to Hold Home

Health Agencies More

Accountable for

Inappropriate Billings

GAO/HEHS-97-108

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-270233 

June 13, 1997

The Honorable Tom Harkin

Ranking Minority Member

Subcommittee on Labor, Health

 and Human Services, Education,

 and Related Agencies

Committee on Appropriations

United States Senate

Dear Senator Harkin:

Medicare, the nation’s health insurance program for the elderly and

disabled, is the single largest payer for home health services. Between

1988 and 1996 Medicare spending for home health grew from $2.1 billion

to $18 billion and by the year 2000 is projected to exceed $21 billion. Along

with increasing expenditures, the number of home health agencies has

also increased—from about 5,800 to over 9,000.

This growth and accompanying reports of overutilization of home health

services have raised questions about Medicare’s ability to detect and

prevent inappropriate payments for this component of the Medicare

program. Congressional committees have held hearings this year on

proposals to control the growth in home health billings. Under any

proposal adopted, however, there would be a continued need to monitor

Medicare payments effectively.

At your request, we (1) examined the weaknesses of existing Medicare

controls over the home health benefit, (2) identified lessons learned from

examining private insurers’ controls over home health payments and

recent federal antifraud initiatives, and (3) identified a management

approach that could improve Medicare’s ability to avoid substantial

payments attributable to abusive billing practices.

To conduct our study, we selected a sample of 80 high-dollar home health

claims that had been processed in May 1995 and had been approved

without review. We asked a Medicare claims-processing contractor to

review the sample for the appropriateness of the charges and services

claimed. We also analyzed information obtained from officials of the

Health Care Financing Administration (HCFA), the agency within the

Department of Health and Human Services (HHS) responsible for

administering Medicare; data obtained from Medicare’s claims-processing

Page 1 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

contractors; and information from the HHS Office of the Inspector General.

In addition, we analyzed information obtained from officials of private

insurance companies and the Office of Personnel Management, which

oversees the Federal Employees Health Benefits Program. (See app. I for a

more detailed description of our scope and methodology.)

Results in Brief We and others have reported on several occasions about problems with

Medicare’s review of home health benefits (see the list of related products

at the end of this report). Yet, in spite of the need for increased scrutiny

indicated by these reports and by the growth in home health expenditures,

Medicare’s review of home health claims decreased in the 1990s. In our

test of just 80 high-dollar claims that had been processed without review,

the Medicare claims-processing contractor, after examining each claim

and supporting documentation, denied more than $135,000 in charges

(about 43 percent of total charges) for 46 of the claims. The reasons for

the denials included failure to substantiate medical necessity, noncoverage

of services or supplies, and inadequate documentation, including the

absence of physician orders. These findings are consistent with prior

federal investigations, one of which estimated that in the month of

February 1993 alone, Medicare paid $16.6 million for home health claims

in Florida that should have been disallowed.

The five private insurers we contacted use controls that, although not

readily adaptable to Medicare’s coverage terms or billing rules, are

nevertheless instructive regarding the monitoring of claims. The insurers

employ professional staff, such as nurses, to determine in advance the

legitimacy of the request for home health services. In contrast, HCFA relies

on home health agencies’ compliance with administrative procedures,

such as obtaining a physician’s signature for ordered services, to safeguard

against the submission of improper claims. While Medicare does not have

sufficient administrative funds to undertake the intensity of claims

monitoring done by the private insurers we reviewed, the vigilance of

private insurers suggests the value of applying more scrutiny in this area.

Reduced funding for payment safeguards in recent years helps explain the

marked absence of adequate claims reviews by Medicare contractors. Ten

years ago, over 60 percent of home health claims were reviewed. In 1996,

Medicare intermediaries reviewed only 2 percent of all claims. New and

more stable funding provided through the Health Insurance Portability and

Accountability Act (HIPAA) of 1996 (P.L. 104-191) should help improve

Medicare’s performance in monitoring home health payments, but HCFA

Page 2 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

also needs an enforcement tool—a preventive approach—that will make

providers accountable for the propriety of their claims. Therefore, we are

suggesting that the Congress consider directing HCFA to test an approach

that would systematically identify and penalize providers that habitually

bill Medicare inappropriately. Under this approach, billing offenders

would be identified and, if found to have excessively high billing errors,

those offenders, rather than the taxpayer, would be required to shoulder

the cost burden of investigative claims reviews. We believe that such an

approach could also serve as a deterrent to future billing abuses.

Background Medicare is a health insurance program that covers over 38 million elderly

and disabled people. The program, authorized by title XVIII of the Social

Security Act, provides coverage under two parts. Part A, the hospital

insurance program, covers inpatient hospital services, posthospital care in

skilled nursing homes, and care in patients’ homes. Part B, the

supplementary medical insurance program, covers primarily physician

services but also a number of other services, including home health care

for beneficiaries not covered under part A. Almost all Medicare payments

for home health care are made under part A.

Beneficiary Eligibility for

Home Health Benefit

Since the late 1980s when a court decision obligated HCFA to interpret

more liberally Medicare’s eligibility and coverage criteria, beneficiaries

have more easily obtained home health coverage than previously. To

qualify, individuals must be confined to their residences (be

“homebound”), be under a physician’s care, and need part-time or

intermittent skilled nursing care and/or physical or speech therapy. In

meeting these requirements, beneficiaries are covered for visits by home

health aides, medical social workers, and occupational therapists.

Required medical supplies are also covered.

Services must be furnished under a plan of care prescribed and

periodically reviewed by a physician. As long as the care is reasonable and

necessary, there are no limits on the number of visits or length of

coverage. Medicare does not require copayments or deductibles for home

health care, except for durable medical equipment.

Home Health Agency

Participation Requirements

Medicare law requires that home health agencies be certified to serve

Medicare beneficiaries. The agencies obtain certification by meeting

specific requirements, commonly referred to as conditions of

Page 3 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

participation. These requirements cover the agency’s qualifications and

capacity to perform such administrative functions as appropriate

recordkeeping, including patient privacy protections, and such provider

functions as the administering of skilled nursing services.

Typically, HCFA contracts with state public health agencies to conduct

certification and recertification surveys of home health agencies.

Generally, home health agencies found to be out of compliance are

provided an opportunity to develop a corrective action plan. If the state

agency and HCFA approve the plan, the home health agency can continue to

participate in Medicare; it can maintain certification if the plan results in

correction of the problems identified.

Oversight of Home Health

Payments

Regional claims-processing contractors, called intermediaries, process and

pay claims submitted by over 9,000 home health agencies, which are paid

on the basis of the costs they incur up to predetermined cost limits. In

1995, claims received from home health agencies represented about

14 percent of all part A claims and 13 percent of part A expenditures.

Intermediaries are responsible for ensuring that Medicare does not pay

home health claims when beneficiaries do not meet the Medicare home

health criteria, when services claimed are not reasonable or necessary, or

when the intensity of services exceeds the level called for in an approved

plan of treatment. They carry out these responsibilities through medical

reviews of claims.

Medical review can be performed either before or after a claim is

approved for payment and involves obtaining home health agency

documentation, such as the beneficiary’s plan of care and medical records.

Occasionally, intermediaries conduct site visits—a postpayment review at

the location of a home health agency, where reviewers can examine plans

of care and other medical documentation. Because of budgetary

constraints in recent years, intermediaries review only about 1 to 3 percent

of all claims. They typically only target providers that have high

unexplained utilization rates.

Page 4 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

Medicare Lacks

Adequate Controls to

Effectively Monitor

Home Health

Payments

Our work in recent years has shown that because of insufficient funding of

payment safeguards, HCFA’s monitoring has been unable to keep pace with

the increasing volume of home health claims submitted to Medicare. This

situation may be one of the factors contributing to the rapid growth in

Medicare’s home health expenditures.

Funding Constraints Limit

Medical Review of Claims

The relationship between funding levels and claims reviewed helps explain

Medicare’s current predicament. In 1985, legislation more than doubled

claims review funding, enabling intermediaries to review over 60 percent

of the home health claims processed in fiscal years 1986 and 1987. By

1995, however, when payment safeguard funding for part A medical review

had substantially declined (from $61 million in 1989 to $33 million in 1995),

the intermediaries’ claims review target had been lowered to 3.2 percent

for all part A claims (or even lower, depending on available resources, to a

required minimum of 1 percent).1

 During this period, the number of home

health agencies participating in Medicare increased by more than a third,

and the volume of home health claims processed more than tripled. Figure

1 illustrates how the total number of claims processed by intermediaries

has risen since 1989, while the number of claims reviewed has generally

declined.

1

Because this review target is the minimum for part A claims as a group, the actual percentage of home

health claims reviewed could be higher or lower than the target level specified.

Page 5 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

Figure 1: Numbers of Claims

Processed and Reviewed by

Intermediaries Since 1989

Note: Numbers are for all part A claims, including home health claims. Data for claims processed

are by fiscal year; data for claims reviewed are by calendar year.

Source: HCFA data.

In our March 1996 report on the deterioration of Medicare’s home health

payment controls, we noted the effects of reduced funding on efforts to

deter abusive billing.2

 We found that the infrequency of the intermediaries’

medical review of claims and limited physician involvement in overseeing

home health agencies’ plans of care made it nearly impossible to

determine whether the beneficiary receiving home health services

qualified for the benefit, needed the care being delivered, or even received

the services being billed to Medicare. Also, because of the small

percentage of claims selected for review, home health agencies that billed

2

Medicare: Home Health Utilization Expands While Program Controls Deteriorate (GAO/HEHS-96-16,

Mar. 27, 1996).

Page 6 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

for noncovered services were less likely to be identified than was the case

a decade earlier.

HIPAA, which now ensures funding for program safeguards through 2003,

allows HCFA to count on stable funding in the coming years. However,

per-claim expenditures for medical review and other controls will remain

below the 1989 level after adjusting for inflation. We project that in 2003,

payment safeguard spending as authorized by the act will be just over half

of the 1989 per-claim level, after adjusting for inflation.

Better Controls Over

Payments Needed

In recent years, we have reported on the marked absence of HCFA guidance

for intermediaries on monitoring high-dollar claims despite postpayment

reviews that have found Medicare paying substantial sums for claims not

satisfying key payment criteria. In a recent test, we asked one regional

intermediary—Blue Cross of California—to do medical reviews for a

sample of high-dollar home health claims that it had originally processed

and approved without review.

We selected 80 claims from the universe of home health claims processed

by the California intermediary in May 1995 (see app. I for a more detailed

description of how these claims were selected). The intermediary found

that 46 of the 80 claims submitted by 26 home health agencies should have

been partially or totally denied and subsequently did deny them. For the 46

claims totaling $313,655 in charges for services and supplies, about

43 percent, or $135,640, were denied. The intermediary’s reasons for the

denials included failure to substantiate medical necessity, noncoverage of

services or supplies, and inadequate documentation, including the absence

of physician orders. Specifically, the intermediary found the following:

• Of $18,132 in charges for the care of a beneficiary’s decubitus ulcer (open

wound) for 30 days, 36 percent ($6,483) were denied, including charges for

almost half of the skilled nursing visits (four per day) that were not

considered medically necessary.

• Of $4,100 in charges for supplies related to care provided over 4 weeks,

31 percent were not adequately documented in the medical records or

should have been part of the paid nurse’s visit and not billed separately.

About half of the amount denied was for supplies never received by the

beneficiary.

• Of $17,953 in charges for medical supplies related to the treatment of a

beneficiary’s salivary gland disease, the intermediary denied the entire

amount because the medical documentation and the itemized list of

Page 7 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

supplies provided were not consistent and did not support the supplies the

agency billed for.

• Nine of the 80 claims—representing nearly half ($61,250) of the total

dollars disapproved—were denied because the home health agencies did

not submit any of the medical records the intermediary had requested for

the review.

The California intermediary also visited a home health agency where it

reviewed supporting documentation for a random sample of 464 claims.

The agency had been targeted for a comprehensive review because of its

high billings. The review team found that the agency’s claims for $39,384

were appropriate; however, claims for $27,834 were considered not

medically necessary and were denied, and claims in the amount of

$330,444 were denied for nonmedical reasons, including undated or

otherwise invalid plans of care, no plan of care, and billing for supplies not

covered.

The findings from our test sample of claims subjected to medical review

are consistent with reports by the HHS Inspector General on home health

agency fraud and abuse. A 1995 Inspector General report on home health

services in Florida found that an estimated 26 percent of home health

claims did not meet Medicare reimbursement requirements.3

 On that basis,

the Inspector General estimated that $16.6 million of the $78 million in

claims approved for payment by intermediaries in February 1993 were

unallowable. Claims did not meet reimbursement requirements because

beneficiaries were not homebound, services were considered unnecessary,

and visits were not documented in the medical records.

Private Insurers’

Approaches and

Federal Initiatives

Emphasize Need for

Accountability

The various approaches to control home health payments used by five

private insurers we examined collectively underscore the importance of

implementing measures to help prevent abusive billings and also hold

providers accountable for services billed. Recent federal fraud-fighting

efforts targeting abusive billers in the home health industry have also

demonstrated the need for greater claims scrutiny.

Private Insurer Strategies

Instructive, but Not Easily

Adapted to Medicare

Because of differences in beneficiary population, claims volume, and

specific benefit provisions, the controls used by private insurers to contain

home health costs would not be easily adapted to the Medicare program.

3

Results of the Audit of Medicare Home Health Services in Florida (HHS/OIG, A-04-94-02087, June 16,

1985).

Page 8 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

The five insurers we contacted use some combination of patient

cost-sharing (deductibles and copayments) and caps on the number of

allowed visits to help control home health utilization; however,

cost-sharing and preset utilization limits are not permissible under

Medicare’s home health benefit provisions.

In addition, all five of the insurers routinely verify the basis for proposed

plans of home care and oversee, using professional staff, how the care

plans are implemented. Company-employed or contract nurses typically

interview the home health agency’s nurses, the discharge planner (when

the patient has been hospitalized), the patient, and sometimes the family.

They attempt to determine in advance the legitimacy of the patient’s need

for home-based medical services. Often the insurers employ utilization

review nursing staffs or insurance company caseworkers to monitor and

approve visits on an incremental basis. For example, one insurer approves

visits in increments of 10 or fewer, or in time intervals of 2 to 4 weeks. For

high-cost cases, all the insurers we examined used some form of case

management that typically involved monitoring by nurses. As case

managers, they track the volume of services provided, the outcomes being

achieved, and the appropriateness of continuing care.

In contrast, the sheer volume of Medicare’s home health claims and scarce

funds for monitoring payments have resulted in an approach that relies

substantially on the home health agencies themselves. In 1996, more than

10 percent of Medicare beneficiaries—roughly 4 million people—received

home health services. To cope with this caseload, HCFA relies on the home

health agencies to rely, in turn, on attending physicians to monitor patient

progress, the proper development and periodic review of plans of care,

and the medical necessity of services delivered.

Unlike their private insurer counterparts, Medicare intermediaries are not

responsible for approving the plans of care developed by the home health

agencies. The physician’s signature on a plan of care is intended to serve

as a quality control, but in practice the certifying physician may not have

ever seen the patient for whom the care plan is designed. Moreover, the

intermediaries’ relatively few medical reviews of claims generally do not

include an independent verification of the documentation prepared and

submitted by the home health agencies. Likewise, although Medicare

requires home health agencies to update a beneficiary’s plan of care at

least every 62 days, the intermediary does not routinely review updated

plans. As for high-cost cases, nearly 40 percent of Medicare’s home health

beneficiaries receive more than 30 visits. Because of the prohibitive costs,

Page 9 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

intermediaries cannot systematically monitor such long-term or otherwise

expensive cases to ensure the care being delivered is appropriate to the

patients’ needs.

Federal Antifraud Efforts

Target Home Health

Payments

Given the growth in Medicare spending for home health services, nursing

home services, and medical equipment and supplies, the HHS Inspector

General and other federal and state agencies banded together to target

fraudulent and abusive billing practices in these industries. This effort,

called Operation Restore Trust, was conducted initially in five states and

reported identifying almost $188 million in inappropriate payments in its 2

years of operation.

Among the lessons learned to date from Operation Restore Trust is the

importance of coordination among the various program and enforcement

agencies involved at the federal, state, and local levels. Coordination, for

example, between Medicare intermediaries and state surveyors in the

project’s several states resulted in the decertification of many of the

targeted home health agencies and in the recovery of substantial sums in

inappropriate payments.4

For example, in investigations conducted in Louisiana and Texas, the

Medicare intermediary trained state surveyors on billing and beneficiary

coverage issues. The intermediary also provided a list of agencies that it

believed to be billing improperly. In turn, the surveyors passed on to the

intermediary information obtained from their site visits to home health

agencies and beneficiaries. This exchange of information allowed the

intermediary to identify claims that (1) were made on behalf of

beneficiaries who were obviously not homebound, (2) billed for services

not provided, and (3) billed inappropriately for supplies. The Secretary of

HHS recently announced that Operation Restore Trust will be expanded to

12 additional states.

HCFA also sponsored pilot projects as part of a “Home Health Initiative”

that assessed the extent to which the detection of abusive billing can be

fostered by educating beneficiaries about home health coverage and

eligibility and by formally notifying beneficiaries and physicians of

benefits provided.

4

State certification surveys generally do not look at coverage and eligibility issues, although state

surveyors can identify patients who are not homebound and services and supplies that are billed but

not provided.

Page 10 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

Medicare’s Existing

Safeguard Apparatus

Presents Opportunity

to Exercise Greater

Accountability

HCFA’s education initiatives may improve beneficiary and physician

awareness of improper billing practices, but HCFA needs to hold home

health agencies more directly accountable for submitting proper claims. In

the past, when seeking recovery of inappropriate payments, intermediaries

have used two approaches to assess overpayment amounts. One is to audit

a universe of claims submitted by the provider and total the charges

disallowed. However, the large volume of claims submitted by the average

provider and the time involved in reviewing a claim make this approach

impractical in most cases. The second approach is to audit a statistically

valid sample of the provider’s claims and estimate total charges disallowed

by projecting the sampling results. Because of the scarcity of funds to

audit claims, it has been difficult to pursue either approach in recent

years.

Currently, Medicare’s intermediaries are responsible for focusing medical

reviews on claims from home health agencies that seem likely to be billing

inappropriately.5

 Given the funding provided under HIPAA, the expectation

is that HCFA will be better able to carry out these focused medical reviews.

However, this funding may not be sufficient to do the follow-up audit work

required once improper billing identifies an agency as an abusive biller and

to conduct enough focused reviews for other home health agencies also

deemed likely to be billing improperly. Consequently, Medicare would be

prevented from taking the steps necessary to recover a greater proportion

of payments that have been made inappropriately.

One option to help finance Medicare’s audits of claims would be to assess

home health agencies that are found to be abusive billers for the costs of

performing follow-up audit work. The home health agency could choose

whether to have a review based on the universe of its claims for a

particular period or a statistically valid sample. HCFA would estimate the

costs and withhold some percentage of the agency’s current Medicare

payments, unless the agency negotiated an alternative payment method, to

ensure that the audit costs (as well as any assessed overpayment) could be

recovered from the agency. By earmarking monies from the assessed audit

costs for payment safeguard activities, performing such claims audits

could be made financially feasible for HCFA. (Under current law, such

assessments would be returned to the general Treasury.)

5

Under sec. 202 of HIPAA, the HHS Secretary is authorized to enter into contracts with additional

entities to perform payment safeguard activities. Such activities would include, for example, medical

reviews on claims from home health agencies that seem likely to be billing inappropriately. This

authority became effective Aug. 21, 1996, but HCFA has not yet entered into any contracts of this type.

Page 11 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

This option, which would require authorizing legislation, would build on

HCFA’s existing safeguard apparatus and should enable it to broaden its

claims reviews. The approach, which could be piloted in one or more

regions, would also require HCFA to establish procedures for identifying

abusive billers that would be required to reimburse HCFA for the costs of

additional claims reviews.

Conclusions Given the rapid growth in Medicare home health spending, the importance

of careful vigilance over payments for this benefit cannot be overstated.

Some home health agencies continue to abuse the Medicare benefit by

providing services that do not meet program coverage requirements or are

not medically necessary. Limited oversight by HCFA allows abusive billings

from these home health agencies to go undetected.

Recent federal antifraud efforts illustrate the value of effective claims

oversight. Building on its current oversight efforts, HCFA could implement

an enforcement mechanism that would hold home health providers

accountable for meeting their responsibilities to provide beneficiaries with

only necessary and appropriate covered services. Such a mechanism

would include a means to recover from abusive billers some of HCFA’s

costs in conducting this oversight. This approach would not only help

finance claims audits but also help deter further abusive billing.

Matters for

Consideration by the

Congress

To hold home health agencies more directly accountable for billing

Medicare appropriately, the Congress may wish to consider enacting

legislation directing HCFA to carry out a pilot demonstration to address the

issue of abusive billing practices by home health agencies. Under such a

demonstration, once improper billing has been detected that identifies an

agency as an abusive biller, follow-up audit work would be conducted and

the cost of this follow-up work would be assessed against the home health

agency. To make such claims audits financially feasible, the Congress may

wish to earmark monies from the assessed audit costs for HCFA’s payment

safeguard activities.

Agency Comments On June 11, 1997, HCFA officials provided us with comments on a draft of

this report. Those officials agreed that the concept presented in our report

could be effective. On the basis of our discussion, it appears that this

concept would fit well with HCFA’s current efforts to strengthen program

safeguards on the home health and skilled nursing facility benefits. They

Page 12 GAO/HEHS-97-108 Home Health Agency Accountability
B-270233 

noted that a number of details would need to be worked out to increase

the likelihood that the demonstration project would be successful.

As arranged with your office, unless you announce its contents earlier, we

plan no further distribution of this report until 10 days after the date of

this letter. At that time, we will send copies of this report to the Secretary

and the Inspector General of HHS, the Administrator of HCFA, and other

interested parties. We also will make copies available to others upon

request.

If you or your staff have any questions, please call me on (202) 512-6806 or

William Scanlon, Director of our Health Financing and Systems issue area,

at (202) 512-4561. Other major contributors to this report include Leslie

Aronovitz, Lisanne Bradley, Marco Gomez, Sam Mattes, Barry Tice, and

Don Walthall.

Sincerely yours,

Richard L. Hembra

Assistant Comptroller General

Page 13 GAO/HEHS-97-108 Home Health Agency Accountability
Contents

Letter 1

Appendix I 

Scope and

Methodology

16

GAO Related Products 20

Figure Figure 1: Numbers of Claims Processed and Reviewed by

Intermediaries Since 1989

6

Abbreviations

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HIPAA Health Insurance Portability and Accountability Act

OPM Office of Personnel Management

Page 14 GAO/HEHS-97-108 Home Health Agency Accountability
Page 15 GAO/HEHS-97-108 Home Health Agency Accountability
Appendix I 

Scope and Methodology

To examine and compare Medicare controls over the home health benefit

with those used by private insurers and to identify Medicare initiatives

associated with appropriate payments for home health services, we

reviewed information obtained from officials at HCFA headquarters, its San

Francisco regional office, and the regional home health intermediaries

responsible for paying Medicare home health claims.

We also reviewed information obtained from officials at the Office of

Personnel Management (OPM), which administers the Federal Employees

Health Benefits Program; five private health plans under contract with OPM

to provide health care services;6 and three private companies that perform

utilization review and case management for private health plans.

Additionally, we reviewed relevant GAO, HHS Office of the Inspector

General, Operation Restore Trust, and intermediary reports on controls

over the use of Medicare’s home health benefit. We also reviewed manuals

and criteria HCFA and private insurers use to administer and control the

home health benefit.

To gain insight into Medicare controls over the home health benefit, we

visited two judgmentally selected home health intermediaries: Blue Cross

of California and Palmetto Government Benefits Administrators. To

supplement work performed at these locations and to broaden our areas

of analysis, we obtained additional information on home health claims and

controls from the remaining home health intermediaries.

In addition, to determine whether the records supported the need for

services or items billed to Medicare, we requested that one

intermediary—Blue Cross of California—review the medical records, an

itemized list of supplies, and other documentation for 80 high-dollar

claims. The intermediary requested this supporting documentation from 26

home health agencies. We limited our request to 80 claims so that we

would not overburden the intermediary’s normal workload.

To select the 80 claims to be reviewed, the intermediary identified the

universe of home health claims processed from May 1 to May 31, 1995.

From this universe, the intermediary identified the top 10 providers in

terms of dollars billed, per beneficiary, for specific home health benefit

categories (medical supplies, surgical dressings, physical therapy, and

skilled nursing). For each of these providers, the 20 largest claims in terms

of dollars billed per service category were identified. From the specific

6

The five private plans are the Blue Cross and Blue Shield Service Benefit Plan, Mail Handlers,

Government Employees Hospital Association, National Association of Letter Carriers, and the

American Postal Workers Union plans.

Page 16 GAO/HEHS-97-108 Home Health Agency Accountability
Appendix I 

Scope and Methodology

service categories, we judgmentally selected 80 claims. In selecting the 80

claims for intermediary review, we considered information on total

charges, average per-day charge, total days charged, and diagnosis.

For each selected claim, the intermediary reviewed the total charges for all

services on the claim. Consequently, even though we did not specifically

select any claims for four types of home health services (speech therapy,

occupational therapy, medical social worker, and home health aide), many

of our selected claims had these services. Therefore, the intermediary also

reviewed the appropriateness of these services.

We performed our work between January 1996 and June 1997 in

accordance with generally accepted government auditing standards.

Page 17 GAO/HEHS-97-108 Home Health Agency Accountability
Page 18 GAO/HEHS-97-108 Home Health Agency Accountability
Page 19 GAO/HEHS-97-108 Home Health Agency Accountability
GAO Related Products

Medicare Post-Acute Care: Cost Growth and Proposals to Manage It

Through Prospective Payment and Other Controls (GAO/T-HEHS-97-106, Apr. 9,

1997).

Medicare: Home Health Utilization Expands While Program Controls

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

Medicare: Home Health Cost Growth and Administration’s Proposal for

Prospective Payment (GAO/T-HEHS-97-92, Mar. 5, 1997).

Medicare Post-Acute Care: Home Health and Skilled Nursing Facility Cost

Growth and Proposals for Prospective Payment (GAO/T-HEHS-97-90, Mar. 4,

1997).

(101375) Page 20 GAO/HEHS-97-108 Home Health Agency Accountability
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100