Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

INAPPROPRIATE AND 

QUESTIONABLE BILLING BY 

MEDICARE HOME HEALTH 

AGENCIES
 

Daniel R. Levinson
 

Inspector General
 

August 2012 

OEI-04-11-00240 
 

EXECUTIVE SUMMARY: INAPPROPRIATE AND QUESTIONABLE BILLING 

BY MEDICARE HOME HEALTH AGENCIES 

OEI-04-11-00240 

WHY WE DID THIS STUDY 

In 2010, Medicare paid $19.5 billion to 11,203 home health agencies (HHA) for services 

provided to 3.4 million beneficiaries. Recent investigations and prior Office of Inspector 

General studies have found that home health services are vulnerable to fraud, waste, and 

abuse. 

HOW WE DID THIS STUDY 

We analyzed data from home health, inpatient hospital, and skilled nursing facility claims 

from 2010 to identify inappropriate home health payments. In addition, we identified 

HHAs that billed unusually high amounts according to at least one of our six measures of 

questionable billing. Although these six measures indicate potential fraud, there may be 

legitimate reasons for an HHA to exceed the threshold for unusually high billing on any 

of the six measures. We also determined the geographic locations of HHAs that had 

questionable billing. 

WHAT WE FOUND 

In 2010, Medicare inappropriately paid $5 million for home health claims with three 

specific errors: overlapping with claims for inpatient hospital stays, overlapping with 

claims for skilled nursing facility stays, or billing for services on dates after beneficiaries’ 

deaths. Further, we found that approximately one in every four HHAs exceeded the 

threshold that indicated unusually high billing for at least one of our six measures of 

questionable billing. Overall, HHAs with questionable billing were located mostly in 

Texas, Florida, California, and Michigan. 

WHAT WE RECOMMEND 

We recommend that the Centers for Medicare & Medicaid Services (CMS) (1) implement 

claims processing edits or improve existing edits to prevent inappropriate payments for 

the three specific errors we reviewed, (2) increase monitoring of billing for home health 

services, (3) enforce and consider lowering the 10‐percent cap on the total outlier 

payments an HHA may receive annually, (4) consider imposing a temporary moratorium 

on new HHA enrollments in Florida and Texas, and (5) take appropriate action regarding 

the inappropriate payments we identified and HHAs with questionable billing. CMS 

concurred with all five recommendations; however, it disagreed with our estimate of the 

inappropriate payments for home health claims overlapping with claims for inpatient 

hospital stays and skilled nursing facility stays. 
 

TABLE OF CONTENTS 

Objectives ....................................................................................................1 

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

Methodology................................................................................................8 

Findings......................................................................................................12 

In 2010, Medicare inappropriately paid approximately 

$5 million for home health claims with three specific errors ........12 

Approximately one in every four HHAs had questionable 

billing .............................................................................................14 

Eighty percent of HHAs with questionable billing were located 

in four States ..................................................................................17 

Conclusion and Recommendations ............................................................20 

Agency Comments and Office of Inspector General Response .....22 

Appendix....................................................................................................24 

A: Number and Percentage of Home Health Agencies With 

Questionable Billing by State, 2010 ..............................................24 

B: Agency Comments ...................................................................26 

Acknowledgments......................................................................................32 
 

 

 

OBJECTIVES 

1.	 To determine the extent to which home health agencies (HHA) 

submitted Medicare claims that inappropriately overlapped with 

claims for inpatient hospital stays, overlapped with claims for skilled 

nursing facility stays, or were billed for services on dates after 

beneficiaries’ deaths. 

2.	 To identify and describe HHAs that exhibited questionable billing. 

BACKGROUND 

Medicare Parts A and B cover home health services furnished by HHAs to 

Medicare beneficiaries.1, 2 In 2010, Medicare paid $19.5 billion to 

11,203 HHAs for home health services provided to 3.4 million 

beneficiaries.3 Home health services include part-time or intermittent 

skilled nursing services, physical therapy, occupational therapy, 

speech-language pathology services, part-time or intermittent home health 

aide services, medical social services, and medical supplies and durable 

medical equipment.4, 5 

Home health services are vulnerable to fraud, waste, and abuse. In past 

years, OIG has raised concerns about HHAs and the billing of home health 

services.6 Additionally, recent investigations have illustrated a variety of 

fraud schemes involving HHAs. For example, a Texas physician was 

1

 Social Security Act, §§ 1814(a)(2)(C) and 1835(a)(2)(A), 42 U.S.C. §§ 1395f(a)(2)(C) and 

1395n(a)(2)(A).

2

 Part A covers home health services beginning within 14 days of a discharge from a hospital 

or skilled nursing facility. Social Security Act, § 1861(tt), 42 U.S.C. § 1395x(tt), and the 

Centers for Medicare & Medicaid Services (CMS), Medicare Benefit Policy Manual, 

Pub. 100-02, ch.7, § 60.1. Part B covers home health services not related to an inpatient stay. 

Social Security Act, § 1832(a), 42 U.S.C. § 1395f(a), and CMS, Medicare Benefit Policy 

Manual, Pub. 100-02, ch. 7, § 60.3. 

3

 Office of Inspector General (OIG) analysis of 2010 National Claims History Part A Standard 

Analytical File. 

4

 Social Security Act, § 1861(m), 42 U.S.C. § 1395x(m). 

5

 Part-time or intermittent skilled nursing or home health aide services are services furnished 

for a total of fewer than 8 hours each day and 28 or fewer hours each week (or, subject to 

review on a case-by-case basis as to the need for care, fewer than 8 hours each day and 35 or 

fewer hours per week). Social Security Act, § 1861(m), 42 U.S.C. § 1395x(m). 

6

 OIG, Review of Compliance with Billing Provisions Under the Prospective Payment System 

for Home Health Agencies’ Therapy Services at Connecticut Home Health Care, Inc., 

A-01-04-00507, May 2005. See also OIG, Review of Selected Paid Claims With Therapy 

Services Submitted to Medicare by Red Oak Home Health Services for the Period October 1, 

2002, Through September 30, 2003, A-09-04-00050, July 2005, and OIG, Review of Selected 

Paid Claims with Therapy Services Submitted to Medicare by Total Patient Care Home 

Health, LLC for the Period October 1, 2002, Through September 30, 2003, A-04-05-02000, 

September 2005. 

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indicted in February 2012 for allegedly certifying or directing the 

certification of beneficiaries’ plans of care so that HHAs were able to bill 

Medicare for home health services that were not medically necessary or 

were not provided.7 This physician also allegedly performed unnecessary 

home visits and ordered unnecessary medical services. This is the largest 

alleged home health fraud scheme in U.S. history; HHAs allegedly 

fraudulently billed more than $350 million to Medicare. Another alleged 

home health fraud scheme involved “beneficiary sharing”—a situation in 

which multiple HHAs fraudulently bill Medicare for the same 

beneficiaries. According to a September 2011 indictment, an individual 

allegedly sold beneficiary information to 100 different HHAs in Houston, 

Texas.8 These HHAs then allegedly used this beneficiary information to 

bill Medicare for services that were unnecessary or were never provided. 

Medicare Home Health Services 

To qualify for home health services, Medicare beneficiaries must (1) be 

confined to the home (i.e., homebound); (2) be in need of intermittent 

skilled nursing care or physical, speech, or continuing occupational 

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

care established and periodically reviewed by a physician.9, 10, 11 For home 

health care starting on or after January 1, 2011, the certifying physician 

must document—prior to certifying the beneficiary’s eligibility—that he 

or she (or an allowed nonphysician practitioner) had a face-to-face 

7

 Department of Justice (DOJ) news release, Dallas Doctor Arrested for Alleged Role in 

Nearly $375 Million Health Care Fraud Scheme, February 28, 2012. Accessed at 

http://www.justice.gov/opa/pr/2012/February/12-crm-260.html on March 12, 2012. 

Additionally, these certifications allegedly resulted in the fraudulent billing of more than 

$24 million to Medicaid. 

8

 OIG news release, Medicare Fraud Strike Force Charges 91 Individuals for Approximately 

$295 Million in False Billing, September 7, 2011. Accessed at 

http://www.hhs.gov/news/press/2011pres/09/20110907c.html on September 7, 2011. 

9

 Social Security Act, §§ 1814(a)(2)(C) and 1835(a)(2)(A), 42 U.S.C. §§ 1395f(a)(2)(C) and 

1395n(a)(2)(A).

10 A beneficiary is considered to be confined to the home (or “homebound”) when he or she 

has a condition due to an illness or injury that restricts his or her ability to leave his or her 

residence except with the aid of supportive devices, the use of special transportation, or the 

assistance of another person or if leaving home is medically contraindicated. CMS, Medicare 

Benefit Policy Manual, Pub. 100-02, ch. 7, § 30.1.1. 

11 For purposes of benefit eligibility, “intermittent skilled nursing care” means care that is 

provided or needed fewer than 7 days each week, or less 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). Social Security Act, § 1861(m), 42 U.S.C. § 1395x(m). 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 2 
 

 

 

 

encounter with the beneficiary.12 This documentation must include a brief 

narrative explaining how the patient’s clinical condition during that 

encounter supports the patient’s homebound status and need for skilled 

services.13 

A beneficiary cannot simultaneously receive home health services and 

care at an inpatient hospital or skilled nursing facility.14, 15 However, an 

HHA may arrange with a hospital, skilled nursing facility, or rehabilitation 

center to provide home health services on an outpatient basis if the 

services require use of equipment that cannot be made available in the 

home.16 

Medicare Payment System for Home Health Services 

CMS uses a prospective payment system that establishes a predetermined 

rate for each 60-day episode of home health care.17 The payment rate is 

adjusted for beneficiaries’ health conditions and care needs, as well as for 

the geographical region.18 HHAs with beneficiaries who require a greater 

number of services receive a higher payment rate per 60-day episode.19 

There are no limits to the number of 60-day episodes that eligible 

beneficiaries may receive; however, the home health services provided 

12 CMS, Medicare Benefit Policy Manual, Pub. 100-02, ch. 7, § 30.5.1. For home health care 

starting on or after January 1, 2012, for patients admitted to home health agencies 

immediately after an acute or postacute stay, a physician who cared for the patient in an acute
 

or postacute facility can inform the certifying physician regarding his or her 

face-to-face encounters with the patient. 42 CFR § 424.22(a)(1)(v), as amended by final rule 

“Medicare Program; Home Health Prospective Payment System Rate Update for Calendar 

Year 2012” (76 Fed. Reg. 68526 (Nov. 4, 2011)), effective January 1, 2012. 13 CMS, Medicare Benefit Policy Manual, Pub. 100-02, ch. 7, § 30.5.1.1. This encounter 

must occur no more than 90 days prior to the start of home health care or within 30 days after 

the start of care. 

14 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 10, § 30.9. 

15 Ibid. A beneficiary can receive home health services on the day of admission to or on the 

day of discharge from an inpatient hospital or skilled nursing facility. However, Medicare 

systems will reject a home health claim containing dates for services provided during a 

beneficiary’s inpatient hospital stay or skilled nursing facility stay. If a beneficiary has a 

leave of absence from an inpatient stay, then he or she can receive home health services
 

during that leave of absence. CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 3,
 

§ 40.2.6, and ch. 6, § 40.3.5.2.

16 CMS, Medicare Benefit Policy Manual, Pub. 100-02, ch. 7, § 30.1.1. 

17 Social Security Act, § 1895(a), 42 U.S.C. § 1395fff(a). 

18 Social Security Act, §§ 1895(b)(4)(B) and 1895(b)(4)(C), 42 U.S.C. §§ 1395fff(b)(4)(B) 

and 1395fff(b)(4)(C). 

19 Medicare Payment Advisory Commission (MedPAC), Home Health Care Services
 

Payment System, October 2011. 

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must be reasonable and necessary.20, 21 Beneficiaries generally do not 

make copayments for home health services.22 

Under the Medicare prospective payment system, at the time that the CMS 

contractor servicing an HHA’s area receives the HHA’s claim for a 60-day 

episode of care, the HHA receives an initial partial payment of the 

estimated rate for the full episode.23 The HHA receives the remaining 

payment at the end of the 60-day episode. The total payment is the sum of 

the initial and remaining payments, unless there is an adjustment.24 An 

example of a payment adjustment is a partial episode payment that occurs 

when a beneficiary transfers to another home health provider during a 

60-day episode. 

Medicare makes additional payments, known as outlier payments, to 

HHAs that provide services to beneficiaries who incur unusually high 

costs.25 Beginning in January 2010, CMS implemented an agency-level 

outlier cap limiting total outlier payments for an individual HHA to a 

maximum of 10 percent of the HHA’s annual total Medicare home health 

payments.26 

Additionally, Medicare adjusts the 60-day episode payment rate depending 

on whether the episode is an early episode (i.e., first or second) or a late 

episode (i.e., third or subsequent) in a sequence of episodes.27 For 

episodes to be considered sequential, the next episode must begin within 

20 CMS, Home Health PPS: Overview. Accessed at http://www.cms.gov/HomeHealthPPS/ on 

July 21 21, 2011. Social Security Act, § 1862(a)(1)(A), 42 U.S.C. § 1395y(a)(1)(A). 

22 CMS, Medicare Benefit Policy Manual, Pub. 100-02, ch. 7, § 60.4. There is no 

coinsurance, copayment, or deductible for home health services and supplies other than 

(1) coinsurance for durable medical equipment (DME) covered as a home health service and 

(2) deductible and coinsurance for osteoporosis drugs, which are part of the home health 

benefit paid only under Part B. The coinsurance amount for DME and osteoporosis drugs 

furnished as home health services is 20 percent of the fee schedule amount for the services. 

23 CMS, Home Health PPS: Overview. Accessed at http://www.cms.gov/HomeHealthPPS/ on 

July 21, 2011. 

24 Ibid. 

25 Social Security Act, § 1895(b)(5), 42 U.S.C. § 1395fff(b)(5). 

26 74 Fed. Reg. 58078 and 58080-58087 (Nov. 10, 2009). See also CMS, Medicare Claims 

Processing Manual, Pub. 100-04, ch. 10, § 10.1.21. The Patient Protection and Affordable 

Care Act (Affordable Care Act) made the 10-percent agency-level cap a permanent statutory 

requirement beginning with 2011 by adding a new paragraph (B) to section 1895(b)(5) of the 

Social Security Act. Affordable Care Act, P.L. 111-148, § 3131(b)(2)(C) (adding Social 

Security Act, § 1895(b)(5)(B), 42 U.S.C. 1395fff(b)(5)(B)). 

27 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 10, § 10.1.19.2. 

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60 days of the previous episode’s end date.28 Late episodes have higher 

payment rates than early episodes.29 

Certificate of Need for Home Health Agencies 

In order to participate in Medicare, HHAs must be licensed pursuant to 

applicable State or local law.30 Some States require an HHA to obtain a 

Certificate of Need to be eligible to seek State licensure.31 Generally, a 

Certificate of Need program is intended to ensure that new health care 

facilities (e.g., HHAs) in the State (1) are developed as needed, (2) are the 

most cost effective approach to meeting identified needs, (3) are 

geographically accessible, (4) are financially viable, and (5) will not have 

a significant negative impact on the viability of other health care facilities 

or the quality and cost of the health care services that these other facilities 

provide. In addition, a Certificate of Need program is intended to ensure 

that services in the State (1) are of high quality and (2) are affordable by 

patients. 

As of January 2012, 17 States and the District of Columbia have 

Certificate of Need policies that limit the number of HHAs in operation. 

The remaining 33 States do not require Certificates of Need for HHAs. 

Detecting and Deterring Medicare Fraud and Abuse 

CMS relies partly on contractors to safeguard the Medicare program from 

fraud and abuse. CMS requires these contractors to conduct activities to 

prevent improper payments and identify fraud and abuse. Specifically, 

CMS contracts with Home Health and Hospice Medicare Administrative 

Contractors (MAC) and Zone Program Integrity Contractors (ZPIC) to 

perform these activities for home health services.32 

MACs’ primary responsibility is to process and pay Medicare home health 

and hospice claims. These contractors are also responsible for conducting 

prepayment and postpayment claim review and targeted provider 

education.33 MACs create local coverage determinations and associated 

28 CMS, Medicare Benefit Policy Manual, Pub. 100-02, ch. 7, §§ 10.3 and 10.4. 29 MedPAC, Home Health Care Services Payment System, October 2011. Assuming that 

other factors affecting payment, such as the beneficiary’s health condition and care needs, 

remain the same. 

30 Social Security Act § 1861(o)(4), 42 U.S.C. § 1395x. See also 42 CFR § 484.12(a). If 

State or local law provides for licensure of HHAs, an HHA not subject to such licensure must 

be approved by the State or local licensing agency as meeting the licensure standards.

31 Certificate of Need is a State-specific issue, decided by each State through the health 

planning process. CMS does not participate in States’ health planning processes. 

32 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-

173 § 911, required CMS to replace its current claims processing contractors (fiscal 

intermediaries and carriers) with Medicare Administrative Contractors. Also, CMS is 

replacing the legacy benefit integrity contractors, Program Safeguard Contractors, with 

ZPICs. 

33 CMS, Medicare Program Integrity Manual, Pub. 100-08, ch.1, § 1.3.1. 

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articles and use proactive data analysis to monitor areas of 

vulnerability.34, 35 CMS and these contractors also implement and use 

claims processing edits (i.e., system processes) to prevent improper 

payments. For example, one such edit is intended to prevent payment of 

claims with dates of service after a beneficiary’s death. 

ZPICs identify cases of suspected fraud, develop them thoroughly and in a 

timely manner, take immediate action to ensure that Medicare funds are 

not inappropriately paid and that inappropriate payments are identified, 

and refer cases of potential fraud to law enforcement.36 On occasion, 

CMS also contracts with ZPICs for special demonstration projects that 

combat fraud and abuse in a specific Medicare program and/or geographic 

area. 

Additionally, CMS safeguards the Medicare program through its 

predictive analytics system and its authority to impose a temporary 

enrollment moratorium. As of June 2011, CMS implemented a predictive 

analytics system that analyzes all Medicare Part A and B claims to identify 

potential fraud.37 This system builds profiles of Medicare providers (e.g., 

HHAs) that enable CMS to create risk scores.38 These risk scores estimate 

the likelihood of fraud and identify potentially fraudulent claims and 

billing patterns. 

CMS may also impose a temporary moratorium on the enrollment of new 

Medicare providers of a particular type (e.g., HHAs) and/or in a particular 

geographic location to safeguard Medicare payments.39 For example, 

CMS may impose this moratorium if—in consultation with OIG (and/or 

DOJ) and with the approval of the CMS Administrator—it identifies a 

particular provider type and/or any particular geographic area as having a 

34 Local coverage determinations are decisions made by claims processing contractors (e.g., 

MACs) on a contractorwide basis regarding whether a particular item or service is considered
 

“reasonable and necessary.” Any additional information that a contractor wants to 

communicate to providers—for example, information regarding billing or coding—would be 

placed in an associated article, known as a local coverage article. 

35 Proactive data analysis includes identifying patterns of potential billing errors through data 

analysis and evaluation of other information. 

36 CMS, Medicare Program Integrity Manual, Pub. 100-08, ch. 1, § 1.7.B. 

37 CMS, Predictive Modeling Analysis of Medicare Claims, MLN Network, November 2011. 

Accessed at https://www.cms.gov/MLNMattersArticles/Downloads/SE1133.pdf on 

February 27, 2012. 

38 The predictive analytics system also builds profiles on networks, billing patterns, and 

beneficiary utilization. 

39 42 CFR § 424.570 (a)(1). CMS may also impose a temporary enrollment moratorium on 

new Medicare suppliers.
 

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significant potential for Medicare fraud, waste, or abuse.40 A temporary 

moratorium may be imposed for 6 months, with the option to extend. 

Related Office of Inspector General Work 

In 2012, OIG found that 98 percent of medical records document that 

Medicare beneficiaries met coverage requirements for home health 

services.41 However, HHAs submitted 22 percent of claims in error 

because services were unnecessary or claims were coded inaccurately, 

resulting in $432 million in improper payments. This review assessed 

HHAs’ medical records for beneficiaries but did not determine whether 

those records accurately reflected beneficiaries’ medical conditions. This 

review did not involve visiting beneficiaries to confirm their homebound 

status, nor did it determine whether the care provided was medically 

necessary. 

In 2009, OIG found aberrant billing patterns in home health outlier 

payments in 24 counties nationwide.42 One county in Florida— 

Miami-Dade County—accounted for more home health outlier payments 

in 2008 than the rest of the Nation combined. 

In 2006, OIG found that HHAs improperly coded claims to overstate the 

severity of the beneficiaries’ conditions, resulting in overpayments.43 OIG 

also found that contractors did not perform prepayment edits or 

postpayment analyses of claims data to prevent and detect overpayments. 

Currently, OIG is conducting a companion study on Medicare contractor 

activities to identify and address improper payments and potential fraud 

and abuse in home health, as well as CMS’s oversight of these 

contractors.44 

40 42 CFR § 424.570 (a)(2)(iv). Other reasons why CMS may impose a temporary enrollment 

moratorium include: (1) CMS determines that there is a significant potential for fraud, waste, 

or abuse with respect to a particular provider or supplier type and/or particular geographic 

area; (2) a State Medicaid program has imposed a moratorium on a group of Medicaid 

providers or suppliers that are also eligible to enroll in the Medicare program; and (3) a State 

has imposed a moratorium on enrollment in a particular geographic area and/or on a particular 

provider or supplier type. 42 CFR § 424.570(a)(2)(i)-(a)(2)(iii). 41 OIG, Coverage Requirements and Payment Accuracy for Medicare Home Health Claims, 

OEI-01-08-00390, March 2012. 

42 OIG, Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County 

and Other Geographic Areas in 2008, OEI-04-08-00570, November 2009. 

43 OIG, Review of Home Health Agencies’ Billing for Services Preceded by a Hospital 

Discharge, A-01-04-00527, March 2006. 

44 OEI-04-11-00220, in progress. 

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METHODOLOGY 

This study is based on our analysis of home health claims from 

100-percent paid claims data from CMS’s National Claims History Part A 

Standard Analytical File for 2010.45 Our analysis included both full and 

partial episode claims. 

We also analyzed paid inpatient claims from hospitals and skilled nursing 

facilities for home health beneficiaries from the Part A Standard Analytical 

File. We used the beneficiary’s Health Insurance Claim Number to link 

these inpatient hospital and skilled nursing facility claims to the home 

health claims. Additionally, we used CMS’s Enrollment Data Base to 

identify beneficiaries with dates of death. 

Identification of Inappropriate Medicare Payments for Home 

Health Claims 

We analyzed the home health claims data to determine the number of 

home health claims that (1) inappropriately overlapped with claims for 

inpatient hospital stays, (2) inappropriately overlapped with claims for 

skilled nursing facility stays, or (3) were billed for services on dates after 

beneficiaries’ deaths. We also calculated the total inappropriate Medicare 

payments for these home health services. 

First, we identified home health claims that overlapped with claims for 

inpatient hospital stays or skilled nursing facility stays. According to 

CMS policy, institutional claims for inpatient hospital stays and skilled 

nursing facility stays have priority over claims for home health services.46 

When a home health claim contains dates of service that overlap with 

dates of an inpatient hospital stay or a skilled nursing facility stay, that 

home health claim is rejected regardless of whether it is received before or 

after the institutional claim. 

We excluded appropriate instances of overlap, which are instances when 

beneficiaries receive home health services on the dates of admission to or 

on the dates of discharge from inpatient hospitals or skilled nursing 

facilities or when beneficiaries receive home health services during leaves 

of absence from inpatient stays. We considered the home health claim to 

have an inappropriate instance of overlap if a home health service was 

provided during an inpatient hospital stay or skilled nursing facility stay 

and a leave of absence did not occur. For home health claims 

inappropriately overlapping with claims for inpatient hospital stays or 

skilled nursing facility stays, we summed the payment amounts to 

45 We excluded all claims with a reimbursement amount of zero. 

46 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 10, § 30.9. 
 

 

 

calculate the overall amount that Medicare inappropriately paid for these 

claims. 

Next, we identified home health episodes that started after beneficiaries’ 

deaths. A beneficiary’s death during an episode results in a full payment 

for that episode.47 However, a Medicare payment for a home health 

episode that starts after a beneficiary’s death is an inappropriate payment. 

After identifying beneficiaries for whom HHAs billed Medicare for home 

health services in 2010, we used CMS’s Enrollment Data Base to identify 

those beneficiaries who died before or during 2010. For home health 

claims in which beneficiaries’ dates of death preceded the episodes’ start 

dates, we summed the payment amounts to calculate the overall amount 

that Medicare inappropriately paid for these services. 

Identification of HHAs That Had Questionable Billing 

We first identified all home health claims with dates of service ending in 

2010. In total, we identified approximately 6.96 million Medicare claims 

for both full and partial home health episodes billed by 11,203 HHAs. To 

identify HHAs that had questionable billing, we first identified those 

HHAs that submitted at least 20 claims in 2010.48 These included 

92 percent (10,341) of the 11,203 HHAs and accounted for 6.88 million 

claims. 

We next identified HHAs that had questionable billing. We developed six 

measures of questionable billing based on the results of past OIG analyses 

and fraud investigations related to home health services, as well as on 

input from CMS staff and contractors. We considered an HHA’s billing to 

be unusually high, or questionable, on each of the six measures if it was 

greater than the 75th percentile plus 1.5 times the interquartile range.49 

The six measures of questionable billing we developed were: 

 High average outlier payment amount per beneficiary. Medicare 

makes outlier payments to HHAs that provide services to beneficiaries 

who incur unusually high costs. We based this measure on the total 

outlier payments each HHA was paid in 2010 relative to the number of 

beneficiaries for whom the HHA billed Medicare in 2010. We also 

calculated each HHA’s total outlier payments relative to total Medicare 

payments in 2010. 

47 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 10, § 10.1.16. 

48 HHAs that submitted fewer than 20 claims represented 8 percent of all HHAs and 

approximately $18 million (or 0.1 percent) of Medicare payments for home health services in 

2010. 

49 This is a standard exploratory method for identifying members of a population with 

unusually high values on a given statistic compared to the rest of the population when no 

established benchmarks exist. See J.W. Tukey, Exploratory Data Analysis, Addison-Wesley, 

1977. 

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	 High average number of visits per beneficiary. We based this measure 

on the total number of visits each HHA billed in 2010 relative to the 

number of beneficiaries for whom the HHA billed Medicare in 2010. 

	 High percentage of beneficiaries for whom other HHAs billed 

Medicare. When multiple HHAs bill for services provided to the same 

beneficiary in a given period, there is potential for fraud (i.e., 

beneficiary sharing). We based this measure on the percentage of each 

HHA’s beneficiaries for whom at least one other HHA billed Medicare 

in 2010. 

	 High average number of late episodes per beneficiary. In a sequence 

of episodes, late (i.e., third and subsequent) episodes have higher 

payment rates than early episodes. We based this measure on the total 

number of late episodes each HHA billed in 2010 relative to the 

number of beneficiaries for whom the HHA billed Medicare in 2010. 

	 High average number of therapy visits per beneficiary. Beneficiaries 

who require a greater number of therapy services have episodes with 

higher payment rates. We based this measure on the total number of 

therapy visits each HHA billed in 2010 relative to the number of 

beneficiaries for whom the HHA billed Medicare in 2010. 

	 High average Medicare payment amount per beneficiary. We based 

this measure on the total payment for home health services that each 

HHA received in 2010 relative to the number of beneficiaries for 

whom the HHA billed Medicare in 2010.50 

These six measures of questionable billing indicate potential fraud. There 

may be legitimate reasons for an HHA to have unusually high billing on 

any of our six measures. For example, a beneficiary receiving home 

health services may live in a State with a colder climate most of the year 

and spend the winter in a warmer State. If this beneficiary receives home 

health services throughout the year, then at least two different HHAs 

would legitimately bill Medicare for services provided to this beneficiary. 

On the other hand, there are schemes in which multiple HHAs 

fraudulently bill Medicare for services provided to the same beneficiaries. 

Acknowledging legitimate instances of unusually high billing is necessary, 

but it is equally necessary to examine HHAs that bill unusually high 

amounts relative to other HHAs to determine whether such billing is 

inappropriate or fraudulent. 

Geographic Analysis of HHAs With Questionable Billing 

We compared the geographic locations of HHAs with questionable billing 

to those of other HHAs. Specifically, we determined for each State the 

50 We did not account for wage adjustments based on geographical areas in this analysis. 

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Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 11 

total number of HHAs and the number of HHAs with questionable 

billing.51 We then calculated the percentage of HHAs with questionable 

billing in each State. Additionally, we determined whether States had 

Certificate of Need policies for HHAs. We then analyzed the total number 

of HHAs and the number of HHAs with questionable billing by States 

with or without Certificate of Need policies. 

Limitations 

We did not independently verify the accuracy of the data we used for this 

study. Further, our findings are based on an analysis of claims data, rather 

than medical documentation; we did not determine whether the services 

billed were inappropriate or fraudulent. For example, we did not analyze 

the health status of beneficiaries to determine whether home health 

services billed by HHAs with questionable billing were appropriate. In 

addition, the measures included in our analysis are not intended to be a 

comprehensive set of measures for identifying questionable billing. 

Standards 

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency. 

51 HHAs were located in all 50 States; the District of Columbia; and certain U.S. territories, 

such as Puerto Rico and the U.S. Virgin Islands. 
 

 

FINDINGS 

In 2010, Medicare inappropriately paid $5 million for 

home health claims with three specific errors 

CMS has claims processing edits in place to prevent payment for home 

health claims with services that inappropriately overlap with claims for 

inpatient hospital stays or skilled nursing facility stays or that are billed for 

services on dates after beneficiaries’ deaths. However, Medicare 

inappropriately paid $5 million (out of $19.5 billion total for home health 

services) in 2010 for home health claims that had at least one of these 

three errors. The $5 million figure is based solely on our analysis of 

claims data for these three specific errors. It does not include any 

additional inappropriate payments that a medical record review or other 

claims analysis might find to be unreasonable or unnecessary. 

In 2010, 1,285 HHAs had claims with at least 1 of the 3 errors. Table 1 

shows the inappropriate payment amount, number of services, number of 

claims, and number of HHAs by the three types of errors. 

Table 1: Inappropriate Medicare Payments for Home Health Services, 2010 

Error Type 

Overlap between inpatient hospital stay and home 

health service 

Overlap between skilled nursing facility stay and 

home health service 

Home health service date after a beneficiary’s 

date of death 

 Total 

Inappropriate 

Payment Amount 

$3,506,429

$1,268,433 

$208,311 

$4,983,173 

Number of 

Services 

1,722

1,180

1,007

3,909 

Number of 

Claims 

1,309 

469 

82 

1,857 

Number of 

HHAs* 

956 

414 

51 

1,285 

*Column sum exceeds total because some HHAs had multiple types of inappropriate payments. 

Source: OIG analysis of Part A data for home health services, hospitals, and skilled nursing facilities, 2012. 

Medicare inappropriately paid approximately $4.8 million for 

home health claims that overlapped with claims for stays in 

inpatient hospitals or skilled nursing facilities 

In 2010, Medicare inappropriately paid $3.5 million for home health 

claims that overlapped with claims for inpatient hospital stays and 

$1.3 million for home health claims that overlapped with claims for skilled 

nursing facility stays, for a total of $4.8 million. Nationwide, Medicare 

paid 956 HHAs when home health claims and claims for inpatient hospital 

stays inappropriately overlapped and paid 414 HHAs when home health 

claims and claims for skilled nursing facility stays inappropriately 

overlapped. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 12 
 

 

 

 

 

 

 

 

 

 

 

Medicare inappropriately paid $208,311 for home health 

services billed on dates after beneficiaries’ deaths 

In 2010, Medicare inappropriately paid $208,311 for home health services 

on dates after beneficiaries’ deaths. Overall, Medicare paid 82 claims for 

50 beneficiaries for services on dates after their deaths. Two beneficiaries 

for whom HHAs billed Medicare had been deceased for more than 

10 years. Table 2 shows the year of death of beneficiaries for whom 

HHAs billed for services on dates after their deaths, the total number and 

percentage of deceased beneficiaries by year, and the inappropriate 

payment amount by year. 

Table 2: Beneficiaries for Whom HHAs Billed Medicare for Home Health 

Services After Death, 2010 

Year of 

Death 

Number of 

Deceased 

Beneficiaries 

Percentage of Total 

Deceased 

Beneficiaries 

Inappropriate 

Payment Amount 

1995 1 2% $11,220 

1999 1 2% $6,507 

2001 5 10% $20,082 

2002 1 2% $12,630 

2005 3 6% $14,900 

2006 1 2% $13,331 

2007 2 4% $15,144 

2008 4 8% $19,987 

2009 4 8% $16,344 

2010 28 56% $78,166

 Total 50 100% $208,311 

Source: OIG analysis of Part A data for home health services, 2012. 

About half of deceased beneficiaries for whom HHAs billed Medicare for 

services on dates after their deaths died in 2010. On average, HHAs billed 

Medicare for such beneficiaries for services on dates about 2 months after 

their deaths. The service date on a claim for 1 beneficiary, who died in 

January 2010, was 275 days later, in October 2010. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 13 
 

 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 14 

 

Approximately one in every four HHAs had 

questionable billing 

In 2010, 25 percent (2,594 of 10,341) of HHAs exceeded the threshold 

that indicated unusually high billing for at least 1 of our 6 measures of 

questionable billing.52, 53 

More than one-third (36 percent) of the HHAs with questionable billing 

exceeded the thresholds for multiple measures of questionable billing. 

Specifically, 925 HHAs exceeded the thresholds for 2 or more measures, 

and 6 HHAs exceeded the thresholds for 5 measures. Table 3 shows the 

number and percentage of HHAs by the number of measures of 

questionable billing for which HHAs exceeded thresholds. 

Table 3: Number and Percentage of HHAs by Number of Measures of 

Questionable Billing for Which HHAs Exceeded Thresholds, 2010 

Number of Measures of 

Questionable Billing for Which 

HHAs Exceeded Thresholds 

Number of HHAs Percentage of HHAs* 

0 7,747 75% 

1 1,669 16% 

2 680 7% 

3 199 2% 

4 40 <1% 

5 6 <1% 

6 0 0%

 Total 10,341 100% 

*The percentages do not sum to 100 percent because of rounding. 

Source: OIG analysis of Part A data for home health services, 2012. 

For each measure of questionable billing, Table 4 shows the median 

among all HHAs, the threshold that indicated unusually high billing, the 

range of unusually high billing, and the number of HHAs with unusually 

high billing. 

52 Of these 2,594 HHAs with questionable billing, 299 also had at least 1 inappropriately paid 

home health claim in 2010. 

53 A Texas physician was indicted in February 2012 for allegedly certifying or directing the 

certification of beneficiaries’ plans of care so that HHAs were able to bill Medicare for home 

health services that were not medically necessary or were not provided. Of the HHAs 

affiliated with this physician, 60 percent (288 of 484) had questionable billing. 
 

 

Table 4: HHAs With Unusually High Billing by Measure of Questionable Billing, 2010 

Measure of Questionable Billing Median Among All 

HHAs* 

HHAs With Unusually High Billing** 

Threshold Range of Billing Number of HHAs 

Average outlier payment amount per 

beneficiary $13 $403 $404 to $5,793 1,684 

Average number of visits per 

beneficiary 32 91 91 to 629 658 

Percentage of beneficiaries for whom 

other HHAs billed Medicare 20% 61% 61% to 100% 618 

Average number of late episodes per 

beneficiary <1 2 2 to 4 426 

Average number of therapy visits per 

beneficiary 9 24 24 to 70 257 

Average Medicare payment amount per 

beneficiary $5,112 $11,653 $11,669 to $24,463 173 

Total 2,594*** 

*The median (i.e., the 50th percentile) indicates that half of all HHAs fell below this value. 

**We considered an HHA’s billing to be unusually high if it was greater than the 75th percentile plus 1.5 times the interquartile range. 

***Column sum exceeds total because some HHAs exceeded thresholds for multiple measures of questionable billing. 

Source: OIG analysis of Part A data for home health services, 2012. 

In 2010, 1,684 HHAs had unusually high outlier payments per 

beneficiary 

Overall, 74 percent (or 7,636) of HHAs had at least 1 outlier payment in 

2010. Of those HHAs, 1,684 HHAs had outlier payments above $403 per 

beneficiary, our threshold for unusually high outlier payments. Fifty 

percent of all HHAs had average outlier payment amounts per beneficiary 

of less than $13. One HHA received an average of $5,793 per beneficiary 

in outlier payments. Ten HHAs’ average outlier payment amounts per 

beneficiary exceeded $3,000. 

Beginning in January 2010, total outlier payments for an HHA should not 

have exceeded 10 percent of the HHA’s annual projected total Medicare 

home health payments. For 72 percent (5,514 of 7,636) of HHAs with 

outlier payments, total outlier payments were 5 percent or less of total 

Medicare payments. However, 434 HHAs exceeded the 10-percent cap. 

In particular, one HHA’s total outlier payments represented approximately 

74 percent of its total Medicare payments in 2010. Almost all (429 of 

434) of those HHAs that exceeded the 10-percent cap also exceeded our 

unusually high threshold for this questionable billing measure. 

Additionally, of those HHAs with outlier payments representing 5 to 

10 percent of their total Medicare payments, 72 percent exceeded our 

threshold for unusually high outlier payments. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 15 
 

 

 

 

In 2010, 658 HHAs billed unusually high numbers of visits per 

beneficiary 

Six hundred fifty-eight HHAs exceeded our unusually high threshold of 

91 visits per beneficiary in 2010. Fifty percent of HHAs billed for fewer 

than 32 visits per beneficiary. One HHA billed for an average 629 visits 

per beneficiary. Thirteen (out of 10,341) HHAs billed for over 300 visits 

per beneficiary, on average. 

In 2010, 618 HHAs had an unusually high percentage of 

beneficiaries for whom other HHAs billed Medicare 

In 2010, 618 HHAs had a high percentage of beneficiaries for whom other 

HHAs billed Medicare, exceeding our threshold—61 percent—for an 

unusually high percentage of such beneficiaries. For 50 percent of HHAs, 

other HHAs billed for 20 percent or less of their beneficiaries. When 

multiple HHAs bill for services provided to the same beneficiary, there is 

potential for fraud (i.e., beneficiary sharing). For six HHAs, other HHAs 

billed for 100 percent of their beneficiaries. 

In 2010, for over 90 percent of beneficiaries, a single HHA billed 

Medicare. For about 9 percent of beneficiaries, two HHAs billed 

Medicare. For the remaining 1 percent of beneficiaries, three or more 

HHAs billed Medicare. In the case of one beneficiary, nine different 

HHAs billed Medicare. 

In 2010, 426 HHAs billed for unusually high numbers of late 

episodes per beneficiary 

Overall, 99 percent (or 10,195) of HHAs billed Medicare for at least 1 late 

episode—i.e., a third or subsequent episode—in 2010, meaning that such 

HHAs billed for 3 or more consecutive episodes for at least 1 beneficiary. 

However, 426 HHAs billed for unusually high numbers of late episodes, 

exceeding our threshold of 2 late episodes per beneficiary. Fifty percent 

of all HHAs billed for less than one late episode per beneficiary. Late 

episodes have higher payment rates than early (i.e., first or second) ones. 

Two HHAs substantially exceeded the threshold for this measure by 

billing for an average of four late episodes per beneficiary. 

In 2010, 257 HHAs billed for unusually high numbers of 

therapy visits per beneficiary 

Two-hundred fifty-seven HHAs exceeded our threshold for unusually high 

numbers of therapy visits—24 therapy visits per beneficiary—in 2010. 

Fifty percent of HHAs billed for fewer than nine therapy visits per 

beneficiary. As the number of therapy visits provided during an episode 

increases, the payment rate for the episode also increases. One HHA 

billed for an average of 70 therapy visits per beneficiary, almost 8 times 

the median. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 16 
 

 

 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 17 

 

In 2010, 173 HHAs had unusually high payments per 

beneficiary 

One hundred seventy-three HHAs were paid above our threshold for 

unusually high payments per beneficiary—$11,653 per beneficiary—for 

services provided in 2010. Fifty percent of all HHAs had average 

Medicare payment amounts per beneficiary of less than $5,112. 

High-dollar per-beneficiary billing amounts may indicate that HHAs were 

billing for services that were not medically necessary or were never 

provided. Medicare paid one HHA an average of $24,463 per beneficiary, 

almost five times the median. Fourteen HHAs’ average Medicare payment 

amounts per beneficiary exceeded $15,000, almost three times the median. 

Eighty percent of HHAs with questionable billing were 

located in four States 

In 2010, 80 percent (2,063 of 2,594) of HHAs that exceeded the threshold 

that indicated unusually high billing for at least 1 of our 6 measures of 

questionable billing were located in Texas, Florida, California, and 

Michigan. Overall, these 4 States represented 47 percent of the total 

number of HHAs (4,863 of 10,341) in 2010. 

These 4 States all had more than 100 HHAs with questionable billing in 

2010. Thirty-nine percent of HHAs with questionable billing (1,000) were 

located in Texas. Similarly, 25 percent of HHAs with questionable billing 

(652) were located in Florida. Table 5 shows the number of HHAs with 

questionable billing and the percentage of the total number of such HHAs 

for these four States. The remaining 531 HHAs with questionable billing 

were dispersed among 37 other States. Nine States did not have any 

HHAs with questionable billing in 2010.54 

54 Additionally, no HHAs with questionable billing were located in the District of Columbia, 

Puerto Rico, the U.S. Virgin Islands, Guam, or Saipan. Saipan is the largest island of the 

Northern Mariana Islands, a U.S. territory. 
 

 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 18 

 

Table 5: States With More Than 100 HHAs With Questionable Billing, 2010 

State Number of HHAs With Questionable 

Billing in State 

Percentage of Total Number of 

HHAs With Questionable Billing 

Texas 1,000 39% 

Florida 652 25% 

California 281 11% 

Michigan 130 5%

 Total 2,063 80% 

Note: The remaining 531 HHAs with questionable billing are located in 37 other States. 

Source: OIG analysis of Part A data for home health services, 2012. 

Texas, Florida, California, and Michigan also do not have Certificate of 

Need policies that limit the number of HHAs in operation. Overall, 

97 percent (2,529 of 2,594) of HHAs with questionable billing that we 

identified were located in States that did not have Certificate of Need 

policies in 2010. 

Eight States had high percentages of HHAs with questionable 

billing 

In 2010, eight States had high percentages, or at least two times the 

national average of 9 percent, of HHAs with questionable billing (i.e., at 

least 18 percent of each State’s total number of HHAs).55 Figure 1 

highlights these eight States. Appendix A corresponds to Figure 1 and 

shows the number and percentage of HHAs with questionable billing for 

each State and the amount by which each State exceeded the national 

average. 

55 Nine percent is the unweighted national average, which is calculated by summing all States’ 

percentages of HHAs with questionable billing and dividing by the total number of States. 

The weighted national average is 25 percent and is calculated by dividing the total number of 

HHAs with questionable billing nationwide by the total number of HHAs nationwide. 
 

Figure 1: States With High Percentages of HHAs with Questionable Billing, 2010 

Source: OIG analysis of Part A data for home health services, 2012. 

Five States far exceeded the national average, having at least three times 

as many HHAs with questionable billing as other States. For example, 

Florida had the largest representation of HHAs with questionable billing. 

In Florida, 652 HHAs (or 52 percent) of the 1,251 HHAs operating in the 

State had questionable billing in 2010. The percentage of HHAs with 

questionable billing in Florida was nearly six times the national average. 

Texas had the second-largest representation of HHAs with questionable 

billing. Forty-five percent, or 5 times the national average, of the 

2,212 HHAs in Texas had questionable billing. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 19 
 

 

CONCLUSION AND RECOMMENDATIONS 

In 2010, Medicare paid $19.5 billion to 11,203 HHAs for services 

provided to 3.4 million beneficiaries. Recent investigations and prior OIG 

studies have found that home health services are vulnerable to fraud, 

waste, and abuse. 

In 2010, Medicare inappropriately paid approximately $5 million for home 

health claims that overlapped with claims for inpatient hospital stays, 

overlapped with claims for skilled nursing facility stays, or were billed for 

services on dates after beneficiaries’ deaths. Further, in 2010, 

approximately one in every four HHAs exceeded the threshold that 

indicated unusually high billing for at least one of our six measures of 

questionable billing. Additionally, HHAs with questionable billing were 

located mostly in four States. Two of these—Florida and Texas—also 

each had a high number of HHAs with questionable billing relative to the 

total number of HHAs in the State. 

Collectively, these findings identify specific issues with Medicare 

payments for home health services that need to be addressed to properly 

safeguard the Medicare program. However, our review is based solely on 

an analysis of claims data and does not include payments that a medical 

record review, site visits, interviews with physicians and beneficiaries, or 

additional data analysis may find to be unreasonable or unnecessary. 

Similarly, the measures of questionable billing used in this review are 

indicators of potential fraud. Although there may be legitimate reasons for 

an HHA to have unusually high billing on any of our six measures of 

questionable billing, it is important to examine HHAs that bill such 

unusually high amounts relative to other HHAs to determine whether such 

billing is inappropriate or fraudulent. CMS must use all of the tools at its 

disposal to more effectively review, identify, and eliminate fraud, waste, 

and abuse in home health services. 

We recommend that CMS: 

Implement claims processing edits or improve existing edits to 

prevent inappropriate payments 

CMS should instruct MACs that process and pay home health claims to 

implement claims processing edits or improve existing edits to prevent 

inappropriate payments. These edits should identify home health claims 

that overlap with claims for inpatient hospital stays or skilled nursing 

facility stays and flag them for further review to ensure the overlap is 

appropriate (i.e., the service was provided on the date of admission or 

discharge or during a leave of absence). CMS should also ensure that 

Medicare does not pay for services on dates after beneficiaries’ deaths. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 20 
 

 

Increase monitoring of billing for home health services 

CMS should instruct MACs and ZPICs to monitor the billing of home 

health services by HHAs by using measures of questionable billing similar 

to those in this report. CMS should develop thresholds for these measures 

and instruct its contractors to conduct additional review of HHAs that 

exceed them. CMS should also consider including these measures of 

questionable billing in its predictive analytic work. 

Enforce and consider lowering the 10-percent cap on the total 

outlier payments an HHA may receive annually 

In January 2010, CMS began capping outlier payments to individual 

HHAs at 10 percent of total projected Medicare payments. Although this 

cap is a first step to mitigating potential fraud and inappropriate billing of 

outlier payments, we identified 434 HHAs that exceeded the cap in 2010. 

CMS should properly enforce the cap on the total outlier payments that an 

HHA may receive annually. 

Additionally, 78 percent of HHAs with total outlier payments greater than 

5 percent of total Medicare payments also exceeded the threshold for our 

measure of questionable billing specific to outlier payments, indicating 

potential fraud. CMS should reevaluate the 10-percent cap and consider 

lowering it, if appropriate, to better prevent fraud and inappropriate billing 

of outlier payments. 

Consider imposing a temporary moratorium on new HHA 

enrollments in Florida and Texas 

Florida and Texas each had a high number of HHAs with questionable 

billing in 2010. Additionally, the percentage of HHAs with questionable 

billing relative to the State’s total number of HHAs exceeded the national 

average by six times in Florida and by five times in Texas. CMS should 

consider imposing a temporary enrollment moratorium on HHAs in these 

States. 

CMS should determine whether this moratorium should be imposed 

Statewide or imposed in specific counties and/or metropolitan areas. CMS 

should also assess and consider beneficiary access to home health services 

when determining the geographic areas to which the moratorium would 

apply. 

Take appropriate action regarding inappropriate payments and 

HHAs with questionable billing 

In a separate memorandum, we will refer to CMS for appropriate action 

the claims associated with inappropriate payments and the HHAs with 

questionable billing that we identified. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 21 
 

 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its comments on the draft report, CMS concurred with all five 

recommendations. CMS acknowledges that home health services have 

historically been vulnerable to fraud, waste, and abuse. For this reason, 

CMS is taking additional steps to address vulnerabilities in the enrollment 

and claims payment process for HHAs and is building reliable models in 

its Fraud Prevention System that can detect and generate alerts for 

suspicious billing by all major provider types, including HHAs. 

While concurring with our first recommendation, CMS disagreed with the 

inappropriate payment amount the report associates with home health 

claims that inappropriately overlapped with claims for inpatient hospital 

stays and skilled nursing facility stays. CMS noted that in the absence of 

individual claims analysis, it is difficult to determine whether there was 

any financial impact from the submission of overlapping claims. 

Additionally, CMS noted that when this overlap occurs, the home health 

claim is rejected and nothing is paid on that initial claim submission. The 

HHA is able to remove the overlapping visit(s) from the rejected claim and 

then resubmit the claim for Medicare payment. However, we found that 

CMS paid for home health claims with visits that inappropriately 

overlapped with claims for inpatient hospital stays and skilled nursing 

facility stays. Therefore, we continue to consider the entire Medicare 

payment amounts as inappropriate as these claims should not have been 

paid. CMS also stated that it will identify and correct any loopholes in its 

current enforcement after receiving OIG’s specific claims examples. 

With regard to our second recommendation, CMS will provide ZPICs with 

a copy of this report. CMS will also review the measures of questionable 

billing in this report and consider incorporating them into its Fraud 

Prevention System models. 

With regard to the third recommendation, CMS has taken action to fully 

enforce the 10-percent outlier cap. In early 2011, CMS identified a 

problem involving the calculation used to enforce the cap and has since 

corrected this problem. Additionally, CMS plans to continue evaluating 

home health outlier policy, including analysis surrounding the current 

10-percent threshold, while considering the impact of lowering the cap on 

legitimate providers. 

With regard to our fourth recommendation, CMS is assessing a variety of 

provider types for suitability for moratoria, including HHAs. CMS is also 

carefully assessing the geographic areas to which moratoria would apply 

and is evaluating issues relative to beneficiary access to care. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 22 
 

 

With regard to our fifth recommendation, CMS will determine the most 

appropriate administrative actions to take on claims containing 

inappropriate payments identified in this report. Additionally, CMS will 

share the HHAs with questionable billing identified in this report with 

MACs to consider as they prioritize their work and with Recovery 

Auditors to consider as they decide what claims to review. Recovery 

Auditors conduct postpayment reviews of claims to identify and correct 

improper payments. 

We support CMS’s efforts to address these issues and encourage continued 

progress. For the full text of CMS’s comments, see Appendix B. We 

made minor changes to the report based on CMS’s comments. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 23 
 

APPENDIX A 

Number and Percentage of Home Health Agencies With Questionable 

Billing by State, 2010 

	 States shaded in black had percentages of home health agencies 

(HHA) with questionable billing four times or greater than the 

national average. 

	 States shaded in dark gray had percentages of HHAs with 

questionable billing three times the national average. 

	 States shaded in light gray had percentages of HHAs with 

questionable billing two times the national average. 

State 

Number of HHAs 

With Questionable 

Billing in State 

Total Number of 

HHAs in State 

Percentage of HHAs 

With Questionable 

Billing in State 

Number of Times 

the National 

Average 

Florida 652 1251 52% 5.8 

Texas 1,000 2212 45% 5.0 

Utah 33 82 40% 4.5 

California 281 847 33% 3.7 

Oklahoma 76 240 32% 3.5 

Michigan 130 553 24% 2.6 

Louisiana 51 217 24% 2.6 

Ohio 83 462 18% 2.0 

Massachusetts 21 135 16% 1.7 

Nevada 15 99 15% 1.7 

Colorado 19 128 15% 1.6 

New York 25 173 14% 1.6 

Tennessee 20 154 13% 1.4 

Wisconsin 13 102 13% 1.4 

Nebraska 8 70 11% 1.3 

Indiana 19 187 10% 1.1 

Mississippi 5 52 10% 1.1 

Kansas 11 115 10% 1.1 

Rhode Island 2 21 10% 1.1 

Illinois 57 625 9% 1.0 

Connecticut 7 81 9% 1.0 

Idaho 3 44 7% 0.8 

New Hampshire 2 32 6% 0.7 

Vermont 1 16 6% 0.7 

Delaware 1 18 6% 0.6 

Missouri 9 172 5% 0.6 

North Dakota 1 21 5% 0.5 

Kentucky 5 105 5% 0.5 

(continued) 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 24 
 

 

APPENDIX A (CONTINUED)
 

State 

Number of HHAs 

With Questionable 

Billing in State 

Total Number of 

HHAs in State 

Percentage of HHAs 

With Questionable 

Billing in State 

Number of Times 

the National 

Average 

Pennsylvania 12 301 4% 0.4 

Georgia 4 113 4% 0.4 

Wyoming 1 29 3% 0.4 

Minnesota 5 151 3% 0.4 

Virginia 6 183 3% 0.4 

South Dakota 1 31 3% 0.4 

Iowa 5 157 3% 0.4 

New Mexico 2 71 3% 0.3 

Alabama 4 153 3% 0.3 

Arizona 2 102 2% 0.2 

West Virginia 1 57 2% 0.2 

Washington 1 60 2% 0.2 

Arkansas 2 161 1% 0.1 

Alaska 0 12 0% --

District of Columbia 0 21 0% --

Hawaii 0 11 0% --

Maine 0 27 0% --

Maryland 0 53 0% --

Montana 0 32 0% --

New Jersey 0 52 0% --

North Carolina 0 182 0% --

Oregon 0 58 0% --

Puerto Rico 0 40 0% --

South Carolina 0 68 0% --

U.S. Virgin Islands 0 1 0% --

Guam 0 4 0% --

Saipan*** 0 2 0% --

 Total 2,594* 10,341* 9%** --

*Certain HHAs had two different provider States listed on claims and are counted twice. 

**This national average is unweighted and is calculated by summing all States’ percentages of HHAs with questionable billing and dividing by the
 

total number of States. The weighted national average is 25 percent and is calculated by dividing the total number of HHAs with questionable 

billing nationwide by the total number of HHAs nationwide. 

***Saipan is the largest island of the Northern Mariana Islands, a U.S. territory.
 

Source: Office of Inspector General analysis of Part A data for home health services, 2012. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 25 
APPENDIX B 

Agency Comments 

/""""'... {..tI DEPARTMENT OF HEALTH & HUMAN SERVICES 

,~~ Adminisft'4tor 

Washington, DC 20201 

DATE: JUN 2 7 2012 

TO: Daniel R. Levinson 

Inspector .General 

J:'ROM: 	 MaNlyn 1;.!!ve!<ner 

Acting KclminiS\.rator 

SunJEcr: 	 Office of Inspector Gencral (OIG) Draft Report: Inappropriate and Questionable 

Billing by Medicare Home Health Agencies (OEl-04-! 1-00240) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on 010 Draft Report entitled, "Inappropriate and Questionable Billing by Medicare 

Home Health Agencies" (OEI-04-11-OO240). The objectives of this study are to determine the 

extent to which home health agencies (HHAs) submitted Medicare claims that inappropriately 

overlapped with an inpatient hospital stay, overlapped with a skilled nursing facility (SNF) stay, 

or were billed after a beneficiary'S death and to identify and describe HHAs that exhibited 

questionable billing, 

HHA services have historically been vulnerable to fraud, waste, and abuse. As such, CMS is 

taking additional steps to address potential vulnerabilities in the enrollment and claims payment 

process for this supplier group using the authorities granted under the Affordable Care Actl

. 

Under the new screening provisions of CMS 6028-FC2 all newly enrolling HHAs are considered 

a high risk provider/supplier and are, therefore, subject to unannounced site visits. The 

Affordable Care Act also enhanced CMS' authority to suspend payments for credible allegations 

of fraud . In February, CMS announced the suspension of payments to 78 HHAs involved in an 

alleged fraud scheme in Dallas that was part of the February 28, 2012 Health Care Prevention 

A(..1ion Team Strike Force takedown. 

As part of CMS revalidation efforts, all HHAs were sent revalidation notices prior to December 

31, 2011 and are currently in process. In addition, all HHAs are subject to an unannounced 

physical site visit as part of the revalidation process. 

In addition, eMS implemented the Fraud Prevention System (FPS) in June of 2011 which 

applies predictive analytic technology on claims prior to payment to identify aberrant and 

suspicious billing patterns. The FPS has been running predictive algorithms and other 

I Section 6401 of the Affordable Care Act provided the Secretary with authority to perform categorical risk-based 

screening on providers and suppliers at enrollment and upon revalidation. 

' CMS 602S-FC entitled, " Medicare, Medicaid and Children's Health Insurance Programs: Addttlonal Screening 

Requirements, Apptication Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for 

Providers and Suppliers" was published in the Federal Register on February 2, 2011. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 26 
 

APPENDIX B (CONTINUED)
 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 27 
 

APPENDIX B (CONTINUED)
 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 28 
 

APPENDIX B (CONTINUED)
 

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APPENDIX B (CONTINUED)
 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 30 
 

 

APPENDIX B (CONTINUED)
 

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ACKNOWLEDGMENTS 

This report was prepared under the direction of Dwayne Grant, Regional 

Inspector General for Evaluation and Inspections in the Atlanta regional 

office, and Jaime Durley, Deputy Regional Inspector General. 

Rachel Daiber served as the lead analyst for this study. Other Office of 

Evaluation and Inspections staff from the Atlanta regional office who 

conducted the study include David Samchok. Central office staff who 

provided support include Kevin Farber, Scott Horning, Scott Manley, and 

Christine Moritz. 

Inappropriate and Questionable Billing by Medicare Home Health Agencies (OEI-04-11-00240) 32 
 

 

 

 

 

 

 

Office of Inspector General

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.