[Federal Register Volume 63, Number 152 (Friday, August 7, 1998)]
[Notices]
[Pages 42410-42426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20966]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General


Publication of the OIG Compliance Program Guidance for Home 
Health Agencies

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice.

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SUMMARY: This Federal Register notice sets forth the recently issued 
Compliance Program Guidance for Home Health Agencies developed by the 
Office of Inspector General (OIG) in cooperation with, and with input 
from, several provider groups and industry representatives. Many home 
health care providers have expressed interest in better protecting 
their operations from fraud and abuse through the adoption of a 
voluntary compliance program. The OIG has previously developed and 
published compliance program guidances focused on the clinical 
laboratory and hospital industries (62 FR 9435, March 3, 1997 and 63 FR 
8987, February 23, 1998, respectively). We believe that the development 
of this compliance program guidance for the home health industry will 
continue as a positive step towards promoting a higher level of ethical 
and lawful conduct throughout the entire health care community.

FOR FURTHER INFORMATION CONTACT: Michael Shaw, Office of Counsel to the 
Inspector General, (202) 619-2078.

SUPPLEMENTARY INFORMATION: The creation of compliance program guidances 
has become a major initiative of the OIG in its efforts to engage the 
health care community in combating fraud and abuse. In formulating 
compliance guidances, the OIG has worked closely with the Health Care 
Financing Administration, the Department of Justice and various sectors 
of the health care industry to provide clear guidance to those segments 
of the industry that are interested in reducing fraud and abuse within 
their organizations. The first of these compliance program guidances 
focused on clinical laboratories and was published in the Federal 
Register on March 3, 1997 (62 FR 9435). Building on basic elements of 
the first issuance, the second compliance program guidance developed by 
the OIG focused on the hospital industry and was published in the 
Federal Register on February 23, 1998 (63 FR 8987). The development of 
these types of compliance program guidance is based on our belief that 
a health care provider can use internal controls to more efficiently 
monitor adherence to applicable statutes, regulations and program 
requirements.
    The OIG has identified seven fundamental elements to an effective 
compliance program. They are:
    <bullet> Implementing written policies, procedures and standards of 
conduct;
    <bullet> Designating a compliance officer and compliance committee;
    <bullet> Conducting effective training and education;
    <bullet> Developing effective lines of communication;
    <bullet> Enforcing standards through well-publicized disciplinary 
guidelines;
    <bullet> Conducting internal monitoring and auditing; and
    <bullet> Responding promptly to detected offenses and developing 
corrective action.
    Using these seven basic elements, the OIG has identified specific 
areas of home health operations that, based on prior Government 
enforcement efforts, have proven to be vulnerable to fraud and abuse. 
The development of this Compliance Program Guidance for Home Health 
Agencies has been further enhanced by input from various home health 
trade associations and others with expertise in the home health 
industry. Regardless of a home health agency's size and structure--
whether large or small, urban or rural, for-profit or non-profit--the 
OIG believes that every home health agency can and should strive to 
accomplish the objectives and principles underlying all of the 
compliance policies and procedures set forth in this accompanying 
guidance. Like the previously-issued compliance guidances for hospitals 
and clinical laboratories, adoption of the Compliance Program Guidance 
for Home Health Agencies set forth below will be voluntary.
    A reprint of the OIG's Compliance Program Guidance for Home Health 
Agencies follows.

Office of Inspector General's Compliance Program Guidance for Home 
Health Agencies

I. Introduction

    The Office of Inspector General (OIG) of the Department of Health 
and Human Services (HHS) continues in its efforts to promote 
voluntarily developed and implemented compliance programs for the 
health care industry. The following compliance program guidance is 
intended to assist home health agencies \1\ and their agents and 
subproviders (referred to collectively in this document as ``home 
health agencies'') develop effective internal controls that promote 
adherence to applicable Federal and State law, and the program 
requirements of Federal, State, and private health plans.\2\ The 
adoption and implementation of voluntary compliance programs 
significantly advance the prevention of fraud, abuse, and waste in 
these health care plans while at the same time further the fundamental 
mission of all

[[Page 42411]]

home health agencies, which is to provide quality care to patients.
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    \1\ The term ``home health agency'' is applied in this document 
as defined in section 1861(o) of the Social Security Act, 42 U.S.C. 
1395x(o).
    \2\ This Compliance Program Guidance for Home Health Agencies is 
not intended to address issues specific to suppliers of durable 
medical equipment, infusion therapy, and other services typically 
provided in the home setting.
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    Within this document, the OIG first provides its general views on 
the value and fundamental principles of home health agency compliance 
programs, and then provides the specific elements that each home health 
agency should consider when developing and implementing an effective 
compliance program. While this document presents basic procedural and 
structural guidance for designing a compliance program, it is not in 
itself a compliance program. Rather, it is a set of guidelines to be 
considered by a home health agency interested in implementing a 
compliance program.
    The OIG recognizes the size-differential that exists between 
operations of the different home health agencies and organizations that 
compose the home health industry. Appropriately, this guidance is 
pertinent for all home health agencies, whether for-profit or non-
profit, large or small, urban or rural. The applicability of the 
recommendations and guidelines provided in this document depends on the 
circumstances of each particular home health agency. However, 
regardless of a home health agency's size and structure, the OIG 
believes that every home health agency can and should strive to 
accomplish the objectives and principles underlying all of the 
compliance policies and procedures recommended within this guidance.
    Fundamentally, compliance efforts are designed to establish a 
culture within a home health agency that promotes prevention, 
detection, and resolution of instances of conduct that do not conform 
to Federal and State law, and Federal, State, and private payor health 
care program requirements, as well as the home health agency's business 
policies. In practice, the compliance program should effectively 
articulate and demonstrate the organization's commitment to ethical 
conduct. The existence of benchmarks that demonstrate implementation 
and achievements are essential to any effective compliance program. 
Eventually, a compliance program should become part of the fabric of 
routine home health agency operations.
    Specifically, compliance programs guide a home health agency's 
governing body (e.g., Board of Directors or Trustees), Chief Executive 
Officer (CEO), managers, clinicians, billing personnel, and other 
employees in the efficient management and operation of a home health 
agency. They are especially critical as an internal control in the 
reimbursement and payment areas, where claims and billing operations 
are often the source of fraud and abuse, and therefore, historically 
have been the focus of Government regulation, scrutiny, and sanctions.
    It is incumbent upon a home health agency's corporate officers and 
managers to provide ethical leadership to the organization and to 
assure that adequate systems are in place to facilitate ethical and 
legal conduct. Employees, managers, and the Government will focus on 
the words and actions of a home health agency's leadership as a measure 
of the organization's commitment to compliance. Indeed, many home 
health agencies have adopted mission statements articulating their 
commitment to high ethical standards. A formal compliance program, as 
an additional element in this process, offers a home health agency a 
further concrete method that may improve quality of care and reduce 
waste. Compliance programs also provide a central coordinating 
mechanism for furnishing and disseminating information and guidance on 
applicable Federal and State statutes, regulations, and other 
requirements.
    Implementing an effective compliance program requires a substantial 
commitment of time, energy, and resources by senior management and the 
home health agency's governing body.\3\ Superficial programs that 
simply purport to comply with the elements discussed and described in 
this guidance or programs that are hastily constructed and implemented 
without appropriate ongoing monitoring will likely be ineffective and 
could expose the home health agency to greater liability than no 
program at all. While it may require significant additional resources 
or reallocation of existing resources to implement an effective 
compliance program, the OIG believes that the long term benefits of 
implementing the program outweigh the costs.\4\
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    \3\ Recent case law suggests that the failure of a corporate 
Director to attempt in good faith to institute a compliance program 
in certain situations may be a breach of a Director's fiduciary 
obligation. See, e.g., In re Caremark International Inc. Derivative 
Litigation, 698 A.2d 959 (Ct. Chanc. Del. 1996).
    \4\ Current Health Care Financing Administration (HCFA) 
reimbursement principles provide that certain of the costs 
associated with the creation of a voluntarily established compliance 
program may be allowable costs on certain types of home health 
agencies' cost reports. These allowable costs, of course, must at a 
minimum be reasonable and related to patient care. See generally 42 
U.S.C. 1395x(v)(1)(A) (definition of reasonable cost); 42 CFR 
413.9(a), (b)(2) (costs related to patent care). In contract, cost 
specifically associated with the implementation of a corporate 
integrity agreement in response to a Government investigation 
resulting in a civil or criminal judgment or settlement are 
unallowable, and are also made specifically and expressly 
unallowable in corporate integrity agreements and civil fraud 
settlements.
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A. Benefits of a Compliance Program

    In addition to fulfilling its legal duty to ensure that it is not 
submitting false or inaccurate claims to Government and private payors, 
a home health agency may gain numerous additional benefits by 
voluntarily implementing an effective compliance program. Such programs 
make good business sense because they help a home health agency fulfill 
its fundamental care-giving mission to patients and the community, and 
assist home health agencies in identifying weaknesses in internal 
systems and management. Other important potential benefits include the 
ability to:
    <bullet> Concretely demonstrate to employees and the community at 
large the home health agency's strong commitment to honest and 
responsible provider and corporate conduct;
    <bullet> Provide a more accurate view of employee and contractor 
behavior relating to fraud and abuse;
    <bullet> Identify and prevent illegal and unethical conduct;
    <bullet> Tailor a compliance program to a home health agency's 
specific needs;
    <bullet> Improve the quality, efficiency, and consistency of 
patient care;
    <bullet> Create a centralized source for distributing information 
on health care statutes, regulations, and other program directives 
related to fraud and abuse and related issues;
    <bullet> Formulate a methodology that encourages employees to 
report potential problems;
    <bullet> Develop procedures that allow the prompt, thorough 
investigation of alleged misconduct by corporate officers, managers, 
employees, independent contractors, consultants, nurses, and other 
health care professionals;
    <bullet> Initiate immediate, appropriate, and decisive corrective 
action;
    <bullet> Minimize, through early detection and reporting, the loss 
to the Government from false claims, and thereby reduce the home health 
agency's exposure to civil damages and penalties, criminal sanctions, 
and administrative remedies, such as program exclusion; \5\ and
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    \5\ The OIG, for example, will consider the existence of an 
effective compliance program that pre-dated any governmental 
investigation when addressing the appropriateness of administrative 
sanctions. The burden is on the provider to demonstrate the 
operational effectiveness of a compliance program. Further, the 
False Claims Act, 31 U.S.C. 3729-3733, provides that a person who 
has violated the Act, but who voluntarily discloses the violation to 
the Government, in certain circumstances will be subject to not less 
than double, as opposed to treble, damages. See 31 U.S.C. 3729(a).

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[[Page 42412]]

    <bullet> Enhance the structure of home health agency operations and 
gain consistency between separate business units.
    Overall, the OIG believes that an effective compliance program is a 
sound investment on the part of a home health agency.
    The OIG recognizes that the implementation of a compliance program 
may not entirely eliminate fraud, abuse, and waste from the home health 
agency system. However, a sincere effort by home health agencies to 
comply with applicable Federal and State standards, as well as the 
requirements of private health care programs, through the establishment 
of an effective compliance program, significantly reduces the risk of 
unlawful or improper conduct.

B. Application of Compliance Program Guidance

    Given the diversity within the industry, there is no single 
``best'' home health agency compliance program. The OIG understands the 
variances and complexities within the home health industry and is 
sensitive to the differences among large national and regional multi-
home health agency organizations, specialty home health agencies, small 
independent home health agencies, and other types of home health agency 
organizations and systems. However, elements of this guidance can be 
used by all home health agencies, regardless of size, location, or 
corporate structure, to establish an effective compliance program. 
Similarly, a hospital or corporation that owns a home health agency or 
provides home health services may incorporate these elements into its 
system-wide compliance or managerial structure. We recognize that some 
home health agencies may not be able to adopt certain elements to the 
same comprehensive degree that others with more extensive resources may 
achieve. This guidance represents the OIG's suggestions on how a home 
health agency can best establish internal controls and monitoring to 
correct and prevent fraudulent activities. By no means should the 
contents of this guidance be viewed as an exclusive discussion of the 
advisable elements of a compliance program.
    The OIG believes that input and support by representatives of the 
major home health trade associations is critical to the development and 
success of this compliance program guidance. Therefore, in drafting 
this guidance, the OIG received and considered input from various home 
health and medical associations, as well as professional practice 
organizations. Further, we took into consideration previous OIG 
publications, such as Special Fraud Alerts, the recent findings and 
recommendations in reports issued by OIG's Office of Audit Services and 
Office of Evaluation and Inspections, as well as the experience of past 
and recent fraud investigations related to home health agencies 
conducted by OIG's Office of Investigations and the Department of 
Justice. As appropriate, this guidance may be modified and expanded as 
more information and knowledge is obtained by the OIG, and as changes 
in the law, rules, policies, and procedures of the Federal, State, and 
private health plans occur. New compliance practices may eventually be 
incorporated into this guidance if the OIG discovers significant 
enhancements to better ensure an effective compliance program.
    The OIG recognizes that the development and implementation of 
compliance programs in home health agencies often raise sensitive and 
complex legal and managerial issues.\6\ However, the OIG wishes to 
offer what it believes is critical guidance for providers who are 
sincerely attempting to comply with the relevant health care statutes 
and regulations.
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    \6\ Nothing stated within this document should be substituted 
for, or used in lieu of, competent legal advice from counsel.
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II. Compliance Program Elements

    The elements proposed by these guidelines are similar to those of 
the Compliance Program Guidance for Hospitals that was published by the 
OIG in February 1998, the clinical laboratory compliance program 
guidance published by the OIG in February 1997,\7\ and our corporate 
integrity agreements.\8\ The elements represent a guide that can be 
tailored to fit the needs and financial realities of a particular home 
health agency.\9\ The OIG is cognizant that, with regard to compliance 
programs, one model is not suitable to every home health agency. 
Nonetheless, the OIG believes that every home health agency, regardless 
of size or structure, can benefit from the principles espoused in this 
guidance.
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    \7\ See 63 FR. 8987 (1998) for the Compliance Program Guidance 
for Hospitals. See 62 FR 9435 (1997) for the clinical laboratory 
compliance program guidance. These documents are also located on the 
Internet at http://www.dhhs.gov/progorg/oig.
    \8\ Corporate integrity agreements are executed as part of a 
civil settlement between the health care provider and the Government 
to resolve a case based on allegations of health care fraud or 
abuse. These OIG-imposed programs are in effect for a period of 3 to 
5 years and require many of the elements included in this compliance 
program guidance.
    \9\ This is particularly true in the context of the home health 
industry, which includes many small independent home health agencies 
with limited financial resources and staff, as well as the larger 
multi-home health agency organizations and networks with extensive 
financial resources and staff.
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    The OIG believes that every effective compliance program must begin 
with a formal commitment by the home health agency's governing body to 
include all of the applicable elements listed below. These elements are 
based on the seven steps of the Federal Sentencing Guidelines.\10\ 
Further, we believe that every home health agency can implement most of 
our recommended elements that expand upon the seven steps of the 
Federal Sentencing Guidelines. We recognize that full implementation of 
all elements may not be immediately feasible for all home health 
agencies. However, as a first step, a good faith and meaningful 
commitment on the part of the home health agency administration, 
especially the governing body and the CEO, will substantially 
contribute to a program's successful implementation. As the compliance 
program is implemented, that commitment should cascade down through the 
management of the home health agency to every employee at all levels in 
the organization.
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    \10\ See United States Sentencing Commission Guidelines, 
Guidelines Manual, 8A1.2, Application Note 3(k). The Federal 
Sentencing Guidelines are detailed policies and practices for the 
Federal criminal justice system that prescribe the appropriate 
sanctions for offenders convicted of Federal crimes.
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    At a minimum, comprehensive compliance programs should include the 
following seven elements:
    (1) The development and distribution of written standards of 
conduct, as well as written policies and procedures that promote the 
home health agency's commitment to compliance (e.g., by including 
adherence to the compliance program as an element in evaluating 
managers and employees) and address specific areas of potential fraud, 
such as claims development and submission processes, cost reporting, 
and financial relationships with physicians and other health care 
professionals and entities;
    (2) The designation of a compliance officer and other appropriate 
bodies, e.g., a corporate compliance committee, charged with the 
responsibility for operating and monitoring the compliance program, and 
who reports

[[Page 42413]]

directly to the CEO and the governing body; \11\
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    \11\ The integral functions of a compliance officer and a 
corporate compliance committee in implementing an effective 
compliance program are discussed throughout this compliance program 
guidance. However, the OIG recognizes that a home health agency may 
tailor the structure of those positions in consideration of the size 
and design of the home health agency, while endeavoring to address 
and accomplish all of the underlying objectives of a compliance 
officer and a corporate compliance committee.
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    (3) The development and implementation of regular, effective 
education and training programs for all affected employees;
    (4) The creation and maintenance of a process, such as a hotline or 
other reporting system, to receive complaints, and the adoption of 
procedures to protect the anonymity of complainants and to protect 
whistleblowers from retaliation;
    (5) The development of a system to respond to allegations of 
improper/illegal activities and the enforcement of appropriate 
disciplinary action against employees who have violated internal 
compliance policies, applicable statutes, regulations, or Federal 
health care program requirements; \12\
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    \12\ The term ``Federal health care programs'' is applied in 
this document as defined in 42 U.S.C. 1320a-7b(f), which includes 
any plan or program that provides health benefits, whether directly, 
through insurance, or otherwise, which is funded directly, in whole 
or in part, by the United States Government (i.e., via programs such 
as Medicare, Federal Employees' Compensation Act, Black Lund, or the 
Longshore and Harbor Worker's Compensation Act) or any State health 
plan (e.g., Medicaid, or a program receiving funds from block grants 
for social services or child health services). Also, for the 
purposes of this document, the term ``Federal health care program 
requirements'' refers to the statutes, regulations, rules, 
requirements, directive, and instructions governing Medicare, 
Medicaid, and all other Federal health care programs.
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    (6) The use of audits and/or other evaluation techniques to monitor 
compliance and assist in the reduction of identified problem areas;
    (7) The investigation and remediation of identified systemic 
problems and the development of policies addressing the non-employment 
or retention of sanctioned individuals.

A. Written Policies and Procedures

    Every compliance program should require the development and 
distribution of written compliance policies, standards, and practices 
that identify specific areas of risk and vulnerability to the home 
health agency. These policies, standards, and practices should be 
developed under the direction and supervision of, or subject to review 
by, the compliance officer and compliance committee and, at a minimum, 
should be provided to all individuals who are affected by the 
particular policy at issue, including the home health agency's agents 
and independent contractors.\13\ In addition to these general corporate 
policies, it may be necessary to implement individual policies for 
independent components of the home health agency.
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    \13\ According to the Federal Sentencing Guidelines, an 
organization must have established compliance standards and 
procedures to be followed by its employees and other agents in order 
to receive sentencing credit for an ``effective'' compliance 
program. The Federal Sentencing Guidelines define ``agent'' as ``any 
individual, including a director, an officer, an employee, or an 
independent contractor, authorized to act on behalf of the 
organization.'' See United States Sentencing Commission Guidelines, 
Guidelines Manual, 8A1.2, Application Note 3.
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1. Standards of Conduct
    Home health agencies should develop standards of conduct for all 
affected employees that include a clearly delineated commitment to 
compliance by the home health agency's senior management \14\ and its 
divisions, including affiliated providers operating under the home 
health agency's \15\ control and other health care professionals (e.g., 
physical therapists, occupational therapists, speech therapists, and 
medical social workers). Standards should articulate the home health 
agency's commitment to comply with all Federal and State standards, 
with an emphasis on preventing fraud and abuse. They should explicitly 
state the organization's mission, goals, and ethical requirements of 
compliance and reflect a carefully crafted, clear expression of 
expectations for all home health agency governing body members, 
officers, managers, employees, clinicians, and, where appropriate, 
contractors and other agents. Standards should be distributed to, and 
comprehensible by, all affected employees (e.g., translated into other 
languages when necessary and written at appropriate reading levels). 
Standards should not only address compliance with statutes and 
regulations, but should also set forth broad principles that guide 
employees in conducting business professionally and properly. Further, 
to assist in ensuring that employees continuously meet the expected 
high standards set forth in the code of conduct, any employee handbook 
delineating or expanding upon these standards of conduct should be 
regularly updated as applicable statutes, regulations, and Federal 
health care program requirements are modified and/or clarified.\16\
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    \14\ The OIG strongly encourages high-level involvement by the 
home health agency's governing body, chief executive officer, chief 
operating officer, general counsel, and chief financial officer, as 
well as other medical or clinical personnel, as appropriate, in the 
development of standards of conduct. Such involvement should help 
communicate a strong and explicit statement of compliance goals and 
standards.
    \15\ E.g., pharmacies, other home health agencies, and 
supplemental staffing entities.
    \16\ The OIG recognizes that not all standards, policies, and 
procedures need to be communicated to all employees. However, the 
OIG believes that the bulk of the standards that relate to complying 
with fraud and abuse laws and other ethical areas should be 
addressed and made part of all affected employees' training. The 
home health agency must decide which additional educational programs 
should be limited to the different levels of employees, based on job 
functions and areas of responsibility.
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    When they first begin working for the home health agency, and each 
time new standards of conduct are issued, employees should be asked to 
sign a statement certifying that they have received, read, and 
understood the standards of conduct. An employee's certification should 
be retained by the home health agency in the employee's personnel file, 
and available for review by the compliance officer.
2. Risk Areas
    The OIG believes that a home health agency's written policies and 
procedures should take into consideration the particular statutes, 
rules, and program instructions that apply to each function or 
department of the home health agency.\17\ Consequently, we recommend 
that the individual policies and procedures be coordinated with the 
appropriate training and educational programs with an emphasis on areas 
of special concern that have been identified by the OIG through its 
investigative and audit functions.\18\ Some of the special areas of OIG 
concern include: \19\
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    \17\ A home health agency can conduct focus groups composed of 
managers from various departments to solicit their concerns and 
ideas about compliance risks that may be incorporated into the home 
health agency's policies and procedures. Such employee participation 
in the development of the home health agency's compliance program 
can enhance its credibility and foster employee acceptance of the 
program.
    \18\ The OIG periodically issues Special Fraud Alerts setting 
forth activities believed to raise legal and enforcement issues. 
Home health agency compliance programs should require that the legal 
staff, compliance officer, or other appropriate personnel carefully 
consider any and all Special Fraud Alerts issued by the OIG that 
relate to home health agencies. Moreover, the compliance programs 
should address the ramifications of failing to cease and correct any 
conduct criticized in such a special Fraud Alert, if applicable to 
home health agencies, or to take reasonable action to prevent such 
conduct from reoccurring in the future. If appropriate, a home 
health agency should take the steps described in section G.2. 
regarding investigations, reporting, and correction of identified 
problems.
    \19\ The OIG's work plan is currently available on the Internet 
at http://www.dhhs.gov/progorg/oig. The OIG Work Plan details the 
various projects of the Office of Audit Services, Office of 
Evaluation and Inspections, Office of Investigations, and Office of 
Counsel to the Inspector General that are planned to be addressed 
during each Fiscal Year.

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[[Page 42414]]

    <bullet> Billing for items or services not actually rendered; \20\
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    \20\ Billing for services not actually rendered involves 
submitting a claim that represents the provider performed a service 
all or part of which was simply not performed. This form of billing 
fraud occurs in many health care entities, including home health 
agencies, hospitals, laboratories, and nursing homes, and represents 
a significant part of the OIG's investigative caseload.
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    <bullet> Billing for medically unnecessary services; \21\
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    \21\ Billing for medically unnecessary services involves 
knowingly seeking reimbursement for a service that is not warranted 
by the patient's current and documented medical condition. See 42 
U.S.C. Sec. 1395y(a)(1)(A) (``no payment may be made under part A or 
part B [of Medicare] for any expenses incurred for items or services 
which * * * are not reasonable and necessary for the diagnosis or 
treatment of illness or injury or to improve the functioning of the 
malformed body member''). Upon submission of an HCFA claim form 
(whether paper or electronic), a home health agency certifies that 
the services provided and billed were medically necessary for the 
health of the beneficiary, and were rendered in accordance with 
orders prescribed by the beneficiary's physician. See also 
discussion in section II.A.3.a and accompanying notes.
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    <bullet> Duplicate billing; \22\
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    \22\ Duplicate billing occurs when the home health agency 
submits more than one claim for the same service or the bill is 
submitted to more than one primary payor at the same time. Although 
duplicate billing can occur due to simple error, knowing, duplicate 
billing--which is sometimes evidenced by systematic or repeated 
double billing--can create liability under criminal, civil, or 
administrative law, particularly if any overpayment is not promptly 
refunded.
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    <bullet> False cost reports; \23\
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    \23\ The submission of false cost reports is usually limited to 
certain Medicare Part A providers, such as home health agencies, 
hospitals, and skilled nursing facilities, which are reimbursed in 
part on the basis of their self-reported operating costs. The OIG is 
aware of practices in which home health agencies maintain records 
that indicate salaries are paid to employees that do not exist, lump 
nonpatient-related expenses with patient-related ones in an attempt 
to bury the non-reimbursable costs, bill Medicare for patient visits 
with no records to substantiate that the services were performed, 
inappropriately shift certain costs to cost centers that are below 
their reimbursement cap, shift non-Medicare related costs to 
Medicare cost centers, and fail to properly disclose related 
organizations (see 42 CFR 413.17(b)), e.g., entities that provide 
leased space or equipment, financial management consulting, and 
direct patient services and supplies.
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    <bullet> Credit balances--failure to refund; \24\
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    \24\ A credit balance is an improper or excess payment made to a 
health care provider as a result of patient billing or claims 
processing errors. Examples of Medicare credit balances include 
instances where a provider is: (1) Paid twice for the same service 
either by Medicare or by Medicare and another insurer; or (2) paid 
for services planned but not performed or for non-covered services. 
See Home Health Agency Manual Sec. 489. Home health agencies should 
institute procedures to provide for the timely and accurate 
reporting of Medicare and other Federal health care program credit 
balances.
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    <bullet> Home health agency incentives to actual or potential 
referral sources (e.g., physicians, hospitals, patients, etc.) that may 
violate the anti-kickback statute or other similar Federal or State 
statute or regulation; \25\
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    \25\ Examples of arrangements that may run afoul of the anti-
kickback statute include practices in which a home health agency 
pays a fee to a physician for each plan of care certified, provides 
items or services for free or below fair market value to 
beneficiaries of Federal health care programs, provides nursing or 
administrative services for free or below fair market value to 
physicians, hospitals and other potential referral sources, and 
provides salaries to a referring physician for services either not 
rendered or in excess of fair market value for services rendered. 
See 42 U.S.C. 1320a-7b; 60 FR 40, 847 (1995). See also discussion in 
section II.A.4. and accompanying notes.
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    <bullet> Joint ventures between parties, one of whom can refer 
Medicare or Medicaid business to the other; \26\
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    \26\ Equally troubling to the OIG is the proliferation of 
business arrangements that may violate the anti-kickback statute. 
Such arrangements are generally established between those in a 
position to refer business, such as physicians, and those providing 
items or services for which a Federal health care program pays. 
Sometimes established as ``joint ventures,'' these arrangements may 
take a variety of forms. The OIG currently has a number of 
investigations and audits underway that focus on such areas of 
concern.
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    <bullet> Stark physician self-referral law; \27\
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    \27\ Under the Stark physician self-referral law, if a physician 
(or an immediate family member of such physician) has a financial 
relationship with a home health agency, the physician may not make a 
referral to the home health agency for the furnishing of home health 
services for which payment may be made under the Federal health care 
programs. See 42 U.S.C. 1395nn.
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    <bullet> Billing for services provided to patients who are not 
confined to their residence (or ``homebound''); \28\
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    \28\ See discussion in section II.A.3.b. and accompanying notes.
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    <bullet> Billing for visits to patients who do not require a 
qualifying service; \29\
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    \29\ See discussion in section II.A.3.d. and accompanying notes.
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    <bullet> Over-utilization \30\ and under-utilization; \31\
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    \30\ Physicians often rely on home health agencies to determine 
the need, type, and frequency of home health services provided to a 
beneficiary. Since Medicare does not limit the number of visits or 
the length of home health coverage for an individual beneficiary, 
home health agencies have incentives to furnish as many visits as 
possible, which can lead to over-utilization. Although it is a 
physician that determines medical necessity, a home health agency 
has an obligation to ensure that services it provides are medically 
necessary, and should consult with physicians as appropriate for the 
requisite assurances.
    \31\ In other words, knowing denial of needed care in order to 
keep costs low.
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    <bullet> Knowing billing for inadequate or substandard care;
    <bullet> Insufficient documentation to evidence that services were 
performed and to support reimbursement;
    <bullet> Billing for unallowable costs of home health coordination; 
\32\
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    \32\ Home health coordination is intended to manage and 
facilitate the transfer of patients from a hospital or skilled 
nursing facility to the care of a home health agency. Although some 
costs of performing this service may be allowable under Medicare, 
the costs of services performed by home health agency personnel that 
constitute patient solicitation or activities duplicative of an 
institution's discharge planning responsibilities are not allowable. 
These non-reimbursable activities, as well as the allowable costs of 
performing home health coordination, are more specifically described 
in the Provider Reimbursement Manual, Part I, Sec. 2113. Further, 
the OIG's Home Health Fraud Alert of June 1995 specifically warned 
home health agencies that providing hospitals with discharge 
planners, home health coordinators, or home care liaisons in order 
to induce referrals can constitute a kickback.
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    <bullet> Billing for services provided by unqualified or unlicensed 
clinical personnel;
    <bullet> False dating of amendments to nursing notes;
    <bullet> Falsified plans of care; \33\
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    \33\ See discussion in section II.A.3.c. and accompanying notes.
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    <bullet> Untimely and/or forged physician certifications on plans 
of care;
    <bullet> Forged beneficiary signatures on visit slips/logs that 
verify services were performed;
    <bullet> Improper patient solicitation activities and high-pressure 
marketing of uncovered or unnecessary services; \34\
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    \34\ Home health agencies should not utilize prohibited or 
inappropriate conduct (e.g., offer free gifts or services to 
patients) to carry out their initiatives and activities designed to 
maximize business growth and patient retention. Also, any marketing 
information offered by home health agencies should be clear, 
correct, non-deceptive, and fully informative.
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    <bullet> Inadequate management and oversight of subcontracted 
services, which results in improper billing;
    <bullet> Discriminatory admission and discharge of patients;
    <bullet> Billing for unallowable costs associated with the 
acquisition and sale of home health agencies;
    <bullet> Compensation programs that offer incentives for number of 
visits performed and revenue generated; \35\
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    \35\ The current nature of the home health benefit (i.e., no 
limits on reimbursable home health visits in a cost-reimbursed 
system) and customary business pressures create risks associated 
with incentives (e.g., payments benefits, etc.) for productivity and 
volume of services. Such risks include over-utilization and billing 
for services not provided in order to meet internal goals and budget 
benchmarks imposed by home health agency management.
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    <bullet> Improper influence over referrals by hospitals that own 
home health agencies;
    <bullet> Patient abandonment in violation of applicable statutes, 
regulations, and Federal health care program requirements; \36\
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    \36\ Under the Medicare conditions of participation, a home 
health agency has the duty to fully inform a beneficiary in advance 
of termination of services when further care or treatment is 
necessary. See generally 42 U.S.C. 395bbb. Moreover, State licensure 
statutes and regulations may stipulate additional requirements 
(e.g., the minimum time period of advance notice allowed) that home 
health agencies must follow when terminating the services provided 
to a patient. The risk of abandonment may arise when a home health 
agency attempts to keep costs of providing services low.

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[[Page 42415]]

    <bullet> Knowing misuse of provider certification numbers, which 
results in improper billing;
    <bullet> Duplication of services provided by assisted living 
facilities, hospitals, clinics, physicians, and other home health 
agencies;
    <bullet> Knowing or reckless disregard of willing and able 
caregivers when providing home health services; \37\
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    \37\ According to Medicare reimbursement principles, where a 
family member or other person is or will be providing services that 
adequately meet a patient's needs, it is not reasonable and 
necessary for a home health agency to furnish such services. 
Therefore, if a home health agency has first hand knowledge of an 
able and willing person to provide the services being rendered by 
the home health agency, or a patient (or patient's family) objects 
to a home health agency providing such services, the home health 
agency should neither provide nor bill for such services. See Home 
Health Agency Manual Sec. 203.2.
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    <bullet> Failure to adhere to home health agency licensing 
requirements and Medicare conditions of participation; \38\ and
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    \38\ See 42 U.S.C. 1395bbb for the Medicare conditions of 
participation that apply to home health agencies.
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    <bullet> Knowing failure to return overpayments made by Federal 
health care programs. A home health agency's prior history of 
noncompliance with applicable statutes, regulations, and Federal health 
care program requirements may indicate additional types of risk areas 
where the home health agency may be vulnerable and that may require 
necessary policy measures to be taken to prevent avoidable 
recurrence.\39\ Additional risk areas should be assessed by home health 
agencies as well and incorporated into the written policies and 
procedures and training elements developed as part of their compliance 
programs.
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    \39\ ``Recurrence of misconduct similar to that which an 
organization has previously committed casts doubt on whether it took 
all reasonable steps to prevent such misconduct'' and is a 
significant factor in the assessment of whether a compliance program 
is effective. See United States Sentencing Commission Guidelines, 
Guidelines Manual. 8A1.2, Application Note 3(k)(iii).
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3. Claim Development and Submission Process
    Of the risk areas identified above, those pertaining to the claim 
development and submission process have been the frequent subject of 
administrative recoveries, as well as investigations and prosecutions 
under the civil False Claims Act and criminal statutes. Settlement of 
these cases often has required the defendants to execute corporate 
integrity agreements, in addition to paying significant civil damages 
and/or criminal fines and penalties. These corporate integrity 
agreements have provided the OIG with a mechanism to specify practices 
that help ensure compliance with applicable Federal and State statutes, 
and Federal health care program requirements. The following 
recommendations include a number of provisions from various corporate 
integrity agreements. As previously discussed, each home health agency 
should develop its own specific policies tailored to fit its individual 
needs.
    With respect to the reimbursement process, a home health agency's 
written policies and procedures should reflect and reinforce current 
Federal health care requirements regarding the submission of claims and 
Medicare cost reports. The policies must create a mechanism for the 
billing or reimbursement staff to communicate effectively and 
accurately with the clinical staff. Policies and procedures should:
    <bullet> Provide for sufficient and timely documentation of all 
nursing and other home health services, including subcontracted 
services, prior to billing to ensure that only accurate and properly 
documented services are billed;
    <bullet> Emphasize that a claim should be submitted only when 
appropriate documentation supports the claim and only when such 
documentation is maintained, appropriately organized in a legible form, 
and available for audit and review. The documentation should record the 
activity leading to the record entry, the identity of the individual 
providing the service, and any information needed to support medical 
necessity and other applicable reimbursement coverage criteria. The 
home health agency should consult with its medical director(s), 
clinical staff, and/or governing body to establish other appropriate 
documentation guidelines;
    <bullet> Indicate that the diagnosis and procedure codes for home 
health services reported on the reimbursement claim should be based on 
the patient's medical record and other documentation, as well as comply 
with all applicable official coding rules and guidelines. Any Health 
Care Financing Administration Common Procedure Coding System (HCPCS), 
International Classification of Disease (ICD), Home Health Agency's 
Current Procedural Terminology (CPT), or revenue code (or successor 
codes) used by the billing staff should accurately describe the service 
that was ordered by the physician and performed by the home health 
agency. The documentation necessary for accurate billing should be 
available to billing staff;
    <bullet> Provide that the compensation for billing department 
personnel and billing consultants should not offer any financial 
incentive to submit claims regardless of whether they meet applicable 
coverage criteria for reimbursement or accurately represent the 
services rendered; and
    <bullet> Establish and maintain a process for pre-and post-
submission review of claims \40\ to ensure that claims submitted for 
reimbursement accurately represent medically necessary services 
actually provided, supported by sufficient documentation, and in 
conformity with any applicable coverage criteria for reimbursement.\41\
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    \40\ The OIG recommends that, at a minimum, a valid statistical 
sample of claims should be reviewed before and after billing is 
submitted.
    \41\ E.g., plan of care is dated and signed by a physician, 
beneficiary is homebound, skilled service is required, finite and 
predictable endpoint exists and is documented for skilled nursing 
services is excess of 35 hours of per week, etc. 42 U.S.C. 1395m(x); 
42 CFR 424.22; Home Health Agency Manual Sec. 204.
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    The written policies and procedures concerning proper billing 
should reflect the current reimbursement principles set forth in 
applicable regulations \42\ and should be developed in tandem with 
private payor and organizational standards. Particular attention should 
be paid to issues associated with medical necessity, homebound status 
of beneficiary, physician certification of plan of care, and qualifying 
services to establish coverage eligibility.\43\
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    \42\ The official reimbursement coverage guidelines for 
participating providers in the Medicare program are promulgated by 
HCFA in the Provider Reimbursement Manual and the Home Health Agency 
Manual. Generally, to qualify for the home health benefit covered by 
Medicare, 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. 
See Home Health Agency Manual Sec. 204 entitled ``Conditions the 
Patient Must Need to Qualify for Coverage of Home Health Services.''
    \43\ The OIG undertaken numerous audits, investigations, 
inspections, and national enforcement initiatives aimed at reducing 
potential and actual fraud, abuse, and waste. For example, OIG audit 
reports, which have focused on issues such as home health agency 
billing for services not authorized by a physician, not medically 
necessary, not eligible for reimbursement, not rendered, and for 
unallowable general and administrative costs, continue to reveal 
abusive, wasteful or fraudulent behavior by some home health 
agencies. Our report on the practices of problem providers, our 
Operation Restore Trust Audit Report of July 1997, and our special 
fraud alert on home health fraud, illustrate how certain home health 
agency billing and business practices may result in fraudulent and 
abusive behavior.
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    a. Medical necessity--Reasonable and necessary services. A home 
health agency's compliance program should provide that claims should 
only be

[[Page 42416]]

submitted for services that the home health agency has reason to 
believe are medically necessary and were ordered by a physician \44\ or 
other appropriately licensed individual.
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    \44\ For Medicare reimbursement purposes, a plan for furnishing 
home health services must be certified by a physician who is a 
doctor of medicine, osteopathy, or podiatric medicine, and who does 
not have a significant ownership interest in, or a significant 
financial or contractual relationship with, the home health agency. 
See 42 CFR 424.22.
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    As a preliminary matter, the OIG recognizes that licensed health 
care professionals must be able to order any services that are 
appropriate for the treatment of their patients. However, Medicare and 
other Government and private health care plans will only pay for those 
services otherwise covered that meet appropriate medical necessity 
standards (i.e., in the case of Medicare, ``reasonable and necessary'' 
services). Providers may not bill for services that do not meet the 
applicable standards.\45\ The home health agency is in a unique 
position to deliver this information to the health care professionals 
on its staff and to the physicians who refer patients. Upon request, a 
home health agency must be able to provide documentation, such as 
physician orders and other patient medical records, to support the 
medical necessity of a service that the home health agency has 
provided.\46\ The compliance officer should ensure that a clear, 
comprehensive summary of the ``medical necessity'' definitions and 
applicable rules of the various Government and private plans is 
prepared, disseminated, and explained to appropriate home health agency 
personnel.\47\
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    \45\ Civil monetary penalties and administrative sanctions, as 
well as remedies available under criminal and civil law, including 
the civil False Claims Act, may be imposed against any person who 
submits a claim for services ``that [the] person knows or should 
know are not medically necessary.'' See 42 U.S.C. 1320a-7a(a).
    \46\ Medicare fiscal intermediaries and carriers have the 
authority to require home health agencies, which furnish items or 
services under the program, to submit documentation that 
substantiates services are actually provided and medically 
necessary. See Medicare Intermediary Manual Sec. 3116.1.B.
    \47\ As it applies to private plan requirements, this compliance 
function may be delegated to supervisory personnel with suitable 
oversight by the compliance officer.
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    We recommend that home health agencies formulate policies and 
procedures that include periodic clinical reviews, both prior and 
subsequent to billing for services, as a means of verifying that 
patients are receiving only medically necessary services. As part of 
such reviews, home health agencies should examine the frequency and 
duration of the services they perform to determine, in consultation 
with a physician, whether patients' medical conditions justify the 
number of visits provided and billed. Home health agencies may choose 
to incorporate this clinical review function into pre-existing quality 
assurance mechanisms or any other quality assurance processes that may 
become part of the conditions of participation for home health 
agencies.
    Additionally, home health agencies should implement policies and 
procedures to verify that beneficiaries have actually received the 
appropriate level and number of services billed. The OIG believes that 
a home health agency has a duty to sufficiently monitor services its 
employees provide to patients for confirmation that all services were 
provided as claimed.\48\ To satisfy such an objective, home health 
agencies may choose to periodically contact (i.e., via mail, telephone, 
or in person) a random sample of patients and interview the clinical 
staff involved.
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    \48\ A home health agency may consider including attestations on 
nursing note forms to be signed by caregivers for the purpose of 
reinforcing the importance of accurate documentation of services 
performed and billed.
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    b. Homebound beneficiaries. For a home health agency to receive 
reimbursement for home health services under either Medicare Part A or 
Part B, the beneficiary must be ``confined to the home.'' \49\ Home 
health agencies should create oversight mechanisms to ensure that the 
homebound status of a Medicare beneficiary is verified and the specific 
factors qualifying the patient as homebound are properly 
documented.\50\ Any determinative assessment of the homebound status of 
a Medicare beneficiary should be completed prior to billing Medicare 
for home health services provided to the beneficiary.\51\ As with other 
conditions for Medicare coverage, a physician must certify that the 
beneficiary was confined to the home at the time when services were 
provided.\52\
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    \49\ Title XVIII of the Social Security Act, Sec. 1861(m), 42 
U.S.C. 1395 x (m), authorizes the provision of home health services 
to patients who are confined to their home (or homebound). In 
general, a patient will be considered to be homebound if the patient 
has a condition due to an illness or injury that restricts the 
patient's ability to leave his or her place of residence except with 
the aid of supportive devices such as crutches, canes, wheelchairs, 
and walkers, or the assistance of another person or if leaving home 
is medically contraindicated. The condition of these patients should 
be such that there exists a normal inability to leave the home and, 
consequently, leaving home would require a considerable and taxing 
effort. See Home Health Agency Manual Sec. 204.1. HHS plans to 
submit a report to Congress by October 1, 1998, recommending 
criteria that should be applied, and the method of applying such 
criteria, in the determination of whether an individual is homebound 
for Medicare reimbursement purposes. See Balanced Budget Act of 
1997, Pub. L. 105-33, Sec. 4614. Any new criteria developed by HHS 
should be incorporated into the public applicable policies and 
procedures of a home health agency.
    \50\ Recent audits, investigations, and studies of home health 
agencies have concluded that many home health agencies have billed 
Medicare for services provided to beneficiaries who are not 
homebound. See note 43.
    \51\ If a question is raised as to whether a patient is confined 
to the home, the home health agency will be requested to furnish its 
Medicare fiscal intermediary with the information necessary to 
establish that the patient is homebound. Home Health Agency Manual 
Sec. 204.1.
    \52\ 42 CFR 424.22(a)(1)(ii).
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    One means by which home health agencies may verify the homebound 
status of a Medicare beneficiary is the inclusion of written prompts on 
nursing note forms. These prompts can direct the home health agency's 
clinicians (e.g., registered nurse or licensed practical nurse) to 
adequately assess and document the homebound status of a Medicare 
beneficiary based upon clinical expertise, consultation with the 
beneficiary, and orders of the attending physician.\53\ Carefully 
designed prompts on nursing note forms may help ensure the complete and 
appropriate documentation necessary to substantiate the homebound 
status of a Medicare beneficiary for reimbursement purposes.
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    \53\ These prompts can be in the form of directions (e.g., 
``Consult with the patient and physician as to the patient's ability 
to leave the home.'') or questions (e.g., ``Does the patient ever 
leave the home, and if so, where does the patient go and how often? 
Does the patient require supportive devices to leave the home?'').
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    Home health agencies can further ensure compliance with the 
homebound requirement by distributing written notices to Medicare 
beneficiaries, reminding them that they must satisfy the regulatory 
requirements for homebound status to be eligible for Medicare coverage. 
Since the Medicare conditions of participation require home health 
agencies to give all beneficiaries a written notice of their legal 
rights before furnishing them with home health services, providers can 
include reminders of homebound requirements in these notices.\54\
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    \54\ See 42 CFR 484.10(a)(1).
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    c. Physician certification of the plan of care. A home health 
agency should take all reasonable steps to ensure that claims for home 
health services are ordered and authorized by a physician.\55\ The home 
health agency's

[[Page 42417]]

written policies and procedures should require, at a minimum, that:
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    \55\ As a condition for payment of home health services by 
Medicare, a physician must certify that a plan for furnishing the 
services has been established and is periodically reviewed by a 
physician. 42 CFR 424.22(a) and (b); Home Health Agency Manual 
Sec. 204.2 If employees of a home health agency believe that 
services ordered by a physician are excessive or otherwise 
inappropriate, the home health agency cannot avoid liability for 
filing improper claims simply because a physician has ordered the 
services. Medicare, through certifications that are incorporated 
into the claim forms (paper or electronic) and ratified by home 
health agencies upon submission, imposes a duty to investigate the 
truth, accuracy, and completeness of claims before they are 
submitted. To illustrate, the HCFA-1500 claim form states that the 
person submitting the form certifies ``the services shown on the[e] 
form were medically necessary for the health of the patient.''
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    <bullet> Before the home health agency bills for services provided 
to a beneficiary, the plan of care \56\ must be established, dated, and 
signed by a qualified physician; \57\
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    \56\ The Home Health Agency Manual uses the term ``plan of 
care'' to refer to the medical treatment plan established by the 
treating physician with the assistance of the home health care 
nurse. Among other things, the plan of care must contain all 
pertinent diagnoses, including the patient's mental status, the 
types of services, supplies, and equipment required, the frequency 
of visits to be made, prognosis, rehabilitation potential, 
functional limitations, activities permitted, nutritional 
requirements, and all medications and treatments. See Home Health 
Agency Manual Sec. 204.2. The plan of care is presented in writing 
on the HCFA-485 form entitled ``Home Health Certification and Plan 
of Treatment.''
    \57\ The home health agency should employ reasonable measures to 
verify that the physician is appropriately licensed and no adverse 
actions, such as criminal conviction, debarment, or an exclusion, 
have been taken against the physician.
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    <bullet> The plan of care must be periodically reviewed by a 
physician in order for the beneficiary to continue to qualify for 
Medicare coverage of home health benefits; \58\
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    \58\ The plan of care must be reviewed and signed by the 
physician who established the plan of care, in consultation with the 
home health agency professional personnel, at least every 62 days. 
Each review of a patient's plan of care must contain the signature 
of the physician and the date of review. 42 C.F.R. 
Sec. Sec. 424.22(a), (b); Home Health Agency Manual Sec. 204.2.F.
---------------------------------------------------------------------------

    <bullet> Home health services are only billed if the home health 
agency is acting upon a physician's certification attesting that the 
services provided to a patient are medically necessary and meet the 
requirements for home health services to be covered by Medicare; \59\
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    \59\ The physician must certify that: (1) The patient is 
confined to the home; (2) the patient is in need of intermittent 
skilled nursing care, physical therapy and/or speech therapy or 
continues to need occupational therapy; (3) the patient is under the 
care of the physician while the services are or were furnished; and 
(4) a plan of care has been established and is periodically reviewed 
by the physician. See Home Health Agency Manual Sec. 204.5 and the 
HCFA-485 form.
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    <bullet> When consulted, the home health agency assists the 
physician in determining the medical necessity of home health services 
and formulating an appropriate and certified plan of care; \60\
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    \60\ In practice, home health agencies often accept the 
responsibility of assessing a beneficiary's status and completing 
the HCFA-485 plan of care form for approval by a physician. In the 
July 1997 OIG Audit Report (A-04-96-02121) entitled, ``Results of 
the Operation Restore Trust Audit of Medicare Home Health Services 
in California, Illinois, New York, and Texas'' (hereinafter ``OIG 
ORT Report''), the OIG concluded that physicians did not always 
review or actively participate in developing the plans of care they 
signed, especially for less complex cases. The report found that 
physicians relied heavily on home health agencies to make 
determinations as to homebound status, as well as the need, type, 
and frequency of home health services without physician 
participation. Since such lack of physician involvement may likely 
result in non-covered services, it is advisable that home health 
agencies undertake all reasonable efforts to procure sufficient 
physician consultation to ensure that an appropriate plan of care is 
established for medically necessary services.
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    <bullet> The home health agency properly documents any assessment 
it has made of a beneficiary's home health needs, which may be used by 
a physician in developing and authorizing a plan of care; and
    <bullet> The home health agency reminds or educates physicians, as 
appropriate, about the scope of their duty to certify patients for home 
health services to be reimbursed by Medicare.\61\
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    \61\ This can be accomplished through provider education and 
liaison activities with physicians and physician support personnel. 
See Provider Reimbursement Manual Sec. 2113.4
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    d. Lack of qualifying service. In addition to addressing the issues 
associated with other reimbursement coverage criteria, a home health 
agency's policies and procedures should ensure that all claims satisfy 
the requisite need of a qualifying service.\62\ Since reimbursement 
coverage of services by other disciplines may depend on the need and 
the provision of the qualifying service, \63\ it is critical for a home 
health agency to enlist measures to prevent billing for dependent 
services after any qualifying service has ceased.\64\ Any procedures or 
practices that a home health agency may implement in response to this 
identified risk will most likely correspond with other policy measures 
taken by the home health agency to ensure medical necessity.
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    \62\ Among other criteria, to receive Medicare reimbursement for 
home health services, a beneficiary must have a need for skilled 
nursing care on an intermittent basis, physical therapy, speech-
language pathology services, or a continuing need for occupational 
therapy. See Home Health Agency Manual Sec. 205. To qualify as 
skilled nursing services, the services must require the skills of a 
registered nurse or a licensed practical (vocational) nurse under 
the supervision of a registered nurse, must be reasonable and 
necessary to the treatment of the patient's illness or injury, and 
must be intermittent (as discussed in Home Health Agency Manual, 
Sec. 206.7). Where a service can be safely and effectively performed 
(or self-administered) by the average nonmedical person without the 
direct supervision of a licensed nurse, the service cannot be 
regarded as a skilled service even if a skilled nurse actually 
provides the service. Home Health Agency Manual Sec. 205.1 A.2.
    \63\ If an eligible beneficiary requires a qualifying service, 
Medicare also covers visits by home health aides, medical social 
workers, and occupational therapists, as well as medical supplies 
needed and used. Hands-on personal care services, such as bathing, 
feeding, and assistance with medications, are services customarily 
performed by home health aides in conjunction with a qualifying 
service. However, a beneficiary who needs only this type of personal 
or custodial care does not qualify for the home health benefit. 
Consequently, with no allowable skilled services, the home health 
aide services are also not medically necessary or reasonable. See 
Home Health Agency Manual Sec. 206.2.
    \64\ Recent audits conducted by the OIG have revealed several 
instances where home health agencies have submitted substantial 
numbers of claims for home health aide visits to beneficiaries that 
did not require any skilled qualifying service. See OIG ORT Report.
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    e. Cost reports. In addition to submitting claims for specific 
services, home health agencies submit annual cost reports to Medicare 
for reimbursement of administrative, overhead, and other general costs. 
With regard to cost report issues, the written policies should include 
procedures that seek to ensure full compliance with applicable 
statutes, regulations, and Federal health care program requirements. 
Among other things, the home health agency's procedures should ensure 
that:
    <bullet> Costs are not claimed unless they are reimbursable, 
reasonable, and are based on appropriate and accurate documentation;
    <bullet> Allocations of costs to various cost centers are 
accurately made and supportable by verifiable and auditable data;
    <bullet> Unallowable costs are not claimed for reimbursement; \65\
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    \65\ For administrative, overhead, and other general costs to be 
allowable under Medicare, regulations require that they be 
reasonable, necessary for the maintenance of the health care entity, 
and related to patient care. 42 CFR 413.9; see also Provider 
Reimbursement Manual, Chapter 21.
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    <bullet> Accounts containing both allowable and unallowable costs 
are analyzed to determine the unallowable amount that should not be 
claimed for reimbursement;
    <bullet> Costs are properly classified; \66\
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    \66\ E.g., time must be accurately split between reimbursable 
home health coordination and non-reimbursable patient solicitation 
activities (see note 32), and between visits to Medicare 
beneficiaries and visits to non-Medicare beneficiaries.
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    <bullet> Medicare fiscal intermediary prior year audit adjustments 
are implemented and are either not claimed for reimbursement or if 
claimed for reimbursement, are clearly identified as protested amounts 
on the cost report;
    <bullet> All related parties are identified on the cost report and 
all related party charges are reduced to the cost to the related party;
    <bullet> Allocations from a home health agency chain's home office 
cost statement to individual home health agency cost reports are 
accurately made

[[Page 42418]]

and supportable by verifiable and auditable data;
    <bullet> Management fees are reasonable and necessary, and do not 
include unallowable costs, such as certain acquisition costs associated 
with the purchase of a home health agency (e.g., good will, non-
competes);
    <bullet> Any return of overpayments, including those resulting from 
an internal review or audit, are appropriately reflected in cost 
reports, i.e., a repayment of an overpayment received in a prior year 
may necessitate changes or amendments to the cost report applicable to 
the prior year; and
    <bullet> Procedures are in place and documented for notifying 
promptly the Medicare fiscal intermediary (or any other applicable 
payor, e.g., TRICARE (formerly CHAMPUS) and Medicaid) in writing of 
errors discovered after the submission of the home health agency cost 
report, and, where applicable, after the submission of a home health 
agency chain's home office cost statement.
    f. Services provided to patients who reside in assisted living 
facilities. Home health agencies should formulate effective policies 
and procedures to evaluate home health services provided to individuals 
who reside in assisted living facilities (also called residential care 
facilities, personal care homes, group homes, etc.) to determine 
whether the services are appropriate for reimbursement.\67\ To avoid 
the submission of improper claims for services to such individuals, the 
adoption of the following measures is advisable upon a request to 
provide home health services to a resident of an assisted living 
facility:
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    \67\ Individuals who reside in assisted living facilities may be 
eligible for Medicare coverage of home health services. See Home 
Health Agency Manual Sec. 204.1B. However, if it is determined that 
the services furnished by the home health agency are duplicative of 
services furnished by an assisted living facility, such as when 
provision of such care is required of the facility under State 
licensure requirements, claims for such services are unallowable 
under 42 U.S.C. 1395y(a)(1)(A) and should not be submitted. Services 
to people who already have access to appropriate care from a willing 
caregiver would not be considered reasonable and necessary to the 
treatment of the individual's illness or injury. See Home Health 
Agency Manual Sec. 203.2. See also note 37.
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    <bullet> Contact the appropriate State licensing authority to 
determine any applicable State licensure and service requirements for 
the specific facility involved;
    <bullet> Make reasonable attempts to verify the specific license, 
if any, held by the facility, e.g., view the license certificate 
hanging on the facility's wall;
    <bullet> Request to view the service agreement between the facility 
and the resident during the initial assessment visit to determine the 
extent and type of the services that the facility is contractually 
obligated to provide to the resident; and
    <bullet> Provide home health services to the resident only to the 
extent that they are appropriate and not duplicative of those services 
provided or required to be provided by the facility.\68\
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    \68\ Audits and investigations by both the OIG and Medicare 
fiscal intermediaries have revealed several instances where home 
health aids of home health agencies have provided personal care 
services, such as meal preparation, room cleaning, and bathing, to 
Medicare beneficiaries who reside in assisted living facilities 
required by State license to provide such services. In addition to 
the customary liability assumed by a home health agency for 
submitting claims for such duplicative and unallowable services, a 
home health agency may violate the anti-kickback statute for 
providing these services at no charge to an assisted living 
facility, an entity that is responsible to perform the services and 
is a potential source of referrals.
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    The OIG strongly recommends that a home health agency contact the 
appropriate State licensing authority if there is reason to believe a 
State-licensed facility is failing to provide care that is required by 
its licensure, regardless of whether claims for services provided to 
residents of such facilities would otherwise be reimbursable by 
Medicare or another Federal health care program.
    g. Prospective payment system. The Balanced Budget Act of 1997 
provides for the establishment of a prospective payment system (PPS) 
for all costs of home health services. Upon the commencement of such 
system, all services covered and paid on a reasonable cost basis under 
the Medicare home health benefit, including medical supplies, will be 
paid for on the basis of a computed prospective payment amount.\69\ 
Once HHS institutes the PPS, home health agencies should guard against 
new types of fraud, abuse, and waste that might arise in such a 
reimbursement system. Potential risks may include failure to report or 
mischaracterization of a change in patient conditions used to establish 
the PPS charge, denial of medically necessary care resulting in under-
utilization, and duplicate billing of charges subsumed within the PPS 
payment. Accordingly, home health agencies should prepare to implement 
policies and procedures to properly address any potential risk areas 
associated with the PPS.
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    \69\ See Balanced Budget Act of 1997, Pub. L. 105-33, Sec. 4603.
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4. Anti-Kickback and Self-Referral Concerns
    The home health agency should have policies and procedures in place 
with respect to compliance with Federal and State anti-kickback 
statutes, as well as the Stark physician self-referral law.\70\ Such 
policies should provide that:
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    \70\ Towards this end, the home health agency's in-house counsel 
or compliance officer should, among other things, obtain copies of 
all relevant OIG regulations, special fraud alerts, and advisory 
opinions (these documents are located on the Internet at <a href="http://
www.dhhs.gov/progorg/oig">http://
www.dhhs.gov/progorg/oig</a>), and ensure that the home health agency's 
policies reflect the guidance provided by the OIG.
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    <bullet> All of the home health agency's contracts and arrangements 
with actual or potential referral sources are reviewed by counsel and 
comply with all applicable statutes and regulations; \71\
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    \71\ In addition to the anti-kickback statutes and the Stark 
physician self-referral law provisions, 42 CFR 424.22 expressly 
prohibits a home health agency from providing services certified or 
recertified by any physician who has a significant ownership 
interest in, or a significant financial or contractual relationship 
with, that home health agency.
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    <bullet> The home health agency does not submit or cause to be 
submitted to the Federal health care programs claims for patients who 
were referred to the home health agency pursuant to contracts or 
financial arrangements that were designed to induce such referrals in 
violation of the anti-kickback statute, Stark physician self-referral 
law, or similar Federal or State statute or regulation; and
    <bullet> The home health agency does not offer or provide gifts, 
free services, or other incentives to patients, relatives of patients, 
physicians, hospitals, contractors, assisted living facilities, or 
other potential referral sources for the purpose of inducing referrals 
in violation of the anti-kickback statute, Stark physician self-
referral law, or similar Federal or State statute or regulation.\72\
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    \72\ See 42 U.S.C. 1320a-7b(b); 60 FR 40847 (1995).
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    Further, the policies and procedures should specifically reference 
and take into account the OIG's safe harbor regulations, which clarify 
those payment practices that would be immune from prosecution under the 
anti-kickback statute.\73\
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    \73\ See 42 CFR 1001.952.
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5. Retention of Records
    Home health agency compliance programs should provide for the 
implementation of a records system. This system should establish 
policies and procedures regarding the creation, distribution, 
retention, storage, retrieval, and destruction of documents.\74\ The 
three categories of documents developed under this system should 
include: (1) All records and documentation (e.g., clinical and

[[Page 42419]]

medical records, and billing and claims documentation) required either 
by Federal or State law for participation in Federal health care 
programs \75\ or any other applicable Federal and State laws and 
regulations (e.g., document retention requirements to maintain State 
licensure); (2) all records, documentation, and verifiable and 
auditable data that support the home health agency's Medicare cost 
report, and, where applicable, the home health agency chain's home 
office cost statement; and (3) all records necessary to protect the 
integrity of the home health agency's compliance process and confirm 
the effectiveness of the program. The third category includes: 
documentation that employees were adequately trained; reports from the 
home health agency's hotline, including the nature and results of any 
investigation that was conducted; documentation of corrective action, 
including disciplinary action taken and policy improvements introduced, 
in response to any internal investigation or audit; modifications to 
the compliance program; self-disclosures; and the results of the home 
health agency's auditing and monitoring efforts.\76\
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    \74\ This records system should be tailored to fit the 
individual needs and financial resources of the home health agency.
    \75\ For example, as a condition of participation, Medicare 
requires that home health agencies retain records regarding their 
claims to Medicare for a minimum of 5 years after the month the cost 
report to which the records apply is filed with the fiscal 
intermediary. See 42 CFR 484.48(a).
    \76\ The creation and retention of such documents and reports 
may raise a variety of legal issues, such as patient privacy and 
confidentiality. These issues are best discussed with legal counsel.
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6. Compliance as an Element of a Performance Plan
    Compliance programs should require that the promotion of, and 
adherence to, the elements of the compliance program be a factor in 
evaluating the performance of all employees, who should be periodically 
trained in new compliance policies and procedures. In addition, all 
managers and supervisors involved in the claims and cost report 
development and submission processes should:
    <bullet> Discuss with all supervised employees and relevant 
contractors the compliance policies and legal requirements pertinent to 
their function;
    <bullet> Inform all supervised personnel that strict compliance 
with these policies and requirements is a condition of employment; and
    <bullet> Disclose to all supervised personnel that the home health 
agency will take disciplinary action up to and including termination 
for violation of these policies or requirements.
    In addition to making performance of these duties an element in 
evaluations, the compliance officer or home health agency management 
should include in the home health agency's compliance program a policy 
that managers and supervisors will be sanctioned for failing to 
adequately instruct their subordinates or for failing to detect 
noncompliance with applicable policies and legal requirements, where 
reasonable diligence on the part of the manager or supervisor would 
have led to the discovery of any problems or violations and given the 
home health agency the opportunity to correct them earlier.

B. Designation of a Compliance Officer and a Compliance Committee

1. Compliance Officer
    Every home health agency should designate a compliance officer to 
serve as the focal point for compliance activities. This responsibility 
may be the individual's sole duty or added to other management 
responsibilities, depending upon the size and resources of the home 
health agency and the complexity of the task. Designating a compliance 
officer with the appropriate authority is critical to the success of 
the program, necessitating the appointment of a high-level official in 
the home health agency with direct access to the home health agency's 
president or CEO, governing body, all other senior management, and 
legal counsel.\77\ The officer should have sufficient funding and staff 
to perform his or her responsibilities fully. Coordination and 
communication are the key functions of the compliance officer with 
regard to planning, implementing, and monitoring the compliance 
program.
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    \77\ The OIG believes that it is not advisable for the 
compliance function to be subordinate to the home health agency's 
general counsel, or comptroller or similar home health agency 
financial officer. Free standing compliance functions help to ensure 
independent and objective legal reviews and financial analyses of 
the institution's compliance efforts and activities. By separating 
the compliance function from the key management positions of general 
counsel or chief financial officer (where the size and structure of 
the home health agency make this a feasible option), a system of 
checks and balances is established to more effectively achieve the 
goals of the compliance program.
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    The compliance officer's primary responsibilities should include:
    <bullet> Overseeing and monitoring the implementation of the 
compliance program; \78\
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    \78\ For multi-home health agency organizations or hospital-
owned home health agencies, the OIG encourages coordination with 
each home health agency owned by the corporation or hospital through 
the use of a headquarter's compliance officer, communicating with 
parallel positions in each facility, regional office, or business 
line, as appropriate.
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    <bullet> Reporting on a regular basis to the home health agency's 
governing body, CEO, and compliance committee (if applicable) on the 
progress of implementation, and assisting these components in 
establishing methods to improve the home health agency's efficiency and 
quality of services, and to reduce the home health agency's 
vulnerability to fraud, abuse, and waste;
    <bullet> Periodically revising the program in light of changes in 
the organization's needs, and in the law and policies and procedures of 
Government and private payor health plans;
    <bullet> Reviewing employees' certifications that they have 
received, read, and understood the standards of conduct;
    <bullet> Developing, coordinating, and participating in a 
multifaceted educational and training program that focuses on the 
elements of the compliance program, and seeks to ensure that all 
relevant employees and management are knowledgeable of, and comply 
with, pertinent Federal and State standards;
    <bullet> Ensuring that independent contractors and agents who 
furnish nursing or other health care services to the clients of the 
home health agency, or billing services to the home health agency, are 
aware of the requirements of the home health agency's compliance 
program with respect to coverage, billing, and marketing, among other 
things;
    <bullet> Coordinating personnel issues with the home health 
agency's Human Resources/Personnel office (or its equivalent) to ensure 
that the National Practitioner Data Bank \79\ and Cumulative Sanction 
Report \80\ have been checked with respect to all employees, medical 
staff, and independent contractors (as appropriate); \81\
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    \79\ The National Practitioner Data Bank is a data base that 
contains information about medical malpractice payments, sanctions 
by boards of medical examiners or State licensing boards, adverse 
clinical privilege actions, and adverse professional society 
membership actions. Health care entities can have access to this 
data base to seek information about their own medical or clinical 
staff, as well as prospective employees.
    \80\ The Cumulative Sanction Report is an OIG-produced report 
available on the Internet at http://www.dhhs.gov/progorg/oig. It is 
updated on a regular basis to reflect the status of health care 
providers who have been excluded from participation in the Medicare 
and Medicaid programs. In addition, the General Services 
Administration maintains a monthly listing of debarred contractors 
on the Internet at http://www.arnet.gov/epls.
    \81\ The compliance officer may also have to ensure that the 
criminal backgrounds of employees have been checked depending upon 
State requirements or home health agency policy. See note 105.
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    <bullet> Assisting the home health agency's financial management in 
coordinating internal compliance review and

[[Page 42420]]

monitoring activities, including annual or periodic reviews of 
departments;
    <bullet> Independently investigating and acting on matters related 
to compliance, including the flexibility to design and coordinate 
internal investigations (e.g., responding to reports of problems or 
suspected violations) and any resulting corrective action (e.g., making 
necessary improvements to home health agency policies and practices, 
taking appropriate disciplinary action, etc.) with all home health 
agency departments, subcontracted providers, and health care 
professionals under the home health agency's control, \82\ and any 
other agents if appropriate;
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    \82\ E.g., physical therapists, occupational therapists, speech 
therapists, medical social workers, and supplemental staffing 
entities.
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    <bullet> Developing policies and programs that encourage managers 
and employees to report suspected fraud and other improprieties without 
fear of retaliation; and
    <bullet> Continuing the momentum of the compliance program and the 
accomplishment of its objectives long after the initial years of 
implementation.\83\
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    \83\ Periodic on-site visits of home agency operations, 
bulletins with compliance updates and reminders, distribution of 
audiotapes or videotapes on different risk areas, lectures at 
management and employee meetings, circulation of recent health care 
article covering fraud and abuse, and innovative changes to 
compliance training are various examples of approaches and 
techniques the compliance officer can employ for the purpose of 
ensuring continued interest in the compliance program and the home 
health agency's commitment to its policies and principles.
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    The compliance officer must have the authority to review all 
documents and other information that are relevant to compliance 
activities, including, but not limited to, patient records, billing 
records, and records concerning the marketing efforts of the facility 
and the home health agency's arrangements with other parties, including 
employees, professionals on staff, relevant independent contractors, 
suppliers, agents, supplemental staffing entities, and physicians. This 
policy enables the compliance officer to review contracts and 
obligations (seeking the advice of legal counsel, where appropriate) 
that may contain referral and payment provisions that could violate the 
anti-kickback statute, as well as the Stark physician self-referral 
prohibition and other legal or regulatory requirements.
2. Compliance Committee
    The OIG recommends that a compliance committee be established to 
advise the compliance officer and assist in the implementation of the 
compliance program.\84\ When developing an appropriate team of people 
to serve as the home health agency's compliance committee, including 
the compliance officer, a home health agency should consider a variety 
of skills and personality traits that are expected from those in such 
positions.\85\ Once a home health agency chooses the people that will 
accept the responsibilities vested in members of the compliance 
committee, the home health agency needs to train these individuals on 
the policies and procedures of the compliance program, as well as how 
to discharge their duties. The committee's functions should include:
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    \84\ The compliance committee benefits from having the 
perspectives of individuals with varying responsibilities in the 
organization, such as operations, finance, audit, human resources, 
and clinical management (e.g., Medical Director), as well as 
employees and managers of key operating units. These individuals 
should have the requisite seniority and comprehensive experience 
within their respective departments to implement any necessary 
changes to home health agency policies and procedures as recommended 
by the committee. A compliance committee for a home health agency 
that is part of a hospital might benefit from the participation of 
officials from other departments in the hospital, such as the 
accounting and billing departments.
    \85\ A health care provider should expect its compliance 
committee members and compliance officer to demonstrate high 
integrity, good judgment, assertiveness, and an approachable 
demeanor, while eliciting the respect and trust of employees of the 
home health agency and having significant professional experience 
working with billing, clinical records, documentation, and auditing 
principles.
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    <bullet> Analyzing the organization,\86\ regulatory environment, 
the legal requirements with which it must comply,\87\ and specific risk 
areas;
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    \86\ E.g., understanding the practical implications of the fraud 
and abuse provisions of the Balanced Budget Act of 1997, Pub. L. 
105-33, and the Health Insurance Portability and Accountability Act 
of 1996, Pub. L. 104-191.
    \87\ This includes, but is not limited to, compliance with the 
Medicare conditions of participation. See 42 U.S.C. 1395bbb.
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    <bullet> Assessing existing policies and procedures that address 
these risk areas for possible incorporation into the compliance 
program;
    <bullet> Working with appropriate home health agency departments to 
develop standards of conduct and policies and procedures to promote 
compliance with legal and ethical requirements;
    <bullet> Recommending and monitoring, in conjunction with the 
relevant departments, the development of internal systems and controls 
to carry out the organization's standards, policies, and procedures as 
part of its daily operations; \88\
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    \88\ With respect to multi-home health agency organizations and 
hospital-owned home health agencies, this may include fostering 
coordination and communication between those employees responsible 
for compliance at the corporation or hospital and those responsible 
for compliance at the home agencies.
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    <bullet> Determining the appropriate strategy/approach to promote 
compliance with the program and detection of any potential violations, 
such as through hotlines and other fraud reporting mechanisms;
    <bullet> Developing a system to solicit, evaluate, and respond to 
complaints and problems; and
    <bullet> Monitoring internal and external audits and investigations 
for the purpose of identifying troublesome issues and deficient areas 
experienced by the home health agency, and implementing corrective and 
preventive action.
    The committee may also address other functions as the compliance 
concept becomes part of the overall home health agency operating 
structure and daily routine.

C. Conducting Effective Training and Education

    The proper education and training of corporate officers, managers, 
employees, nurses, and other health care professionals, and the 
continual retraining of current personnel at all levels, are 
significant elements of an effective compliance program. As part of 
their compliance programs, home health agencies should require 
personnel to attend specific training on a periodic basis, including 
appropriate training in Federal and State statutes, regulations, and 
guidelines, and the policies of private payors, and training in 
corporate ethics, which emphasizes the organization's commitment to 
compliance with these legal requirements and policies.\89\
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    \89\ Specific compliance training should complement any ``in-
service'' training sessions that a home health agency may regularly 
schedule to reinforce adherence to policies and practices of the 
particular home health agency.
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    These training programs should include sessions highlighting the 
organization's compliance program, summarizing fraud and abuse laws, 
Federal health care program requirements, claim development and 
submission processes, patient rights, and marketing practices that 
reflect current legal and program standards. The organization must take 
steps to communicate effectively its standards and procedures to all 
affected employees, physicians, independent contractors, and other 
significant agents, e.g., by requiring participation in training 
programs and disseminating publications that explain specific

[[Page 42421]]

requirements in a practical manner.\90\ Managers of specific 
departments or groups can assist in identifying areas that require 
training and in carrying out such training.\91\ Training instructors 
may come from outside or inside the organization, but must be qualified 
to present the subject matter involved and experienced enough in the 
issues presented to adequately field questions and coordinate 
discussions among those being trained. New employees should be trained 
early in their employment.\92\ Training programs and materials should 
be designed to take into account the skills, experience, and knowledge 
of the individual trainees. The compliance officer should document any 
formal training undertaken by the home health agency as part of the 
compliance program.
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    \90\ Some publications, such as OIG's Special Fraud Alerts, 
audit and inspection reports, and advisory opinions, as well as the 
annual OIG work plan, are readily available from the OIG and could 
be the basis for standards, educational courses, and programs for 
appropriate home health agency employees.
    \91\ Significant variations in the functions and 
responsibilities of different departments or groups may create the 
need for training materials that are tailored to compliance concerns 
associated with particular operations and duties.
    \92\ Certain positions, such as those that involve the billing 
of home health services, create a greater organizational legal 
exposure, and therefore require specialized training. One 
recommendation would be for a home health agency to attempt to fill 
such positions with individuals who have the appropriate educational 
background and training.
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    A variety of teaching methods, such as interactive training, and 
training in several different languages, particularly where a home 
health agency has a culturally diverse staff, should be implemented so 
that all affected employees are knowledgeable of the institution's 
standards of conduct and procedures for alerting senior management to 
problems and concerns.\93\ Targeted training should be provided to 
corporate officers, managers, and other employees whose actions affect 
the accuracy of the claims submitted to the Government, such as 
employees involved in the billing, cost reporting, and marketing 
processes. Given the complexity and interdependent relationships of 
many departments, proper coordination and supervision of this process 
by the compliance officer is important. In addition to specific 
training in the risk areas identified in section II.A.2, above, primary 
training for appropriate corporate officers, managers, and other home 
health agency staff should include such topics as:
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    \93\ Post-training tests can be used to assess the success of 
training provided and employee comprehension of the home health 
agency's policies and procedures.
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    <bullet> Government and private payor reimbursement principles;
    <bullet> General prohibitions on paying or receiving remuneration 
to induce referrals;
    <bullet> Improper alterations to clinical records;
    <bullet> Providing home health services with proper authorization;
    <bullet> Proper documentation of services rendered, including the 
correct application of official ICD and CPT coding rules and 
guidelines;
    <bullet> Patient rights and patient education;
    <bullet> Compliance with Medicare conditions of participation; and
    <bullet> Duty to report misconduct.
    Clarifying and emphasizing these areas of concern through training 
and educational programs are particularly relevant to a home health 
agency's marketing and financial personnel, in that the pressure to 
meet business goals may render these employees vulnerable to engaging 
in prohibited practices.
    The OIG suggests that all relevant levels of personnel be made part 
of various educational and training programs of the home health 
agency.\94\ Employees should be required to have a minimum number of 
educational hours per year, as appropriate, as part of their employment 
responsibilities.\95\ For example, for certain employees involved in 
the billing functions, periodic training in applicable reimbursement 
coverage and documentation of clinical records should be required.\96\ 
In home health agencies with high employee turnover, periodic training 
updates are critical.
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    \94\ In addition, where feasible, the OIG recommends that a home 
health agency afford outside contractors the opportunity to 
participate in the home health agency's compliance training and 
educational programs, or develop their own programs that complement 
the home health agency's standards of conduct, compliance 
requirements, and other rules and practices.
    \95\ Currently, the OIG is monitoring a significant number of 
corporate integrity agreements that require many of these training 
elements. The OIG usually requires a minimum of 1 to 3 hours 
annually for basic training in compliance areas. Additional training 
is required for specialty fields such as billing and marketing.
    \96\ Appropriate billing depends upon the quality and 
completeness of the clinical documentation. Therefore, OIG believes 
that active clinical staff participation in educational programs 
focusing on billing and documentation should be emphasized by the 
home health agency. Clinical staff should be reminded that thorough, 
precise, and timely documentation of services provided services the 
interests of the patient, as well as the interests of the billing 
department.
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    The OIG recommends that attendance and participation in training 
programs be made a condition of continued employment and that failure 
to comply with training requirements should result in disciplinary 
action, including possible termination, when such failure is serious. 
Adherence to the provisions of the compliance program, such as training 
requirements, should be a factor in the annual evaluation of each 
employee. The home health agency should retain adequate records of its 
training of employees, including attendance logs and material 
distributed at training sessions.
    Finally, the OIG recommends that home health agency compliance 
programs address the need for periodic professional education courses 
that may be required by statute and regulation for certain home health 
agency employees.

D. Developing Effective Lines of Communication

1. Access to the Compliance Officer
    An open line of communication between the compliance officer and 
home health agency employees is equally important to the successful 
implementation of a compliance program and the reduction of any 
potential for fraud, abuse, and waste. Written confidentiality and non-
retaliation policies should be developed and distributed to all 
employees to encourage communication and the reporting of incidents of 
potential fraud.\97\ The compliance committee should also develop 
independent reporting paths for an employee to report fraud, waste, or 
abuse so that employees can feel comfortable reporting outside the 
normal chain of command and supervisors or other personnel cannot 
divert such reports.\98\
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    \97\ The OIG believes that whistleblowers should be protected 
against retaliation, a concept embodied in the provisions of the 
False Claims Act. See 31 U.S.C. 3730(h). In many causes, employees 
sue their employers under the False Claims Act's qui tam provisions 
out of frustration because of the company's failure to take action 
when a questionable, fraudulent, or abusive situation was brought to 
the attention of senior corporate officials.
    \98\ Home health agencies can also consider rewarding employees 
for appropriate use of established systems.
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    The OIG encourages the establishment of a procedure so that home 
health agency personnel may seek clarification from the compliance 
officer or members of the compliance committee in the event of any 
confusion or question with regard to a home health agency policy, 
practice, or procedure. Questions and responses should be documented 
and dated and, if appropriate, shared with other staff so that 
standards, policies, practices, and procedures can be updated and 
improved to reflect any necessary changes or clarifications. The

[[Page 42422]]

compliance officer may want to solicit employee input in developing 
these communication and reporting systems.
2. Hotlines and Other Forms of Communication
    The OIG encourages the use of hotlines,\99\ e-mails, written 
memoranda, newsletters, suggestion boxes, and other forms of 
information exchange to maintain these open lines of 
communication.\100\ If the home health agency establishes a hotline, 
the telephone number should be made readily available to all employees 
and independent contractors, possibly by circulating the number on 
wallet cards or conspicuously posting the telephone number in common 
work areas.\101\ Employees should be permitted to report matters on an 
anonymous basis. Matters reported through the hotline or other 
communication sources that suggest substantial violations of compliance 
policies, Federal health care program requirements, regulations, or 
statutes should be documented and investigated promptly to determine 
their veracity. A log should be maintained by the compliance officer 
that records such calls, including the nature of any investigation and 
its results.\102\ Such information should be included in reports to the 
governing body, the CEO, and compliance committee.\103\ Further, while 
the home health agency should always strive to maintain the 
confidentiality of an employee's identity, it should also explicitly 
communicate that there may be a point where the individual's identity 
may become known or may have to be revealed in certain instances.
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    \99\ The OIG recognizes that it may not be financially feasible 
for a smaller home health agency to maintain a telephone hotline 
dedicated to receiving calls about compliance issues.
    \100\ In addition to methods of communication used by current 
employees, an effective employee exit interview program could be 
designed to solicit information from departing employees regarding 
potential misconduct and suspected violations go home health agency 
policy and procedures.
    \101\ Home health agencies should also post in a prominent, 
available area the HHS-OIG Hotline telephone number, 1-800-447-8477 
(1-800-HHS-TIPS), in addition to any company hotline number that may 
be posted.
    \102\ To efficiently and accurately fulfill such an obligation, 
the home health agency should create an intake form for all 
compliance issues identified through reporting mechanisms. The form 
could include information concerning the date that the potential 
problem was reported, the internal investigative methods utilized, 
the results of the investigation, the corrective action implemented, 
the disciplinary measures imposed, and any identified overpayments 
and monies returned.
    \103\ Information obtained over the hotline may provide valuable 
insight into management practices and operations, whether reported 
problems are actual or perceived.
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    The OIG recognizes that assertions of fraud and abuse by employees 
who may have participated in illegal conduct or committed other 
malfeasance raise numerous complex legal and management issues that 
should be examined on a case-by-case basis. The compliance officer 
should work closely with legal counsel, who can provide guidance 
regarding such issues.

E. Enforcing Standards Through Well-Publicized Disciplinary Guidelines

1. Discipline Policy and Actions
    An effective compliance program should include guidance regarding 
disciplinary action for corporate officers, managers, employees, and 
other health care professionals who have failed to comply with the home 
health agency's standards of conduct, policies and procedures, Federal 
health care program requirements, or Federal and State laws, or those 
who have otherwise engaged in wrongdoing, which have the potential to 
impair the home health agency's status as a reliable, honest, and 
trustworthy health care provider.
    The OIG believes that the compliance program should include a 
written policy statement setting forth the degrees of disciplinary 
actions that may be imposed upon corporate officers, managers, 
employees, and other health care professionals for failing to comply 
with the home health agency's standards and policies and applicable 
statutes and regulations. Intentional or reckless noncompliance should 
subject transgressors to significant sanctions. Such sanctions could 
range from oral warnings to suspension, termination, or financial 
penalties, as appropriate. Each situation must be considered on a case-
by-case basis to determine the appropriate sanction. The written 
standards of conduct should elaborate on the procedures for handling 
disciplinary problems and those who will be responsible for taking 
appropriate action. Some disciplinary actions can be handled by 
department or agency managers, while others may have to be resolved by 
a senior home health agency administrator. Disciplinary action may be 
appropriate where a responsible employee's failure to detect a 
violation is attributable to his or her negligence or reckless conduct. 
Personnel should be advised by the home health agency that disciplinary 
action will be taken on a fair and equitable basis. Managers and 
supervisors should be made aware that they have a responsibility to 
discipline employees in an appropriate and consistent manner.
    It is vital to publish and disseminate the range of disciplinary 
standards for improper conduct and to educate officers and other home 
health agency employees regarding these standards. The consequences of 
noncompliance should be consistently applied and enforced, in order for 
the disciplinary policy to have the required deterrent effect. All 
levels of employees should be potentially subject to the same types of 
disciplinary action for the commission of similar offenses. The 
commitment to compliance applies to all personnel levels within a home 
health agency. The OIG believes that corporate officers, managers, 
supervisors, clinical staff, and other health care professionals should 
be held accountable for failing to comply with, or for the foreseeable 
failure of their subordinates to adhere to, the applicable standards, 
laws, and procedures.
2. New Employee Policy
    For all new employees who have discretionary authority to make 
decisions that may involve compliance with the law or compliance 
oversight, home health agencies should conduct a reasonable and prudent 
background investigation, including a reference check,\104\ as part of 
every such employment application. The application should specifically 
require the applicant to disclose any criminal conviction,\105\ as 
defined by 42 U.S.C. 1320a-7(i), or exclusion action. Pursuant to the 
compliance program, home health agency policies should prohibit the 
employment of individuals who have been recently convicted of a 
criminal offense related to health care \106\ or who are listed as 
debarred, excluded, or otherwise ineligible for participation in 
Federal health care programs.\107\ In addition, pending the

[[Page 42423]]

resolution of any criminal charges or proposed debarment or exclusion, 
the OIG recommends that an individual who is the subject of such 
actions should be removed from direct responsibility for or involvement 
in any Federal health care program.\108\ With regard to current 
employees or independent contractors, if resolution of the matter 
results in conviction, debarment, or exclusion, the home health agency 
should terminate its employment or other contract arrangement with the 
individual or contractor.
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    \104\ See note 80.
    \105\ Slightly over a quarter of the States require, and several 
home health agencies voluntarily conduct, criminal background checks 
for prospective employees of home health agencies. Identification of 
a criminal background of an applicant, who may have been recently 
convicted of serious crimes that relate to the proposed employment 
duties, could be grounds for denying employment. Further, criminal 
background screening may deter those individuals with criminal 
intent from entering the field of home health. See United States 
General Accounting Office's September 27, 1996, Letter Report 
entitled ``Long-Term Care: Some States Apply Criminal Background 
Checks to Home Care Workers,'' GAO/PEMD-96-5.
    \106\ Since providers of home health services have frequent, 
relatively unsupervised access to potentially vulnerable people and 
their property, a home health agency should also strictly scrutinize 
whether it should employ individuals who have been convicted of 
crimes of neglect, violence, or financial misconduct.
    \107\ Likewise, home health agency compliance programs should 
establish standards prohibiting the execution of contracts with 
companies that have been recently convicted of a criminal offense 
related to health care or that are listed by a Federal agency as 
debarred, excluded, or otherwise ineligible for participation in 
Federal health care programs. See note 80.
    \108\ Prospective employees who have been officially reinstated 
into the Medicare and Medicaid programs by the OIG may be considered 
for employment upon proof of such reinstatement.
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F. Auditing and Monitoring

    An ongoing evaluation process is critical to a successful 
compliance program. The OIG believes that an effective program should 
incorporate thorough monitoring of its implementation and regular 
reporting to senior home health agency or corporate officers.\109\ 
Compliance reports created by this ongoing monitoring, including 
reports of suspected noncompliance, should be maintained by the 
compliance officer and shared with the home health agency's senior 
management and the compliance committee. The extent and frequency of 
the audit function may vary depending on factors such as the size and 
available resources, prior history of noncompliance, and the risk 
factors that a particular home health agency confronts.
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    \109\ Even when a home health agency or group of home health 
agencies is owned by a larger corporate entity, the regular auditing 
and monitoring of the compliance activities of an individual home 
health agency must be a key feature in any annual review. 
Appropriate reports on audit findings should be periodically 
provided and explained to a parent organization's senior staff and 
officers.
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    Although many monitoring techniques are available, one effective 
tool to promote and ensure compliance is the performance of regular, 
periodic compliance audits by internal or external auditors who have 
expertise in Federal and State health care statutes, regulations, and 
Federal health care program requirements. The audits should focus on 
the home health agency's programs or divisions, including external 
relationships with third-party contractors, specifically those with 
substantive exposure to Government enforcement actions. At a minimum, 
these audits should be designed to address the home health agency's 
compliance with laws governing kickback arrangements, the physician 
self-referral prohibition, claim development and submission, 
reimbursement, cost reporting, and marketing. The audits and reviews 
should inquire into the home health agency's compliance with the 
Medicare conditions of participation and the specific rules and 
policies that have been the focus of particular attention on the part 
of the Medicare fiscal intermediaries or carriers, and law enforcement, 
as evidenced by educational and other communications from OIG Special 
Fraud Alerts, OIG audits and evaluations, and law enforcement's 
initiatives.\110\ In addition, the home health agency should focus on 
any areas of concern that are specific to the individual home health 
agency and have been identified by any entity, whether Federal, State, 
or internal.
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    \110\ See also section II.A.2.
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    Monitoring techniques may include sampling protocols that permit 
the compliance officer to identify and review variations from an 
established baseline.\111\ Significant variations from the baseline 
should trigger a reasonable inquiry to determine the cause of the 
deviation. If the inquiry determines that the deviation occurred for 
legitimate, explainable reasons, the compliance officer and home health 
agency management may want to limit any corrective action or take no 
action. If it is determined that the deviation was caused by improper 
procedures, misunderstanding of rules, including fraud and systemic 
problems, the home health agency should take prompt steps to correct 
the problem. Any overpayments discovered as a result of such deviations 
should be returned promptly to the affected payor, with appropriate 
documentation and a sufficiently detailed explanation of the reason for 
the refund.\112\
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    \111\ The OIG recommends that when a compliance program is 
established in a home health agency, the compliance officer, with 
the assistance of department managers, should take a ``snapshot'' of 
their operations from a compliance perspective. This assessment can 
be undertaken by outside consultants, law or accounting firms, or 
internal staff, with authoritative knowledge of health care 
compliance requirements. This ``snapshot,'' often used as part of 
benchmarking analyses, becomes a baseline for the compliance officer 
and other managers to judge the home health agency's progress in 
reducing or eliminating potential areas of vulnerability.
    \112\ In addition, when appropriate, as referenced in section 
G.2, below, reports of fraud or systemic problems should also be 
made to the appropriate governmental authority.
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    Monitoring techniques may also include a review of any reserves the 
home health agency has established for payments that it may owe to 
Medicare, Medicaid, or other Federal health care programs. Any reserves 
discovered that include funds that should have been paid to such 
programs, or funds set aside for potential reimbursement of a known 
overpayment to the home health agency, should be paid promptly, 
regardless of whether demand has been made for such payment.
    An effective compliance program should also incorporate periodic 
(at least annual) reviews of whether the program's compliance elements 
have been satisfied, e.g., whether there has been appropriate 
dissemination of the program's standards, training, ongoing educational 
programs, and disciplinary actions, among other elements.\113\ This 
process will verify actual conformance by all departments with the 
compliance program and may identify the necessity for improvements to 
be made to the compliance program, as well as the home health agency's 
operations. Such reviews could support a determination that appropriate 
records have been created and maintained to document the implementation 
of an effective program.\114\ However, when monitoring discloses that 
deviations were not detected in a timely manner due to program 
deficiencies, proper modifications must be implemented. Such 
evaluations, when developed with the support of management, can help 
ensure compliance with the home health agency's policies and 
procedures.
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    \113\ One way to assess the knowledge, awareness, and 
perceptions of the home health agency's employees is through the use 
of a validated survey instrument (e.g., employee questionnaires, 
interviews, or focus groups).
    \114\ Such records should include, but not be limited to, logs 
of hotline calls, logs of training attendees, training agenda 
materials, and summaries of corrective action taken and improvements 
made to home health agency policies as a result of compliance 
activities.
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    As part of the review process, the compliance officer or reviewers 
should consider techniques such as:
    <bullet> Visits and interviews of patients at their homes;
    <bullet> Analysis of utilization patterns;
    <bullet> Testing clinical and billing staff on their knowledge of 
reimbursement coverage criteria and official coding guidelines (e.g., 
present hypothetical scenarios of situations experienced in daily 
practice and assess responses);
    <bullet> Assessment of existing relationships with physicians, 
hospitals, and other potential referral sources;
    <bullet> Unannounced mock surveys, audits, and investigations;
    <bullet> Reevaluation of deficiencies cited in past surveys for 
Medicare conditions of participation;

[[Page 42424]]

    <bullet> Examination of home health agency complaint logs;
    <bullet> Checking personnel records to determine whether any 
individuals who have been reprimanded for compliance issues in the past 
are among those currently engaged in improper conduct;
    <bullet> Interviews with personnel involved in management, 
operations, claim development and submission, patient care, and other 
related activities;
    <bullet> Questionnaires developed to solicit impressions of a broad 
cross-section of the home health agency's employees and staff;
    <bullet> Interviews with physicians who order services provided by 
the home health agency;
    <bullet> Reviews of clinical documentation (e.g., plan of care, 
nursing notes, etc.), financial records, and other source documents 
that support claims for reimbursement and Medicare cost reports;
    <bullet> Validation of qualifications of physicians who order 
services provided by the home health agency;
    <bullet> Evaluation of written materials and documentation 
outlining the home health agency's policies and procedures; and
    <bullet> Trend analyses, or longitudinal studies, that uncover 
deviations, positive or negative, in specific areas over a given 
period.

The reviewers should:

    <bullet> Have the qualifications and experience necessary to 
adequately identify potential issues with the subject matter that is 
reviewed;
    <bullet> Be objective and independent of line management to the 
extent reasonably possible; \115\
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    \115\ The OIG recognizes that home health agencies that are 
small in size and have limited resources may not be able to use 
internal reviewers who are not part of line management or hire 
outsider reviewers.
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    <bullet> Have access to existing audit and health care resources, 
relevant personnel, and all relevant areas of operation;
    <bullet> Present written evaluative reports on compliance 
activities to the CEO, governing body, and members of the compliance 
committee on a regular basis, but no less often than annually; and
    <bullet> Specifically identify areas where corrective actions are 
needed.
    With these reports, home health agency management can take whatever 
steps are necessary to correct past problems and prevent them from 
recurring. In certain cases, subsequent reviews or studies would be 
advisable to ensure that the recommended corrective actions have been 
implemented successfully.
    The home health agency should document its efforts to comply with 
applicable statutes, regulations, and Federal health care program 
requirements. For example, where a home health agency, in its efforts 
to comply with a particular statute, regulation or program requirement, 
requests advice from a Government agency (including a Medicare fiscal 
intermediary or carrier) charged with administering a Federal health 
care program, the home health agency should document and retain a 
record of the request and any written or oral response. This step is 
extremely important if the home health agency intends to rely on that 
response to guide it in future decisions, actions, or claim 
reimbursement requests or appeals. A log of oral inquiries between the 
home health agency and third parties will help the organization 
document its attempts at compliance. In addition, the home health 
agency should maintain records relevant to the issue of whether its 
reliance was ``reasonable'' and whether it exercised due diligence in 
developing procedures and practices to implement the advice.

G. Responding to Detected Offenses and Developing Corrective Action 
Initiatives

1. Violations and Investigations
    Violations of a home health agency's compliance program, failures 
to comply with applicable Federal or State law, and other types of 
misconduct threaten a home health agency's status as a reliable, honest 
and trustworthy provider capable of participating in Federal health 
care programs. Detected but uncorrected misconduct can seriously 
endanger the mission, reputation, and legal status of the home health 
agency. Consequently, upon reports or reasonable indications of 
suspected noncompliance, it is important that the compliance officer or 
other management officials immediately investigate the conduct in 
question to determine whether a material violation of applicable law or 
the requirements of the compliance program has occurred, and if so, 
take decisive steps to correct the problem.\116\ As appropriate, such 
steps may include an immediate referral to criminal and/or civil law 
enforcement authorities, a corrective action plan,\117\ a report to the 
Government,\118\ and the return of any overpayments, if applicable.
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    \116\ Instances of noncompliance must be determined on a case-
by-case basis. The existence, or amount, of a monetary loss to a 
health care program is not solely determinative of whether or not 
the conduct should be investigated and reported to governmental 
authorities. In fact, there may be instances where there is no 
readily identifiable monetary loss at all, but corrective action and 
reporting are still necessary to protect the integrity of the 
applicable program and its beneficiaries, (e.g., where services 
required by a plan of care were not provided.
    \117\ Advice from the home health agency's in-house counsel or 
an outside law firm may be sought to determine the extent of the 
home health agency's liability and to plan the appropriate course of 
action.
    \118\ The OIG currently maintains a voluntary disclosure program 
that encourages providers to report suspected fraud. The concept of 
voluntary self-disclosure is premised on a recognition that the 
Government alone cannot protect the integrity of the Medicare and 
other Federal health care programs. Health care providers must be 
willing to police themselves, correct underlying problems, and work 
with the Government to resolve these matters. The OIG's voluntary 
self-disclosure program has four prerequisites: (1) The disclosure 
must be on behalf of an entity and not an individual; (2) the 
disclosure must be truly voluntary (i.e., no pending proceeding or 
investigation); (3) the entity must disclose the nature of the 
wrongdoing and the harm to the Federal health care programs; and (4) 
the entity must not be the subject of a bankruptcy proceeding before 
or after the self-disclosure.
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    Where potential fraud or False Claims Act liability is not 
involved, the OIG recommends that normal repayment channels should be 
used for returning overpayments to the Government as they are 
discovered. However, even if the overpayment detection and return 
process is working and is being monitored by the home health agency's 
audit or billing divisions, the OIG still believes that the compliance 
officer needs to be made aware of these overpayments, violations, or 
deviations that may reveal trends or patterns indicative of a systemic 
problem.
    Depending upon the nature of the alleged violations, an internal 
investigation will probably include interviews and a review of relevant 
documents. Some home health agencies should consider engaging outside 
counsel, auditors, or health care experts to assist in an 
investigation.
    Records of the investigation should contain documentation of the 
alleged violation, a description of the investigative process 
(including the objectivity of the investigators and methodologies 
utilized), copies of interview notes and key documents, a log of the 
witnesses interviewed and the documents reviewed, the results of the 
investigation, e.g., any disciplinary action taken, and the corrective 
action implemented. While any action taken as the result of an 
investigation will necessarily vary depending upon the home health 
agency and the situation, home health agencies should strive for some 
consistency by utilizing sound practices and disciplinary 
protocols.\119\

[[Page 42425]]

Further, after a reasonable period, the compliance officer should 
review the circumstances that formed the basis for the investigation to 
determine whether similar problems have been uncovered or modifications 
of the compliance program are necessary to prevent and detect other 
inappropriate conduct or violations.
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    \119\ The parameters of a claim review subject to an internal 
investigation will depend on the circumstances surrounding the 
issue(s) identified. By limiting the scope of an internal audit to 
current billing, a home health agency may fail to discover major 
problems and deficiencies in operations, as well as be subject to 
certain liability.
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    If an investigation of an alleged violation is undertaken and the 
compliance officer believes the integrity of the investigation may be 
at stake because of the presence of employees under investigation, 
those subjects should be removed from their current work activity until 
the investigation is completed (unless an internal or Government-led 
undercover operation known to the home health agency is in effect). In 
addition, the compliance officer should take appropriate steps to 
secure or prevent the destruction of documents or other evidence 
relevant to the investigation. If the home health agency determines 
that disciplinary action is warranted, it should be prompt and imposed 
in accordance with the home health agency's written standards of 
disciplinary action.
2. Reporting
    If the compliance officer, compliance committee, or management 
official discovers credible evidence of misconduct from any source and, 
after a reasonable inquiry, has reason to believe that the misconduct 
may violate criminal, civil, or administrative law, then the home 
health agency should promptly report the existence of misconduct to the 
appropriate Federal and State authorities \120\ within a reasonable 
period, but not more than sixty (60) days \121\ after determining that 
there is credible evidence of a violation.\122\ Prompt reporting will 
demonstrate the home health agency's good faith and willingness to work 
with governmental authorities to correct and remedy the problem. In 
addition, reporting such conduct will be considered a mitigating factor 
by the OIG in determining administrative sanctions (e.g., penalties, 
assessments, and exclusion), if the reporting provider becomes the 
target of an OIG investigation.\123\
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    \120\ Appropriate Federal and State authorities include the 
Office of Inspector General of the Department of Health and Human 
Services, the Criminal and Civil Divisions of the Department of 
Justice, the U.S. Attorney in relevant districts, and the other 
investigative arms for the agencies administering the affected 
Federal or State health care programs, such as the State Medicaid 
Fraud Control Unit, the Defense Criminal Investigative Service, and, 
the Department of Veterans Affairs and the Office of Personnel 
Management (which administers the Federal Employee Health Benefits 
Program).
    \121\ In contrast, to qualify for the ``not less than double 
damages'' provision of the False Claims Act, the report must be 
provided to the government within thirty (30) days after the date 
when the home health agency first obtained the information. 31 
U.S.C. 3729(a).
    \122\ The OIG believes that some violations may be so serious 
that they warrant immediate notification to governmental 
authorities, prior to, or simultaneous with, commencing an internal 
investigation, e.g.,  if the conduct: (1) Is a clear violation of 
criminal law; (2) has a significant adverse effect on the quality of 
care provided to program beneficiaries (in addition to any other 
legal obligations regarding quality of care); or (3) indicates 
evidence of a systemic failure to comply with applicable laws or an 
existing corporate integrity agreement, regardless of the financial 
impact on Federal health care programs.
    \123\ The OIG has published criteria setting forth those factors 
that the OIG takes into consideration in determining whether it is 
appropriate to exclude a health care provider from program 
participation pursuant to 42 U.S.C. 1320a-7(b)(7) for violations of 
various fraud and abuse laws. See 62 FR 67392 (1997).
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    When reporting misconduct to the Government, a home health agency 
should provide all evidence relevant to the alleged violation of 
applicable Federal or State law(s) and potential cost impact. The 
compliance officer, under advice of counsel, and with guidance from the 
governmental authorities, could be requested to continue to investigate 
the reported violation. Once the investigation is completed, the 
compliance officer should be required to notify the appropriate 
governmental authority of the outcome of the investigation, including a 
description of the impact of the alleged violation on the operation of 
the applicable health care programs or their beneficiaries. If the 
investigation ultimately reveals that criminal, civil, or 
administrative violations have occurred, the appropriate Federal and 
State authorities \124\ should be notified immediately.
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    \124\ See note 120.
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    As previously stated, the home health agency should take 
appropriate corrective action, including prompt identification of any 
overpayment to the affected payor and the imposition of proper 
disciplinary action. If potential fraud or violations of the False 
Claims Act are involved, any repayment of the overpayment should be 
made as part of the discussion with the Government following a report 
of the matter to law enforcement authorities. Otherwise, normal 
repayment channels should be used for repaying identified 
overpayments.\125\ Failure to disclose overpayments within a reasonable 
period of time could be interpreted as an intentional attempt to 
conceal the overpayment from the Government, thereby establishing an 
independent basis for a criminal violation with respect to the home 
health agency, as well as any individuals who may have been 
involved.\126\ For this reason, home health agency compliance programs 
should emphasize that overpayments obtained from Medicare and other 
Federal health care programs should be promptly disclosed and returned 
to the payor that made the erroneous payment.
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    \125\ A home health agency should consult with its Medicare 
fiscal intermediary or HCFA for any further guidance regarding 
normal repayment channels. The home health agency's Medicare fiscal 
intermediary or HCFA may require certain information (e.g., alleged 
violation or issue causing overpayment, description of the internal 
investigative process with methodologies used to determine any 
overpayments, disciplinary actions taken, and corrective actions 
taken, etc.) To be submitted with return of any overpayments, and 
that such repayment information be submitted to a specific 
department or individual. Interest will be assessed, when 
appropriate. See 42 CFR 405.376.
    \126\ See U.S.C. 130a-7b(a)(3).
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III. Conclusion

    Through this document, the OIG has attempted to provide a 
foundation to the process necessary to develop an effective and cost-
efficient home health agency compliance program. As previously stated, 
however, each program must be tailored to fit the needs and resources 
of an individual home health agency, depending upon its particular 
corporate structure, mission, and employee composition. The statutes, 
regulations, and guidelines of the Federal and State health insurance 
programs, as well as the policies and procedures of the private health 
plans, should be integrated into every home health agency's compliance 
program.
    The OIG recognizes that the health care industry in this country, 
which reaches millions of beneficiaries and expends about a trillion 
dollars annually, is constantly evolving. In particular, the home 
health industry is currently responding to recent legislative changes 
that have created additional program participation requirements and is 
gearing up for the changes underway in the areas of home health 
reimbursement and payment methodologies. However, the time is right for 
home health agencies to implement a strong voluntary compliance program 
concept in health care. As stated throughout this guidance, compliance 
is a dynamic process that helps to ensure that home health agencies and 
other health care providers are better able to fulfill their commitment 
to ethical behavior, as well as meet the changes and challenges

[[Page 42426]]

being imposed upon them by Congress and private insurers. Ultimately, 
it is OIG's hope that a voluntarily created compliance program will 
enable home health agencies to meet their goals, improve the quality of 
patient care, and substantially reduce fraud, waste, and abuse, as well 
as the cost of health care to Federal, State, and private health 
insurers.

    Dated: July 31, 1998.
June Gibbs Brown,
Inspector General.
[FR Doc. 98-20966 Filed 8-6-98; 8:45 am]
BILLING CODE 4150-04-P