Medicare: Home Health Utilization Expands While Program Controls Deteriorate
Published: 1996-03-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO examined the growth in the use of Medicare home health benefits, focusing on the: (1) changes in the home health industry; (2) composition of Medicare home health users; (3) differences in utilization of home health benefits across geographic areas; (4) incentives to overuse Medicare home health benefits; and (5) effectiveness of payment controls in preventing payment for services not covered by Medicare.
section_title: What GAO Found
paragraphs: GAO noted that: (1) the growth in Medicare's home health benefits resulted from less restrictive Health Care Financing Administration (HCFA) guidelines issued in 1989; (2) 2.8 million Medicare beneficiaries received home health services in 1993, up from 1.7 million in 1989; (3) during the same period, the average number of home health care visits doubled from 26 visits per year in 1989 to 57 visits per year in 1993; (4) more than 25 percent of home health beneficiaries received at least 60 visits per year; (5) between 1989 and 1994, the number of Medicare-certified home health agencies grew from 5,692 to 7,864; (6) proprietary home health agencies provided beneficiaries with 78 visits per year, while voluntary and government agencies provided beneficiaries with 46 visits per year; (7) home health beneficiaries with the same diagnosis received more visits from proprietary agencies than from non-profit agencies; and (8) Medicare's home health services can be improved by subjecting claims to medical review and audit, requiring visits from intermediaries and physicians to beneficiaries, and determining whether beneficiaries are qualified for such service, and actually need or receive the service billed to Medicare.

section_title: Letter
paragraphs: Use of the Medicare home health benefit has seen dramatic growth in recent years, with spending climbing from $2.7 billion in 1989 to $12.7 billion in 1994 and projected to exceed $21.0 billion by the year 2000. Changes in the benefit, the home health industry, and the characteristics of home health care users have strongly affected home health care utilization patterns and expenditure trends.
In several earlier reviews, we reported on lax controls over the use of the Medicare home health benefit. Two reports, issued in 1981 and 1986,respectively, concluded that many claimed services were not medically necessary or did not meet the coverage criteria and, therefore, should not have been covered under the program. We also concluded that payment systems generally were not capable of detecting noncovered services. Thus, we recommended that steps be taken to increase the capability of Medicare’s claims processing and utilization review systems to detect noncovered care.
The recent rapid growth in Medicare home health expenditures continues to raise questions about the extent to which abuse of the benefit may be contributing to this growth. Therefore, you asked us to determine the reasons for and the nature of the growth in the use of the Medicare home health benefit. Specifically, you asked us to examine changes in the composition of the home health industry, changes in the composition of Medicare home health users, differences in utilization patterns across geographic areas, incentives to overutilize services, and the effectiveness of payment controls in preventing payment for services not covered by Medicare.
To address these issues, we reviewed pertinent laws, regulations, court decisions, Health Care Financing Administration (HCFA) policies, and relevant research. We interviewed staff from HCFA, two HCFA regional offices, and three regional home health intermediaries. We analyzed paid claims history data for 1989 through 1993 and provider of service data for 1989 through 1994. We did not, however, examine the internal and automatic data processing controls for automated systems from which we obtained data used in our analyses. With this exception, we conducted our study from July 1994 to December 1995 in accordance with generally accepted government auditing standards. (See app. I for details on our scope and methodology.)
subsections: section_title: Background
paragraphs: Medicare, administered by HCFA within the Department of Health and Human Services (HHS), is a health insurance program that covers almost all Americans 65 years old and older and certain individuals under 65 years old who are disabled or have chronic kidney disease. The program, authorized under title XVIII of the Social Security Act, provides protection under two parts. Part A, the hospital insurance program, covers inpatient hospital services, posthospital care in skilled nursing homes, and care in patients’ homes. Part B, the supplementary medical insurance program, covers primarily physician services but also home health care for beneficiaries not covered under part A.
subsections: section_title: Coverage Criteria
paragraphs: To qualify for Medicare home health care, a person must be confined to his or her residence (homebound); under a physician’s care; and need part-time or intermittent skilled nursing care and/or physical therapy or speech therapy. The services must be furnished under a plan of care prescribed and periodically reviewed by a physician. Home health benefits covered by Medicare include part-time or intermittent nursing care provided by or under the supervision of a registered nurse; physical, occupational, and speech therapy; medical social services related to the patients’ health problems; and part-time or intermittent home health aide services when provided as an adjunct to skilled nursing or therapy care.
Medicare beneficiaries may receive home health care as long as it is reasonable and necessary for the treatment of illness or injury; no limits exist on the number of visits or length of coverage. Medicare does not require copayments or deductibles for home health care.
Medicare home health services must be furnished by Medicare-certified HHAs or by others under arrangement with such an agency. Agencies participating in the program must meet specific requirements of the Social Security Act. HHAs are reimbursed for the reasonable costs incurred in providing covered visits to eligible beneficiaries up to specified cost limits established for each area of the country.
Medicare-certified HHAs are classified into one of three ownership categories. Proprietary HHAs are private, for-profit agencies. Voluntary agencies are private (nongovernmental), nonprofit agencies that are exempt from federal income taxation; for example, Visiting Nurse Associations and Easter Seal Societies. Government agencies are operated by a state or local government.
section_title: Program Administration
paragraphs: HCFA currently administers the home health care program through nineregional home health intermediaries (RHHI)—eight Blue Cross plans and the Aetna Life and Casualty Insurance Company. These intermediaries serve as a communication channel between HHAs and HCFA, make payments to HHAs for covered services provided to Medicare establish and apply payment safeguards to prevent program abuse.
section_title: Changes in Eligibility Criteria Key to Home Health Growth
paragraphs: Changes in the legal and regulatory provisions governing the home health benefit together with changes in HCFA’s policies have played a key role in the increase in the benefit’s use. At Medicare’s inception in 1966, the home health benefit under part A provided limited posthospital care of up to 100 visits per year that required a prior hospitalization of at least 3 days. In addition, the services could only be provided within 1 year after the patient’s discharge and had to be for the same illness. These restrictions were eliminated by the Omnibus Budget Reconciliation Act of 1980.
With the implementation of the Medicare inpatient prospective payment system in 1983, the utilization of the home health benefit was expected to grow as patients were discharged from the hospital earlier in their recovery period. However, expenditures changed little over the next 5 years (see fig. 1). The Deficit Reduction Act of 1984 reduced the number of intermediaries processing home health claims, and HCFA intensified education of the home health intermediaries to promote more consistency in claims review. Additionally, HCFA instructed the intermediaries to increase the number of claims receiving medical review before payment. This increased review in addition to a requirement for more detailed documentation contributed to an increased claim denial rate—from 3.4 percent in 1985 to 7.9 percent in 1987.
A lawsuit was filed in 1988 (Duggan v. Bowen) that struck down HCFA’s interpretation of benefit coverage requirements. As a result of the suit, HCFA revised the Medicare Home Health Agency and Medicare Intermediary manuals in 1989 so that the criteria for coverage of home health visits would be consistent with “part-time or intermittent care,” as required by statute, rather than “part-time and intermittent care,” as HCFA had been interpreting it. This change enabled HHAs to increase the frequency of visits because they no longer had to be intermittent. The requirements were also changed so that patients now qualify for skilled observation by a nurse or therapist if a reasonable potential for complications or possible need to change treatment existed. Further, the benefit now allows maintenance therapy where therapy services are required to simply maintain function rather than the previous criteria that patients show improvement from such services.
The 1989 Medicare Home Health Agency Manual changes also required that intermediaries, in order to deny claims on the basis of medical necessity, determine that each denied visit was not medically necessary at the time services were ordered. Before this change, intermediaries were denying all visits beyond what the intermediary judged necessary; for example, denying 10 visits out of 50 visits claimed, if the intermediary could determine that the beneficiary could be adequately treated with 40 visits. The intermediary did not need to review each visit. This change has made it more costly for intermediaries to determine whether services are medically necessary and, therefore, fewer claims are denied.
The effect of changes in Medicare law, regulations, and policy has been that home health care is now available to more beneficiaries, for less acute conditions, and for longer periods of time. For example, in 1992, approximately one-third of home health beneficiaries entered the program without a hospital stay at one time during the year. Of those who had been hospitalized, only half had a hospital stay in the 30 days before starting home health care.
subsections: section_title: Medicare Beneficiaries Receiving More Home Health Services
paragraphs: Since the Medicare Home Health Agency Manual and Medicare Intermediary Manual changes of 1989, the percentage of Medicare beneficiaries receiving home health services and the number of home health visits received per year per home health user have increased significantly. In 1989, 1.7 million beneficiaries (5.6 percent of the Medicare population) received home health care. In 1993, the number of beneficiaries receiving such care increased to 2.8 million (8.8 percent of the Medicare population). Beneficiaries receiving home health services are typically female and over 75 years old; however, the number of disabled beneficiaries under 65 years old receiving services has been growing. (See table II.1 in app. II.)
The average number of visits received per home health beneficiary has also increased dramatically since 1989. From 1989 through 1993, the average number of visits received per year more than doubled, from 26 to 57 visits. Over the same period, the median number of visits almost doubled, from 13 to 24 visits (see fig. 2). Most of the increase in visits has resulted from an increased use of skilled nursing (average visits increased from 15 per year in 1989 to 26 visits per year in 1993) and home health aide visits (average visits increased from 25 visits per year for beneficiaries who received any aide visits in 1989 to 56 visits per year in 1993).
The distribution of visits across home health beneficiaries has become increasingly skewed toward heavy users (see fig. 3). From 1989 to 1993, the percentage of users having more than 60 visits in a year increased from 10.6 percent to 25.7 percent. While beneficiaries who had 60 or fewer visits in 1993 averaged only 20 home health visits (with a median of 15 visits), those with more than 60 visits, averaged 163 visits (with a median of 125 visits). The percentage of beneficiaries receiving more than 210 visits in 1 year has also increased, from fewer than 1.0 percent in 1989 to 5.8 percent in 1993.
section_title: Home Health Industry Expanding Rapidly
paragraphs: The home health industry has experienced rapid growth since 1989. The number of Medicare-certified HHAs increased from 5,692 in 1989 to 7,864 at the end of 1994. Growth has occurred mainly in HCFA’s Dallas, San Francisco, and Chicago regions. (See fig. II.1 in app. II for individual state growth data.)
Recent HHA growth has primarily taken place in proprietary agencies, while the percentage of more traditional nonprofit home health providers—visiting nurse associations and government agencies—has declined (table 1). In 1989, approximately 35 percent of all Medicare-certified HHAs were proprietary. In 1994, close to 50 percent of all HHAs were in this category. (See fig. II.1 in app. II for state breakdowns.) This increased percentage of proprietary agencies was responsible for 83 percent of the growth in the number of HHAs between 1989 and 1994.
section_title: Utilization Varies by Geographic Area and Type of HHA
paragraphs: A comparison of average visits per beneficiary receiving home health services in 1993 indicates that beneficiaries in certain HCFA regions—most notably in the Atlanta, Boston, and Dallas regions—receive considerably more services on average than beneficiaries in other areas (see table 2). (Refer to fig. II.3 in app. II for data on total home health visits per Medicare beneficiary by state.) A further breakdown of these figures by ownership category indicates that in all regions, proprietary HHAs provide many more services per case than voluntary or government-run agencies. (See fig. II.2 in app. II for state breakdowns.)
On the national level, proprietary agencies have provided a significantly higher number of average visits per home health beneficiary since 1989 (see fig. 4).
A recent study noted that some of the regional variation in services may reflect differences in the availability of substitute services. Additionally, the study reported some regional differences in patient characteristics; however, these differences did not seem to have a clear pattern that might partially explain variations in utilization. Another study indicated that regional variation could in part be explained by patient characteristics. For instance, the study found that compared with Medicare home health users nationally, beneficiaries in the East South Central region were more likely to be frail, chronically ill, and in poorer health. The study also noted that home health care in the East South Central region tended to be delivered outside large metropolitan counties and in counties that had unusually high percentages of elderly persons living in poverty (both characteristics associated with higher than average home health use).
While evidence might suggest that the availability of substitute services and beneficiary case-mix may explain some of the regional variation in utilization of home health services, why proprietary agencies consistently provide more visits in all regions is not clear. To learn more about the differences between care provided by proprietary and other types of HHAs, we conducted an episode-of-care analysis for four diagnoses: diabetes, heart failure, hypertension, and hip fracture. (See app. I for our methodology and app. III for detailed results.)
For these diagnoses, proprietary agencies, on average, provided care for the longest period of time and provided the most visits per episode during the period studied (see table 3). Although government-run agencies provided care for similar lengths of time as proprietary agencies, government-run HHAs provided 32 to 45 percent fewer visits to beneficiaries with these four diagnoses. Voluntary agencies, in general, provided care for the shortest period of time for all four diagnoses, but they provided slightly more visits per episode than government-run agencies. Variations in utilization between the different types of HHAs were most notable in cases of diabetes, which is regarded as a chronic problem, and less notable in cases of hip fracture, which is more of an acute problem.
Several HCFA and intermediary officials expressed concern that the growing number of proprietary agencies may be generating increased utilization of home health services. They believe that because the beneficiary incurs no cost and little data exist on the effectiveness of different plans of care, HHAs primarily compete by offering greater numbers of services to beneficiaries. Some HHS Office of Inspector General and intermediary officials further believe that the nonprofit HHAs are being forced to offer increasingly more services in order to stay in business.
section_title: Benefit Controls Weakened as Utilization Expands
paragraphs: In two reports issued in 1981 and 1986, respectively, we criticized HCFA’s administration of the Medicare home health benefit. We reported that about 27 percent of the visits reviewed at 37 agencies and paid for under the benefit were questionable or improper. We attributed those problems to the vagueness of the coverage criteria (particularly uncertainty over the exact meaning of terms such as homebound and intermittent care), insufficient information being submitted with the claims upon which to base a coverage decision, and poor performance of the intermediaries in reviewing claims. We also noted that other control problems were adversely affecting proper utilization of the home health benefit, including insufficient physician involvement and inadequate monitoring of beneficiary status. In revisiting these issues, we found that while controls had improved during the mid- and late 1980s, they have largely deteriorated since then.
subsections: section_title: Considerable Room for Interpretation of Coverage Criteria Remains
subsections: section_title: Homebound Status
paragraphs: The Social Security Act requires that a beneficiary be “confined to the home” (homebound) to be eligible for Medicare home health care. In our 1981 report, we found that determining whether beneficiaries are homebound is difficult due to the inadequacy of the definition provided by HCFA. The report recommended that HCFA’s criteria for determining homebound status be clarified and made more specific. The Omnibus Reconciliation Act of 1987 added a definition of homebound to the Social Security Act using the same wording as the HCFA Home Health Agency Manual definition. Therefore, the definition of homebound remains essentially unchanged and considerable discretion remains in interpreting and applying the homebound definition. “the condition of these patients should be such that there exists a normal inability to leave home and, consequently, leaving their homes would require a considerable and taxing effort. “ if the patient does in fact leave the home, the patient may nevertheless be considered homebound if the absences from the home are infrequent or for periods of relatively short duration, or are attributable to the need to receive medical treatment.” (See app. IV for a full definition.)
Several HCFA and intermediary officials said that few denials are made on the basis that the beneficiary was not homebound. One intermediary official said that the RHHI made fewer than 10 denials a year based on the homebound criteria. An HCFA official further noted that although the RHHIs tend to interpret the homebound criteria fairly consistently, the criteria are so broad that very few claims are denied on the basis that the coverage criteria have not been met. Finally, even if intermediaries do make a denial based on the homebound criteria, so much room for interpretation still exists in the infrequent or short duration requirements that such denials may end up being reversed at the reconsideration or appeals level.
A recent study conducted by one of the RHHIs identified some of the types of abuses that are difficult for the intermediary to prevent because of the range of interpretations possible for the homebound criterion. For example, the study identified an instance where a physician called the RHHI to complain that some of his patients were being told by an HHA that they were homebound because they did not own a car. The survey also revealed an example of a home health beneficiary who would put her home health care on hold so that she could go fishing for a week or two. She would then come back and resume her care.
section_title: Intermittent Care
paragraphs: The Medicare Home Health Manual sets the parameters of the term intermittent in two ways. The first pertains to beneficiary eligibility requirements; to meet the requirement for intermittent skilled nursing care, an individual must have a “medically predictable recurring need for skilled nursing services.” In most instances, the definition will be met if a patient requires a skilled nursing service at least once every 60 days. In contrast, a person expected to need more or less full-time skilled nursing care over an extended period of time would usually not qualify for home health benefits because he or she needs a higher level of care.
The second parameter of intermittent pertains to the frequency of visits allowed by Medicare in a given time frame and is usually used together with the term part-time. According to the Medicare Home Health Agency Manual, intermittent care is defined as up to and including 28 hours per week of skilled nursing and home health aide services combined provided on a less than daily basis; up to 35 hours per week of skilled nursing and home health aide service combined that are provided on a less than daily basis, subject to review by fiscal intermediaries on a case-by-case basis, and determined on the basis of documentation justifying the need for and reasonableness of such additional care; or up to and including full-time (that is, 8 hours per day) skilled nursing and home health aide services combined that are provided and needed 7 days per week for temporary but not indefinite periods of time of up to 21 days with allowances for extensions in exceptional circumstances where the need for care in excess of 21 days is finite and predictable.
Because a range of interpretations is possible for intermittent, the requirement is difficult to enforce. For example, individuals can be provided intermittent services (for example, blood tests or periodic skilled observation) every 60 days simply to qualify for aide services on a long-term basis. Under the part-time or intermittent coverage rules, determining whether someone who needs daily care for an extended period meets the intermittent requirement or might require institutional care is difficult. Moreover, without further review, to determine whether daily care itself is really necessary is not possible. During our recent investigation of a large home health organization, for example,employees alleged instances where managers instructed nurses to visit new patients daily for the first 14 or 21 days of care regardless of condition—intermediaries usually do not question daily visits during the first 21 days of care.
section_title: Less Information Is Available to Intermediaries for Making Coverage Decisions
paragraphs: In August 1985, HCFA implemented standardized medical information forms for HHAs to use in requesting payment from intermediaries. These plan-of-care and update forms, which were to be submitted with the initial claim and the claim closest to the recertification date 60 days later, gave medical reviewers more detailed information on each beneficiary’s general physiological condition, homebound status, functional limitations, nutritional requirements, services prescribed, and services received. The additional information was intended to increase the accuracy and consistency of coverage decisions. “These forms  are no longer submitted routinely with the initial claim or other subsequent claim. The completed HCFA-485, signed by the physician, is retained in the HHA files and a copy of the signed form is submitted  when requested for medical review. The HCFA-486 is completed only when required for medical review.” “assume that the type and frequency of services ordered are reasonable and necessary unless objective clinical evidence clearly indicates otherwise, or there is a lack of clinical evidence to support coverage.”
Because the current billing form alone does not supply adequate information to make this type of determination, most bills are paid without question.
section_title: Little Medical Review Is Done
paragraphs: The regional home health intermediaries are responsible for procedures to assure that they only make payments for home health services that are covered by Medicare and avoid paying for services that are (1) provided to beneficiaries who do not meet Medicare home health criteria, (2) not reasonable or medically necessary, or (3) in excess of the services called for by the approved plan of treatment. Currently, the RHHI’s primary procedure for detecting noncovered services is medical review of claims.
subsections: section_title: Prepayment Reviews
paragraphs: The Consolidated Omnibus Budget Reconciliation Act of 1985 more than doubled the funds available for medical review and audit of home health and other Medicare claims. This allowed intermediaries to increase the number of medical reviews performed; they conducted medical reviews on 62 percent of home health claims processed in fiscal years 1986 and 1987. The increased number of claims subjected to medical review resulted in more denials and higher denial rates even though the percentage of claims being denied during medical review did not increase significantly. For example, in both 1985 and 1987, intermediaries denied about 10 percent of the claims subjected to medical review. However, because over twice as many claims were subjected to medical review in 1987, there were over twice as many denials. As a result, the HCFA-reported denial rate was 7.9 percent in 1987 compared with 3.4 percent in 1985.
Due to budget cuts since 1989, however, intermediaries are now required to conduct medical reviews (pre- and postpayment) on a target of 3.2 percent of all claims, including home health claims. At the same time, home health claims volume increased from 5.5 million claims in 1989 to 16.6 million claims in 1994. Of the 3.7 percent of home health claims denied in fiscal year 1994, only 0.6 percent were denied because the services were determined, through medical review, to not be medically necessary or because the beneficiary did not meet the qualifying coverage criteria.
As a result of decreased review, HHAs are less likely to be caught if they abuse the home health benefit. An HCFA official noted that HHAs are aware that the intermediary only reviews a small number of claims and, therefore, can take chances billing for noncovered services. As long as they do not trigger the criteria that would cause the claim to be flagged,HHAs can submit abusive claims that will never be reviewed.
Besides covering so few claims, prepayment medical review is limited in its ability to detect noncovered care in that it is simply a paper review done at the offices of the RHHI. According to HCFA and intermediary officials, it is often not possible to obtain enough information from a paper review alone no matter how complete the medical records submitted, to determine whether a provider is abusing the benefit or committing fraud. If the codes are valid, the forms filled out properly, and no unusual patterns are identified during the FMR process, the claim goes through. For example, our investigation of a large home health organization turned up allegations that staff were directed to alter or falsify medical records to ensure continued or prolonged visits, including recording visits that were never made or noting that patients were homebound even after they were no longer confined to the home. To further illustrate, an intermediary official noted that sometimes the wrong diagnosis is put on the claim form to make beneficiaries appear sicker than they really are and, thus, in need of more care.
section_title: Postpayment Review
paragraphs: Postpayment utilization review differs from prepayment review in that its principal focus is on identifying HHAs that are providing significant amounts of noncovered care rather than on identifying services provided to specific beneficiaries. In 1982, HCFA implemented a selective postpayment utilization review program that has cost effectively identified extensive noncovered services paid for by Medicare. The essential component of postpayment review, comprehensive medical review (CMR), is a thorough postpayment evaluation of claims and medical documentation that may involve an audit at the provider’s site. On-site audits give the reviewer access to the information in the provider’s records, including plans of care and documentation of visits.
According to records obtained from HCFA, only 51 on-site audits were conducted by the nine RHHIs combined in fiscal year 1994. Thus, fewer than 1 percent of all Medicare-certified HHAs were audited. Intermediaries are required to perform 10 on-site CMRs each year for all provider types, including, for example, outpatient, skilled nursing, and rehabilitation facilities. An HCFA representative noted that CMRs are so resource intensive that they may be done only in instances where a high level of return is expected. Because HHA claims may comprise a relatively small portion of an intermediary’s total claims volume, the intermediary may not do any home health CMRs.
One of the best ways to verify information provided by the HHA is to visit beneficiaries at home. Beginning in 1984, intermediaries were required to make visits to a sample of five beneficiaries at targeted agencies to assess coverage status; however, this requirement was subsequently dropped due to cuts in contractor funding. In March 1995, HCFA revised the Medicare Intermediary Manual to say that intermediaries may perform visits to selected beneficiary homes but they are not required to do so. According to officials at the intermediaries visited, only one of the three was doing any beneficiary visits as part of its CMRs.
A proposed sampling procedure for CMRs involves selecting a valid statistical sample of claims from agencies suspected of abusive practices and extrapolating the denial rate (and therefore payment recovery rate) in the sample to similar claim types during the same period. In our 1986 report, we suggested that by using statistically valid sampling techniques, such as those being used to estimate physician overpayments under Medicare part B, overpayments to HHAs for noncovered services could be projected to all claims submitted by the agency during the sampling period and could result in millions of dollars in additional recoveries. In addition, we recommended that HCFA require intermediaries to use such procedures. However, RHHIs are currently not required to use a projectable sample of home health visits to extend recoveries—recoveries are, therefore, limited to the cost of actual services reviewed and denied. HCFA is circulating a new draft sampling plan that delineates the methodology for selecting a representative sample. However, previous attempts to implement statistically valid postpayment sampling have not been successful, primarily due to opposition from the home health industry and other health care providers.
section_title: Physicians Not Actively Involved in Monitoring Patient Care
paragraphs: With the enactment of the Medicare program, it was expected that the physician would play an important role in determining utilization of services. Medicare law and regulations, therefore, require that home health items and services must be furnished under a plan of treatment established and periodically reviewed by a physician. HCFA requires that the plan is to be reviewed and recertified in writing by the attending physician at least every 62 days. The physician is expected but not required to see the patient.
Few data exist about the current nature of physician involvement in home health care. Concerns have been raised, based on audits of certain HHAs and anecdotal reports, that physicians are not appropriately involved in planning and coordinating home health services. For example, both HCFA and intermediary officials expressed concern that HHAs were preparing the plans of treatment and the physicians were signing them with little or no review.
A recent report issued by HHS’ Office of the Inspector General (OIG) that was based on a survey of physicians and HHAs around the country found that physicians generally have a relationship with patients for whom they sign plans of care. Physicians usually reported initiating referrals for home care and reviewing the plans of care that they sign; however, most do not prepare the plans of care themselves. The report also found that physicians were most involved when caring for patients with complex medical problems and were less involved when caring for patients with chronic or less complex conditions. Thus, physicians frequently are not aware of the ongoing HHA services being provided to patients and billed to the Medicare program. HHS’ Inspector General pointed out the importance of recognizing that physicians usually do not make home visits themselves to monitor the HHA services provided and do not directly manage the care that a patient receives from an HHA. An intermediary official noted that some physicians feel that because they are ordering nonmedical services, which will generally not harm the patient, not much review is required.
The 1993 Aetna of Florida pilot study revealed examples of different levels of physician involvement. In one instance, a physician wrote that he took every Friday off to spend the whole day reviewing home health plans of care. Another physician, who received 100 plans of care a week, wrote a letter to his intermediary reprimanding it for asking him to read the plans of care. Our investigation of a large home health organization found that physicians typically rely on nurses’ verbal recommendations, written recommendations, or both. We also noted allegations that physicians’ signatures were forged and plans of care were altered after certification without the physicians’ knowledge.
To compensate physicians for the time spent on preparing and reviewing home health plans-of-care forms, HCFA issued a new regulation in 1994 providing separate payment for physician care plan oversight services. As of January 1995, HCFA began allowing participating physicians to be paid for oversight requiring at least 30 minutes. Currently, the payment rate is approximately $81 per patient.
section_title: Physicians and Beneficiaries Not Aware of Services Billed
paragraphs: Neither the beneficiaries receiving nor the physicians ordering home health services are sent information about which services Medicare has paid. Beneficiaries do not receive an explanation of benefits because they are not billed for in-home services. Therefore, neither the physician nor the beneficiary has any way of knowing whether Medicare is paying the HHA for services not rendered or whether the home health services are provided according to the plan of care.
section_title: Denied Claims Likely to Be Paid Under Waiver of Liability
paragraphs: Under the waiver-of-liability provision of the Social Security Act (§ 1879) Medicare will pay for denied services if the beneficiaries and providers did not know and had no reason to know that the services were not medically reasonable and necessary or were based on the need for custodial rather than skilled care. In implementing this provision, HCFA generally presumed that HHAs did not know services were not covered as long as their number of denials did not exceed 2.5 percent of total visits billed. When a provider exceeded the 2.5-percent rate in a calendar quarter, Medicare would not reimburse the provider for denied services, usually for the next 3-month period.
According to statistics obtained from HCFA, in fiscal year 1994 approximately half of all claims denied for lack of medical necessity or for not meeting the coverage criteria were eligible for waiver. Of those eligible for waiver, 73 percent were ultimately paid. In fiscal year 1994, the total amount reimbursed under waiver was approximately $45.5 million.
Because so few claims are reviewed and so few technical and medical necessity denials are made, most providers, especially those who submit large numbers of claims, would never exceed the 2.5-percent rate threshold. In an earlier report, we noted that savings could be realized by changing the waiver-of-liability rules and recommended that HCFA establish more stringent eligibility requirements for the application of waiver of liability for health care providers under part A of Medicare.
section_title: HCFA Striving to Address Problems
paragraphs: In response to the changing climate surrounding home health care, the Administrator of HCFA convened an internal task force in the spring of 1994 (the Medicare Home Health Initiative) to examine the home health benefit from both a policy and an operations perspective. As of September 1995, the task force has held four open workgroup meetings at which HCFA officials solicited ideas and suggestions for benefit improvement from physician organizations, representatives of beneficiary groups, the home health industry, state governments and their Medicaid agencies, and others. The task force has also issued a draft revision of the conditions of participation, developed a pamphlet to better inform beneficiaries of what services are covered, and developed draft sampling instructions for postpayment utilization review. Further, the task force has implemented a four-state pilot program to investigate providing home health beneficiaries with claims information, begun pilots of team on-site medical review of HHAs, revised the Medicare Intermediary Manual to allow unannounced on-site audits, and implemented a two-state pilot program involving training state surveyors to assess patient eligibility as a part of HHA annual surveys.
These efforts by HCFA are commendable and should help somewhat in gaining control of the use of the home health benefit. However, as discussed earlier in this report, HCFA cannot address many of the major problems, such as the changes in the manuals made in response to a court decision, that make it harder to control use of services and the shortage of funds to perform program safeguard activities.
section_title: Conclusions
paragraphs: The Medicare home health program is judged by HCFA as being very difficult to control. While quantifying how much of the recent growth in home health care is due to abuse of the benefit is not possible, lax benefit controls leave the door open for abuses such as overutilization to occur. While HCFA has made some notable attempts to remedy several specific problems, a number of fundamental issues remain. For example: In response to a court decision, HCFA revised its requirements for determining Medicare home health eligibility. The revisions made it possible for more beneficiaries to qualify for Medicare home health services and more HHAs to receive payment for higher numbers of visits and for longer periods of care. Historically, part A of Medicare’s home health benefit was directed at acute conditions after hospitalization. While many beneficiaries still use the benefit in this way, an increasing number of beneficiaries are receiving visits that are more directed at long-term care for chronic conditions.
Physicians tend to depend on HHAs to design plans of care, especially for less complex cases, and agencies as a rule have incentives to furnish as many visits as possible. This combination can lead to the overprovision of services.
Medicare has reduced on-site audits and reviews so that HHAs have less incentive to follow Medicare rules. The percentage of claims that are reviewed has decreased from over 60 percent in 1987 to approximately 3 percent in 1994. We have testified on a number of occasions that program safeguard activities are cost effective, returning close to $14 in savings for each $1 invested in 1994, and cuts in payment safeguard areas translate into increased program losses from fraud, waste, and abuse. When claims volume increases and medical review of claims declines, intermediaries’ ability to detect and prevent erroneous payments is substantially lessened. Further, even when claims are denied, they were often paid because the HHA qualified for a waiver of liability. It is nearly impossible for intermediaries to assess from paper review alone whether a beneficiary meets the eligibility criteria, whether the services received are appropriate given the beneficiary’s current condition, and whether the beneficiary is actually receiving the services billed to Medicare. Coverage criteria, such as confined to the home or intermittent, are not meaningful when the HHAs are in effect the only ones monitoring beneficiaries.
section_title: Matters for Consideration by the Congress
paragraphs: The emphasis of Medicare’s home health benefit program has recently shifted from primarily posthospital acute care to more long-term care. At the same time, HCFA’s ability to manage the program has been severely weakened by coverage changes mandated by court decisions and a decrease in the funds available to review HHAs and the care they provide. The Congress may wish to consider whether the Medicare home health benefit should continue to become more of a long-term care benefit or if it should be limited primarily to a posthospital acute care benefit. The Congress should also consider providing additional resources so that controls against abuse of the home health benefit can be better enforced.
section_title: Agency Comments
paragraphs: We provided HHS an opportunity to comment on our draft report, but it did not provide comments in time for them to be included in the final report.
As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 7 days after its issue date. At that time, we will send copies to the Secretary of HHS, the Administrator of HCFA, interested congressional committees, officials who assisted our investigation, and other interested parties. Copies also will be made available to others on request.
Please contact me on (202) 512-6808 if you have any questions about this report. Other GAO contacts and staff acknowledgments are listed in appendix V.
section_title: Scope and Methodology
paragraphs: Our work was done primarily at HCFA headquarters. We also visited three regional home health intermediaries (in Chicago, Illinois; Milwaukee, Wisconsin; and Clearwater, Florida) and two HCFA regional offices (Chicago and Atlanta) to obtain workload and performance data, information concerning RHHI claims review operations, and an update on HCFA’s implemented and planned program changes. We also interviewed officials at HHS’ Office of the Inspector General in Baltimore and Atlanta.
We reviewed pertinent laws, regulations, court decisions, and HCFA policies to identify changes in eligibility determination and medical review practices. And we reviewed studies related to home health benefit utilization and control issues.
To identify home health growth patterns and variations in utilization, we analyzed data from Medicare’s Provider of Service and Home Health National Claims History files. These data include information on all paid claims for the period 1989 through 1993. We used data from the Provider of Service file to determine agency growth through time and across geographic regions and to identify provider ownership type. And we used the Medicare claims data to calculate mean and median home health visits, by total and by each type of service, broken out by geographic area and HHA ownership types.
While the average visits per year provides a general indication of variations in utilization of home health services, it does not indicate the length of each individual’s episode of care nor does it provide a picture of the intensity of services provided during this time. To obtain a more in-depth look at variations in practice patterns, both across regions and among various types of HHAs, we conducted an episode-of-care analysis for four diagnoses: diabetes, heart failure, hypertension, and hip fracture.The first three diagnoses were selected because they are among the most common primary diagnoses associated with home health care. Hip fracture was selected because it is generally regarded as having a more predictable pattern of treatment with a more finite end point. We selected beneficiaries with one of the above primary diagnoses who began receiving home health services in 1992. We then tracked beneficiaries’ visits up to 210 days after their episode start date.
The principal sources of our automated data were Medicare paid claims data systems, which are subject to periodic HCFA reviews and examinations. HCFA relies on the data obtained from these systems as evidence of Medicare-covered services and expenditures and to support its management and budgetary decisions. For this reason, we did not independently examine the internal and automatic data processing controls for automated systems from which we obtained data used in our analyses. With this exception, we conducted our work in accordance with generally accepted government auditing standards between July 1994 and December 1995.
section_title: Detailed Data Tables
paragraphs: 36.84 40.00 38.01 22.50 33.33 53.51 60.00 57.89 72.50 66.67 0.00 9.22 7.89 0.00 0.00 59.22 72.73 70.92 78.95 92.86 9.65 0.00 4.09 5.00 0.00 0.00 24.51 50.00 48.82 39.13 27.51 18.78 26.72 24.69 46.91 21.14 34.39 58.39 13.79 25.00 46.15 40.24 41.02 45.83 17.86 25.42 61.64 52.11 36.27 23.08 19.69 28.26 55.76 31.84 38.93 35.19 22.68 34.55 29.30 14.29 63.22 47.83 39.02 58.31 24.30 47.37 38.26 25.76 12.66 14.52 15.27 14.29 38.70 12.90 26.32 50.25 24.39 15.30 66.23 47.62 29.67 32.61 26.85 32.56 12.12 15.79 27.03 73.33 19.64 13.66 31.58 20.83 28.57 25.00 27.12 18.97 55.00 46.15 41.46 58.59 32.14 42.86 16.95 32.76 39.44 39.22 26.92 31.50 32.61 16.73 49.39 34.35 40.12 30.41 44.31 36.31 27.33 22.99 43.48 36.59 26.39 25.97 33.33 40.66 52.17 42.59 60.47 63.64 68.42 37.84 54.34 36.20 20.43 29.69 17.53 23.40 24.24 15.79 35.14 20.00 35.71 49.42 21.05 62.50 14.29 39.29 23.73 24.14 44.64 36.92 47.37 16.67 57.14 35.71 49.15 56.90 114 30 171 40 18 13 53 213 44 2 19 19 75 313 200 67 168 306 82 107 76 149 66 237 303 203 175 230 341 171 203 431 81 218 937 163 230 64 154 47 32 33 64 52 94 604 25 41 18 56 80 59 50.00 36.84 68.42 37.33 48.88 54.00 31.34 26.19 63.40 58.54 36.45 28.95 29.53 45.45 67.51 42.90 56.16 37.71 28.26 49.56 31.58 15.76 77.03 59.26 59.63 75.45 12.14 33.13 44.78 28.13 46.75 10.64 18.75 18.18 57.81 23.08 55.32 63.41 32.00 78.05 16.67 42.86 38.75 27.12 63.16 26.32 45.33 51.12 33.50 35.82 20.83 32.03 37.80 39.25 23.68 32.21 28.79 19.83 42.57 28.57 48.00 33.04 37.54 42.11 33.99 17.87 28.40 24.31 16.76 33.53 30.67 34.78 42.19 35.71 65.96 71.88 66.67 31.25 15.38 38.30 27.98 52.00 14.63 55.56 28.57 48.75 57.63 (Figure notes on next page)
subsections: section_title: Figure II.2: Average and Median Number of Visits per Beneficiary per Year, 1989 and 1993
section_title: Figure II.3: Home Health Visits per Medicare Beneficiary, 1993, in Descending Order
section_title: Episode-of-Care Analysis
paragraphs: The following figures present tables (figs. III.1 to III.4) that show the average length of episode and the average number of visits per episode for patients with a primary diagnosis of diabetes, heart failure, hypertension, and hip fracture for the different types of HHAs. Length of episode refers to the average period of time during which a beneficiary receives care, and visits per episode refers to the average number of home health services a beneficiary receives during that time. We examined episodes of care beginning during 1992. For these episodes we tracked care throughout 1992 and 1993.
Much variation in both lengths of episode and average number of visits per episode can be seen among the different types of agencies for these four diagnoses. For example, on a national level, proprietary agencies provided an average of 53 visits to beneficiaries with diabetes over an average period of 64 days. Government agencies, on the other hand, provided an average of 29 visits to diabetic beneficiaries over a similar period of time. The variation in utilization between the different types of agencies is less pronounced in cases of hip fracture, which may be regarded as an acute condition, than in cases of diabetes, heart failure, and hypertension, which may be regarded as more chronic conditions.
Variations in utilization are also seen across geographic regions. For example, beneficiaries diagnosed with hypertension receiving care in the Atlanta or Dallas regions received more care for longer periods of time than beneficiaries in other regions with the same diagnosis. (See fig. III.3.) HHAs in these two regions, on average, consistently provided more care for cases of diabetes, heart failure, and hypertension, while HHAs in the Boston region provided the most care to beneficiaries with hip fracture. Some of the variation between regions may be explained by case-mix differences and availability of alternative sources of care. And some of the differences are probably due to geographic variations in practice patterns.
Table III.5 shows the average number of two types of visits provided to beneficiaries—skilled nursing visits and home health aide visits. Again, proprietary agencies provided more of these types of services for all diagnoses. For example, in cases of hypertension, proprietary agencies provided almost twice as many skilled nursing visits as voluntary agencies during a beneficiary’s episode of care. (Figure notes on next page)
subsections: section_title: Figure III.2: Average Episode Length and Visits per Episode—Heart Failure, 1992-93
paragraphs: (Figure notes on next page)
section_title: Figure III.3: Average Episode Length and Visits per Episode—Hypertension, 1992-93
paragraphs: (Figure notes on next page)
section_title: Figure III.4: Average Episode Length and Visits per Episode—Hip Fracture, 1992-93
section_title: HCFA Definition of Confined to the Home
paragraphs: § 204.1: Medicare Home Health Intermediary Manual (HCFA Publication 11)
A. eligible to receive covered home health services under both Part A and Part B, the law requires that a physician certify in all cases that the beneficiary is confined to his home.  (See § 240.1.)  An individual does not have to be bedridden to be considered as confined to his home.  However, the condition of these patients should be such that there exists a normal inability to leave home and, consequently, leaving their homes would require a considerable and taxing effort.  If the patient does in fact leave the home, the patient may nevertheless be considered homebound if the absences from the home are infrequent or for periods of relatively short duration, or are attributable to the need to receive medical treatment.  Absences attributable to the need to receive medical treatment include attendance at adult day centers to receive medical care, ongoing receipt of outpatient kidney dialysis, and the receipt of outpatient chemotherapy or radiation therapy.  It is expected that in most instances absences from the home which occur will be for the purpose of receiving medical treatment.  However, occasional absences from the home for nonmedical purposes, e.g., an occasional trip to the barber, a walk around the block or a drive, would not necessitate a finding that the individual is not homebound so long as the absences are undertaken on an infrequent basis or are of relatively short duration and do not indicate that the patient has the capacity to obtain the health care provided outside rather than in the home.
Patient Confined to His Home--In order for a beneficiary to be Generally speaking, a beneficiary will be considered to be homebound if he has a condition due to an illness or injury which restricts his ability to leave his place of residence except with the aid of supportive devices such as crutches, canes, wheelchairs, and walkers, the use of special transportation, or the assistance of another person or if he has a condition which is such that leaving his home is medically contraindicated.  Some examples of homebound patients which are illustrative of the factors to be taken into account in determining whether a homebound condition exists would be:  (1) a beneficiary paralyzed from a stroke who is confined to a wheelchair or who requires the aid of crutches in order to walk; (2) a beneficiary who is blind or senile and requires the assistance of another person in leaving his place of residence; (3) a beneficiary who has lost the use of his upper extremities and, therefore, is unable to open doors, use handrails on stairways, etc., and, therefore, requires the assistance of another individual in leaving his place of residence; (4) a patient who has just returned from a hospital stay involving surgery who may be suffering from resultant weakness and pain and, therefore, his actions may be restricted by his physician to certain specified and limited activities such as getting out of bed only for a specified period of time, walking stairs only once a day, etc.; and (5) a patient with arteriosclerotic heart disease of such severity that he must avoid all stress and physical activity; and (6) a patient with a psychiatric problem if his illness is manifested in part by a refusal to leave his home environment or is of such a nature that it would not be considered safe for him to leave his home unattended, even if he has no physical limitations.
The aged person who does not often travel from his home because of feebleness and insecurity brought on by advanced age would not be considered confined to his home for purposes of receiving home health services unless he meets one of the above conditions.  A patient who requires speech therapy but does not require physical therapy or nursing services must also meet one of the above conditions in order to be considered as confined to his home.
Although a patient must be confined to his home to be eligible for covered home health services, some services cannot be provided at the patient's residence because equipment is required which cannot be made available there.  If the services required by an individual involve the use of such equipment, the home health agency may make arrangements with a hospital, , or a rehabilitation center to provide these services on an outpatient basis.  (See § 200.2 and § 206.5.)  However, even in these situations, for the services to be covered as home health services the patient must be considered as confined to his home; and to receive such outpatient services it may be expected that a homebound patient will generally require the use of supportive devices, special transportation, or the assistance of another person to travel to the appropriate facility.
If for any reason a question is raised as to whether an individual is confined to his home, the agency will be requested to furnish the intermediary with the information necessary to establish that the beneficiary is homebound as defined above.
B. wherever he makes his home.  This may be his own dwelling, an apartment, a relative's home, a home for the aged, or some other type of institution.  However, an institution may not be considered a patient's residence if it: Patient's Place of Residence--A patient's residence is 1. Meets at least the basic requirement in the definition of a hospital, i.e., it is primarily engaged in providing by or under the supervision of physicians, to inpatients, diagnostic and therapeutic services for medical diagnosis, treatment, and care of disabled, or sick persons, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons, or 2. Meets at least the basic requirement in the definition of a , i.e., it is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons.  All nursing homes that participate in Medicare and/or Medicaid as skilled nursing facilities, and most facilities that participate in Medicaid as intermediate care facilities meet this basic requirement.  In addition, many nursing homes which do not choose to participate in Medicare or Medicaid meet this test.  Check with your fiscal intermediary or Medicare regional office before serving nursing home patients.
Thus, if an individual is a patient in an institution or distinct part of an institution which provides the services described in (A) or (B) above, he is not entitled to have payment made for home health services under either Part A or Part B since such an institution may not be considered his residence.
When a patient remains in a participating [skilled nursing facility] following his discharge from active care, the facility may not be considered his residence for purposes of home health coverage.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: The following team members also contributed to this report: Adrienne S. Friedman, Senior Evaluator; MaryEllen Fleischman, Computer Specialist; and Mary W. Reich, Attorney Advisor.
section_title: Related GAO Products
paragraphs: Medicare: Allegations Against ABC Home Health Care (GAO/OSI-95-17, July 19, 1995).
Medicare: Increased Denials of Home Health Claims During 1986 and 1987 (GAO/HRD-90-14BR, Jan. 24, 1990).
Medicare: Need to Strengthen Home Health Care Payment Controls and Address Unmet Needs (GAO/HRD-87-9, Dec. 2, 1986).
Savings Possible by Modifying Medicare’s Waiver of Liability Rules (GAO/HRD-83-38, Mar. 4, 1983).
The Elderly Should Benefit From Expanded Home Health Care but Increasing These Services Will Not Insure Cost Reductions (GAO/IPE-83-1, Dec. 7, 1982).
Response to the Senate Permanent Subcommittee on Investigations’ Queries on Abuses in the Home Health Care Industry (GAO/HRD-81-84, Apr. 24, 1981).
Medicare Home Health Services: A Difficult Program to Control (GAO/HRD-81-155, Sept. 25, 1981).
Home Health Care Services—Tighter Fiscal Controls Needed (GAO/HRD-79-17, May 15, 1979).
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