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Home Health Fraud

As part of its Part B coverage, Medicare pays for some “home health services” for qualified patients.  In order to qualify for home health care reimbursement under Medicare, a patient must: (1) be homebound – i.e. the patient is generally confined to his home and can leave only by dent of considerable effort; (2) need part-time skilled nursing services or speech therapy, physical therapy, or continuing occupational therapy as determined by a physician; and (3) be under a plan of care established and periodically reviewed by a physician and administered by a qualified home health agency.  See 42 U.S.C. 1395(f).  When a patient so qualifies, Medicare will pay for: (1) part-time skilled nursing care; (2) physical, occupational, or speech therapy; (3) medical social services (counseling); (4) part-time home health aide services; and (5) medical equipment and supplies.

Medicare pays for home health care by way of a Prospective Payment System (PPS).  See 42 C.F.R. Part 484. The PPS is based on a “national prospective 60-day episode payment,” a rate based on the average cost of care over a 60-day episode for the patient’s diagnostic group.  Upon a physician’s referral, an HHA is required to make an initial assessment visit and perform a comprehensive assessment encompassing the patient’s clinical, functional, and service characteristics.  Accordingly, a registered nurse must evaluate the patient’s eligibility for Medicare home health care, including homebound status, and must determine the patient’s care needs using the Outcome and Assessment Set (OASIS) instrument.  The OASIS diagnostic items describe the patient’s observable medical condition (clinical), physical capabilities (functional), and expected therapeutic needs (service).  Based upon the OASIS information – and in turn upon the expected cost of caring for the patient – the patient’s “case mix assignment” is determined and the patient is assigned to one of eighty Home Health Resource Groups (HHRGs).  The patient’s HHRG assignment and other OASIS information are represented by a Health Insurance Prospective Payment System (HIPPS) code that is used by Medicare to determine the rate of payment to the HHA for a given patient.

Once the HAA has submitted the patient’s OASIS information, partial payment is made based on a presumptive 60-day episode.  In order to continue receiving covered care for another 60-day episode, the patient must be re-certified by a physician within the final five days of the initial episode as requiring and qualifying for home health care, and a new comprehensive assessment must be performed.  The initial base rate may be subject to upward adjustment, such as where there is a “significant change in condition resulting in a new case-mix assignment,”  or downward adjustment, such as where the number of predicted therapy visits substantially exceeds the number actually performed.   Throughout the patient’s episode, the HHA is required to maintain clinical notes documenting the patient’s condition and the health services performed.

From 2002 to 2006, spending by the United States on home health care rose a precipitous 44%, amounting to nearly $12.9 billion in 2006.  According to a report by the Medicare Payment Advisory Commission, HHAs as a whole currently enjoy an average profit margin of nearly 16%.  In light of the explosive growth in profits to private companies and cost to Medicare, abuse of the home health system has been identified by CMS as a major concern.  In March, 2009, the Government Accountability Office (GAO) published a report entitled “Improvements Needed to Address Improper Payments in Home Health.”  The GAO reported that the startling rise in home health spending was caused in part by fraud on the part of HHAs.  Frohsin & Barger has identified and uncovered the following types of fraud related to the home health benefit:

  • upcoding or overstating the severity of a patient’s condition; inflating patient OASIS scores by falsifying or manipulating information;
  • billing for home care provided to non-homebound, non-qualifying patients;
  • billing for medically unnecessary therapy visits and other treatment;
  • billing for services not rendered, including visits that are never performed;
  • billing for services performed by untrained, unauthorized personnel.

To report home health care fraud and abuse, contact Frohsin & Barger.

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