Department of Health and Human Services

Office of Inspector General -- AUDIT

"OPERATION RESTORE TRUST:  Audit of Medicare Home Health Services in California, Illinois, New York and Texas," (A-04-96-02121)

July 28, 1997

Complete Text of Report is available in PDF format (1 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This report provides the results of our audit of Medicare Home Health Services in California, Illinois, New York and Texas. The audit was performed under the auspices of Operation Restore Trust (ORT).

The audit objective was to determine whether Medicare payments to home health agencies (HHA) met Medicare reimbursement requirements.

Our review disclosed that 40 percent of the total services contained in 146 of 250 HHA claims reviewed did not meet Medicare reimbursement requirements. Our sample was selected from claims approved for payment by fiscal intermediaries servicing California, Illinois, New York and Texas during the 15-month period ended March 31, 1996. The services did not meet Medicare reimbursement requirements because:

We estimate for the 15 months ended March 31, 1996, the intermediaries approved unallowable claims with charges totaling about $2.6 billion out of the 4 State universe of $6.7 billion.

In order for home health services to be covered by Medicare, beneficiaries must be:

We believe there are several reasons why inappropriate claims were submitted by HHA providers and approved by intermediaries. These reasons include:

Since 1990, the Medicare expenditures for HHA services have increased dramatically from about $3.3 billion to an estimated $16.9 billion for 1996. We believe the results from our work strongly support the need for major changes in providing and paying for HHA services. Based on joint work with HCFA, we believe implementing such recommendations as the following will help address the abuses we have noted in the HHA program.

We therefore recommend HCFA:

In its written response to our draft report, HCFA concurred with four of the five recommendations. The HCFA agreed in principle with the other recommendation, and is continuing to examine the issue.