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CMS and Contractor Oversight of Home Health Agencies

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In 2010, Medicare paid $19.5 billion to 11,203 home health agencies (HHA) for home health services provided to 3.4 million beneficiaries. HHAs are considered to be particularly vulnerable to fraud, waste, and abuse. CMS designated newly enrolling HHAs as high-risk providers in March 2011, citing their record of fraud, waste, and abuse. A 2012 OIG report also found that one in four HHAs had questionable billing, which was concentrated in certain geographic areas where Federal investigators and analysts have focused their efforts to combat fraud, waste, and abuse. Other OIG studies have found vulnerabilities in Medicare contractors' efforts to identify and investigate potential fraud and abuse, as well as limitations in CMS's oversight of these contractors.


We collected information and supporting documentation from CMS, selected Medicare Administrative Contractors (MAC), and selected Zone Program Integrity Contractors (ZPIC) regarding activities to prevent improper payments on home health claims and to detect and deter potential HHA fraud in 2011. In addition, we identified geographic areas prone to HHA fraud, waste, and abuse and determined whether contractor activities focused on these areas. We also analyzed claims data to determine whether Medicare paid HHAs that were suspended or had their billing privileges revoked, and we examined the timeliness with which CMS and its contractors acted on revocation recommendations.


In 2011, the 2 MACs we reviewed collectively prevented $275 million in improper payments and referred 14 instances of potential fraud. The four ZPICs we reviewed did not identify any HHA vulnerabilities and varied substantially in their efforts to detect and deter fraud. In 2011, Medicare also inappropriately paid five HHAs with suspended or revoked billing privileges; additionally, CMS did not act on all revocation recommendations.


We recommend that CMS (1) establish additional contractor performance standards for high-risk providers in fraud-prone areas, (2) develop a system to track revocation recommendations and respond to them in a timely manner, and (3) follow up on and prevent inappropriate payments made to HHAs with suspended or revoked billing privileges. CMS concurred with all three recommendations.