OPERATION RESTORE TRUST: Audit of Medicare Home Health Services in California, Illinois, New York and Texas

EXECUTIVE SUMMARY:

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:

• 793 services contained in 65 claims were for services not reasonable and necessary. The unnecessary services included skilled or aide services that, in the opinion of intermediary medical personnel, were not medically necessary. For example, in many cases the home health nurses provided no skilled service, only observation and assessment of the patients' condition.
  
• 499 services contained in 46 claims were for services to beneficiaries who were not homebound. According to intermediary medical personnel, the beneficiaries or their families, these beneficiaries could leave home without considerable effort. One beneficiary told us he went shopping on a daily basis during the elapsed time HHA services were provided to him.
  
• 239 services contained in 31 claims were for services that did not have valid physician orders. These services were performed without evidence of timely written or verbal physician approval. For example, we found instances where (1) there was no signature on the plan of care; (2) the plan of care was signed and dated after the services began; or (3) the plan of care was signed by a nurse, an office manager, a physician's assistant or a doctor's secretary in the name of the physician. Also, in some instances the plan of care did not include an order for a skilled service.
  
• 8 services contained in 4 claims were for services without supporting documentation. The HHA had no documented evidence that the services were performed.

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:

• confined to their homes;
• under the care of a physician; and
• in need of skilled nursing services on an intermittent basis or skilled physical, speech, or occupational therapy.

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

• Physicians did not always review or actively participate in developing the plans of care they signed. They relied heavily on HHAs to make homebound determinations and develop the plans of care for home health services.
  
• At the time of our review, beneficiaries were not aware of the cost of the home health services. We believe, had the beneficiaries been aware of the cost, they may have questioned the intermediary about services claimed on their behalf. As of October 1, 1996, the Health Care Financing Administration (HCFA) took steps to improve on this by instructing the Regional Home Health Intermediaries (RHHI) to generate a beneficiary notification system for home health services.
  
• Medical reviews of claims for HHA services were not effective in curbing abuse. The HCFA, as a result of funding constraints, instructed intermediaries to reduce medical reviews and focus on aberrant providers. The intermediary medical review effort was reduced because the reviews resulted in low denial rates and were therefore considered ineffective. However, the reviews will continue to produce limited results because the focused medical reviews do not include beneficiary and physician interviews.

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:

• Consider the following alternatives in restructuring the home health reimbursement methodology: (1) a prospective payment system; (2) placing limitations on the number of visits; (3) establishing a system of pre-authorizations; (4) establishing a copayment; and (5) a case management system.
  
• Emphasize the definition of homebound in the Medicare HHA Manual and include additional guidance on the standards for defining "considerable and taxing effort" and "infrequent or for periods of relatively short duration."
  
• Revise Medicare regulations to require the physician to examine the patient before ordering home health services. Also, HCFA should require the patient to see the recertifying physician at least once every 60 days. The HCFA should ensure the treating physicians establish the plan of care and specifically prescribe the type and frequency of home health services needed. Also, an outreach program should be established to re-educate the physicians on the home health eligibility requirements so they do not have to rely on the HHA determination.
  
• Require intermediaries reviewing claims to continue to notify beneficiaries when HHA claims are paid on their behalf and use information provided by the beneficiaries to target abusive HHAs for focused medical review.
  
• Instruct intermediaries to augment focused medical reviews with physician and beneficiary interviews to verify services were provided and properly prescribed.

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.