Review of Selected Paid Claims with Therapy Services Submitted to Medicare by Red Oak Home Health Services for the Period October 1, 2002 Through September 30, 2003

Our objective was to determine whether selected home health claims that included therapy services provided by Red Oak Home Health Services (Red Oak) to Medicare beneficiaries met Federal requirements and were appropriately paid. We selected 74 claims billed by Red Oak with 10, 11, or 12 therapy visits and paid by Medicare. Of the 74 selected paid claims, 65 did not meet the Federal requirements and were not appropriately paid resulting in overpayments of $187,627 by Medicare. The overpayments occurred because Red Oak did not have effective quality assurance procedures to ensure that all therapy services provided were reasonable and medically necessary for the beneficiaries' conditions and properly authorized by a physician. We recommend that Red Oak refund $187,627 to the Medicare program; identify and submit adjusted home health claims for Medicare overpayments received subsequent to our audit period; and establish quality assurance procedures, including periodic independent review, to confirm that (1) patient needs during the home health episode of care are properly reassessed and (2) the level of care is adjusted accordingly to meet the requirement for medical necessity and is properly authorized by a physician. In response to our draft report, Red Oak disagreed with our finding regarding medical necessity of services, but agreed with our finding that one claim was not properly authorized by a physician.