Home Health News

Part 2 of a series to help providers understand and respond to increased government payment denial activity.
Click here to read Part 1.

Achieving and maintaining compliance has always been high on the goal statements of every legitimate home care agency. Today, compliance is quickly becoming a survival issue. To help readers sort through current challenges, we traveled to Boston to interview Denise Bonn, Deputy Director of NAHC’s Center for Healthcare law, and sit in on her comprehensive presentation to that association’s Financial Managers meeting.

With the number of Medicare-certified agencies on the rise in recent years, there is good reason to speculate that CMS is already planning steps similar to the ones it used in the late 90’s to reduce the total number it has to deal with. If the same number of Beneficiaries can be served by 7,000 agencies as by 10,000, why should CMS and its RHHIs have to administer the accounts of those 3,000 additional entities? Indications are already surfacing that the government has already put some of those plans into action.

Early warning clues are plentiful that IPS-style measures are coming attorney Bonn told her July audience of CFOs and other executives. “The current environment is full of risks for both Medicare and Medicaid providers,” she began. “It is imperative that home care and hospice managers know how to maintain compliance when federal contractors are looking hard for ways to prove they missed the target. It is equally important to know the reasons our industry attracts periodic Congressional and regulatory backlash.”

First among the reasons: When one instance of fraud is found, there is a knee-jerk tendency to paint the entire home care industry with the same wide fraud brush.

In Miami-Dade County, Florida, for example, CMS and FBI investigators recently discovered that 200 of the county’s 300 home care agencies drew 60% of their total revenues, on average, from Home Health PPS Outlier cases. Nationally, the average is 6%. Set aside for a moment that 300 agencies in one county, while some entire states with larger populations have fewer than 50, did not attract any an enforcement agency’s attention years ago.

January, 2009 raids turned up the cause: BID insulin injections. Most of the Medicare beneficiaries reported to be receiving insulin injection visits were not even diabetics. In many cases, those patients received cash payments in exchange for the use of their Medicare number.

From headlines to a Senator to the GAO.
National headlines did not read that 9,800 home care agencies receive 6% of their revenue from outlier patients. Headlines read that 200 agencies averaged 60%. A February 2009 GAO report did not inform Congress that CMS has a crime problem due to years of lax enforcement in South Florida. The GAO said CMS pays too much for home care services in general, a shocking 3.6% of total Medicare expenditures.

The link between spun headline and generalizing GAO language was one Charles Grassley, Republican of Iowa, ranking minority member of the Senate Finance Committee and longtime member of C Street religio-political clique “The Family.” It was Senator Grassley who convinced the GAO to perform a study and write its report. Then, as soon as it was published, demanded sweeping changes for all providers, not just the criminal ones.

Criminal background checks for all
As evidence of its opinion that CMS did not have adequate controls in place to limit home health spending, the GAO cited the lack of thorough criminal background checks of individuals applying to certify and open a new agency. The report recommended two types of clampdowns in response. First, it suggested stepped up pre-payment and post-payment reviews such as denials and ADRs, an activity which many providers have already noticed. Second, it called for the creation of a new system to verify the medical necessity for services ordered by a Medicare beneficiary’s physician. If such a system is being created, it has not seen the light of day yet.

Provider Enrollment Fraud Demonstration: Houston & L.A.
When CMS notice a large increase in the number of home care agencies, followed by a corresponding increase in claims but no justifying increase in the number of beneficiaries, it focused its attention on the provider enrollment process, which had not previously been used for that purpose. CMS selected Houston and Los Angeles, two locations that had experienced an explosion in new agency filings, and required all certified agencies to re-enroll. “The purpose was to verify whether every one of these agencies were real,” Bonn explained to her July audience.

“They thought it might have been akin to what they found in the HME industry, where many licensed companies were found to have no office at the address on their applications. Sometimes addresses of vacant lots or abandoned buildings were used.”

The fraud demonstration in these two cities did result in some improvements, especially for those honest providers who had previously been in a position of having to compete with criminals. Following criminal background checks and re-enrollment, 34 licenses were revoked from entities failing to re-enroll and 18 “agencies” had Medicare billing privileges revoked when site visits found them non-operational. In essence, these were claims-generating organizations, not care providers.

Nevertheless, they were a small fraction of the total number of providers forced to go through the re-verification process and many fraudulent agencies were obviously missed. Attorney Bonn offered a brief opinion on the results of this demonstration. “50 or so license revocations out of about 800 agencies in those two cities is not a lot. It is approximately 6.5%, which does not explain the large number of fraudulent agencies that got through these hurdles.”

Docs on the take
The next compliance challenge coming from Washington was sparked by the Office of the Inspector General’s (OIG) concern that some physicians appeared to be over-utilizing home care services. Though no concrete results of this investigation have been released yet, it is known that it is closely examining utilization patterns of individual referring physicians. The OIG theory is that doctors would not be likely to refer to home care with extraordinarily high frequency unless there were a financial incentive.

Recently, eight Michican home health agency owners were indicted for paying kickbacks for patient referrals. If nothing else in attorney Bonn’s warnings inspires caution, this story is one that should be told far and wide, even posted on employee bulletin boards.

Rebecca Sharp had a great idea. She called on area senior centers, asking if they would allow her to send a physician to their premises to provide services. The doctor, an accomplice, was on the lookout for candidates for home care services. When the scam got rolling, Sharp was selling referrals to home care agencies for $250 a piece and bragging that she could manufacture 80 referrals per month.

That is not the alert. This is: when the authorities finally knocked on Rebecca Sharp’s door, she turned state’s evidence and testified against all of her “customers.” She did not go to jail; they did.

Why they may soon arrive at your door
Thanks, therefore, to GAO, OIG, Grassley and USA Today, government enforcement entities, including CMS, are perceiving more potential fraud than there is and asking why the national average payment denial rate is only 1.4%.

To quiet questions and pressure from Congress, the Department of Health and Human Services is putting pressure on its contractors – RHHIs, QICs, ALJ and, soon, RACs. They, in turn, put pressure on providers, which explains why agencies within known criminal stronghold areas – Miami-Dade, Houston, Los Angeles, Detroit – and agencies far away from them in the most remote rural communities, are experiencing increased denials, ADRs and Probe Edits.

Next week:
No, we are not quite done. Part three of this series will detail Denise Bonn’s action plan for home care agencies and hospices, whether reimbursed more by Medicare or by Medicaid. Subscribers will be notified when we have posted to this site our action plan for addressing PSCs, ZPICs, MIPs and MPIs, RACs, the new joint federal/state False Claims Acts, whistle-blowers (real and phony) and chronic documentation shortcomings.