In  processing and paying claims, RHHIs are responsible for minimizing  improper payments. Six States Identified as Experiencing Highest Medicare Home Health Spending or Utilization Growth from 2002 through 2006

Medicare home health spending or utilization growth from 2002 through  2006 was highest in California, Florida, Nevada, Oklahoma, Texas, and  Utah. These states ranked among the top three in at least one of four  spending and utilization indicators. Two states—Florida and Texas— ranked in the top three on three or more indicators. All three states had at least double  the national growth rate of 44 percent, and Texas’s increase in spending  was more than three times the national growth rate. Upcoding and Other Fraudulent and Abusive Practices Contributed to Home Health Spending and Utilization

Upcoding, or overstating the severity of a beneficiary’s condition, and  other fraudulent and abusive practices were problems in some areas and  contributed to Medicare home health spending and utilization. In addition, stakeholders  identified these practices as common types of home health fraud and  abuse, although some stakeholders acknowledged that they were difficult  to prove. One PSC interviewed 670 Houston beneficiaries  who had the most severe clinical rating and who were patients of HHAs  identified by the PSC as having aberrant billing patterns. The PSC concluded that only 9 percent of claims for the 670  beneficiaries were properly coded. In addition, court cases and OIG actions illustrate how other fraudulent  and abusive practices such as kickbacks, payments by HHAs to  beneficiaries for use of their Medicare identification numbers, and billing  for services not rendered contributed to Medicare home health spending  and utilization. Inadequate Screening, Monitoring, Investigation, and Enforcement Procedures Leave Home Health Benefit Vulnerable to Improper Payments

Inadequate administration of the Medicare home health benefit leaves the  benefit vulnerable to improper payments. Although CMS policy charges  RHHIs with the responsibility of screening applications from prospective  Medicare HHAs, CMS does not require RHHIs to verify the criminal history  of persons named on the application. In the preamble to the rule establishing the revalidation  requirement, CMS noted that revalidation will “ensure that Medicare  beneficiaries are receiving services furnished only by legitimate providers  and suppliers, and strengthen  ability to protect the Medicare Trust  Funds.”

		Gaps in Monitoring Claims Make It Easy for Improper Payments to Occur

CMS generally does not include physicians, who are in a position to detect  certain types of improper billing, in CMS efforts to detect improper  payments. CMS does not routinely provide physicians authorizing home  health care with information that would allow the physicians to detect  billing for unauthorized services. Current CMS regulations provide for the removal of providers or HHA  officials from the program for abuse of billing privileges in limited  circumstances. CMS recently issued regulations  authorizing the revocation of Medicare billing privileges of providers  engaging in one narrowly defined type of improper billing—billing for  services that could not have been rendered. While this is a step in the right  direction, CMS has yet to address the removal of HHAs or HHA officials  engaging in other types of improper or abusive billing. Appendix I: Medicare Home Health Spending and Utilization Growth in the United States, 2002 through 2006

For our analysis of 2002 and 2006 Medicare home health claims data for  the 50 states and Washington, D.C., we used the following four spending  and utilization indicators: percentage growth in Medicare home health  spending from 2002 through 2006 (table 2), percentage growth in the  percentage of Medicare beneficiaries who used home health services   from 2002 through 2006 (table 3), percentage growth in the number of  home health agencies (HHA) that billed Medicare from 2002 through 2006   (table 4), and percentage of outlier cases in 2006 (table 5).
Why GAO Did This Study

Medicare spending on home health totaled $12.9 billion in 2006, up 44 percent from 2002. Concerns have been raised that improper payments from practices indicating fraud and abuse may have contributed to Medicare home health spending and utilization. The Centers for Medicare & Medicaid Services (CMS), the agency that administers Medicare, is responsible for minimizing improper payments made on behalf of Medicare beneficiaries. GAO was asked to examine the growth in Medicare home health spending and utilization and the benefit's vulnerability to improper payments. GAO focused on states with the highest growth in Medicare home health spending or utilization; fraudulent and abusive practices contributing to recent spending and utilization; and administrative issues that make it vulnerable to improper payments. GAO analyzed Medicare claims data; reviewed Medicare laws and regulations and CMS documents; and interviewed stakeholders and contractors that administer and protect the home health benefit.

What GAO Found

California, Florida, Nevada, Oklahoma, Texas, and Utah were identified as experiencing the highest growth in Medicare home health spending or utilization from 2002 through 2006. These states ranked among the three highest in one or more of four spending and utilization indicators. Florida and Texas were among the top three on three or more indicators. Texas, Florida, and Nevada--the states with the highest percentage growth in Medicare home health spending from 2002 through 2006--had more than double the national spending growth rate of 44 percent during this period. Upcoding--overstating the severity of a beneficiary's condition--by home health agencies (HHA) and other fraudulent and abusive practices contributed to Medicare home health spending and utilization. For example, a CMS contractor found that only 9 percent of claims were properly coded for 670 Houston beneficiaries who had the most severe clinical rating and who were served by potentially fraudulent HHAs. Court cases and Department of Health and Human Services Office of Inspector General actions illustrated that kickbacks and billing for services not rendered also contributed to Medicare spending and utilization. Stakeholders identified these practices as common types of home health fraud and abuse. Inadequate administration of the Medicare home health benefit leaves the benefit vulnerable to improper payments. Although CMS policy charges its contractors, known as Regional Home Health Intermediaries (RHHI), with the responsibility of screening applications from prospective Medicare HHAs, CMS does not require RHHIs to verify the criminal history of persons named on the application. CMS does not generally include physicians, who are in a position to detect certain types of improper billing, in the agency's efforts to detect improper payments. For instance, CMS does not provide physicians responsible for authorizing home health care with information that would enable them to determine whether an HHA was billing for unauthorized care. Current CMS regulations provide for the removal of HHAs or HHA officials from Medicare for one type of abusive billing--billing for services that could not have been rendered. However, the agency has yet to address the removal of HHAs or HHA officials engaging in other types of abusive or improper billing.