The company then improperly claimed the full amounts of the leave as part of the employees’ payroll costs and was reimbursed by Medicare. Second, Mrs. Reed requested—or, again according to some employees, coerced—Mid-Delta and P&T Management employees to return a certain amount (about 20 percent or more) of their 1996 bonuses to the company. Mid-Delta improperly claimed, and received reimbursement from Medicare for, the returned bonuses. 2.) At least $155,000 was then transferred from that fund to the P&T Management operating account. When we questioned Mrs. Reed about this, she responded that she tells the nurses, “If I don’t get paid, you don’t get paid.”
Indeed, Mid-Delta’s controller told us that the indigent care fund was used to offset unpaid bills of patients of the company’s rural health clinics, Taylor’s Medical Clinics. Other Improper or Questionable Payroll-Cost/ Reimbursement Issues

Additional Mid-Delta Home Health payroll-cost issues resulted in either improper or questionable claims to and reimbursement by Medicare: Mid-Delta improperly claimed Medicare reimbursement for the total 7-month salary that Mrs. Reed’s daughter received while she attended school full-time and worked part-time. We question Mid-Delta’s (1) claiming $65,000 in bonuses to the daughter, which equated to about 119 percent of the daughter’s base salary and (2) claiming the payroll costs of “Community Education” staff who were marketing Mid-Delta and other affiliated operations. At the same time, she held the job title of Executive Vice President for Operations at P&T Management, Inc. and received a full-time 1996 salary of approximately $54,660. We question the propriety of Mid-Delta’s submitting payroll and other costs related to marketing activities for Medicare reimbursement because the costs involved marketing and promoting the company. Bonus Used to Purchase Business Improperly Claimed as Payroll Cost and Reimbursed by Medicare

According to a former Mid-Delta employee, Mrs. Reed used the bonus system as a means, in part, to purchase a business and be reimbursed by Medicare. However, Mrs. Reed told Ms. Martin that $10,000 of the bonus was partial payment for Ms. Martin’s business. Questionable Nature of Some Mid-Delta Home Health Services

Mid-Delta Home Health nurses and other professionals voiced concerns to us that Mid-Delta was providing Medicare-reimbursed home health care services to patients who, in their professional opinions, were ineligible for the services. The intermediary and we also question Mid-Delta’s provision of Medicare-reimbursable home health services to some apparently ineligible patients as they did not appear to meet HCFA’s requirement that their condition create an inability to leave home without “considerable, taxing effort.”

		Questionable Mid-Delta Home Health Care Services

After interviewing a number of Mid-Delta Home Health’s patients, patients’ friends, and relatives and evaluating the patients’ plans of care (HCFA Form 485) and other case material, we question the reasonableness and/or necessity of the Medicare-reimbursable home health care services provided to 14 of the 41 patients reviewed during our investigation. For example, the intermediary and we noted that Mid-Delta was providing services that were not covered in the plans of care. 9, 1997). 5, 1997). 4, 1997). 27, 1996).
Why GAO Did This Study

Pursuant to a congressional request, GAO investigated allegations of Medicare improprieties by home health care provider Mid-Delta Home Health of Belzoni, Mississippi, and affiliated companies, focusing on allegations that Mid-Delta: (1) routinely requested and received leave or bonuses back from its employees while charging Medicare their full amount; (2) paid the owner's daughter a full-time salary and charged it to Medicare although she was a full-time nursing student; and (3) conducted unnecessary and excessive home health care patient visits.

What GAO Found

GAO noted that: (1) Medicare, through the intermediary, reimbursed Mid-Delta Home Health for payroll costs between January 1993 and December 1996 that, in GAO's opinion, were improperly claimed because they did not represent actual costs to the provider; (2) specifically, the owner of the company, Clara T. Reed, regularly asked employees to return to the company the cash value of unused leave and about 20 percent or more of bonuses received; (3) the employees were told that the returned money was needed for, among other things, a Mid-Delta Home Health-sponsored indigent care fund; (4) however, rather than use the fund to provide home health care to those who could not afford it, Mid-Delta officials stated that the money was used to offset unpaid bills of private-pay patients of Mid-Delta's affiliated rural health clinics; (5) Mid-Delta Home Health also improperly claimed and was reimbursed by Medicare for other costs that did not meet Medicare cost reimbursement principles since they were not related to patient care; (6) one example involved salary paid to the owner's daughter as a P&T Management executive vice president for over half of 1996 while she attended school full-time; (7) further, GAO questions the reasonableness of the daughter's $65,000 in 1996 bonuses claimed by Mid-Delta for Medicare reimbursement; (8) in addition, Mid-Delta was reimbursed by Medicare for the payroll costs of some P&T Management employees whose positions appeared to focus on marketing activities; (9) GAO questions the propriety of these claims because Medicare does not reimburse providers for marketing costs used to increase patient utilization of the provider's facilities; (10) in another payroll-cost matter, Mrs. Reed purchased a business from a third party, hired that individual to work for P&T Management, and gave the individual a $10,000 bonus that was considered partial payment of the purchase price; (11) Mid-Delta then improperly claimed the bonus as part of its payroll costs and was reimbursed by Medicare for this payment; (12) the purchase of a business does not qualify as a payroll cost; and morever, Medicare does not reimburse providers for the cost of purchasing a business; (13) as alleged by current and former Mid-Delta Home Health nurses, Mid-Delta staff visited individual Medicare beneficiaries whose eligibility or need for the visits was questionable; and (14) GAO visited or reviewed case files for 41 of the patients identified by the nurses and determined that for at least 14, or 34 percent, of the patients, eligibility for Medicare-reimbursed services was questionable.