U.S. Attorney: Common Home Health Schemes ‘Turn System Upside Down’

Home health care agency owners would be the first to say the industry is seeing an onslaught of new regulations. However, there may be good reason for it—the industry is rife with improper and fraudulent payments, according to the Centers for Medicare & Medicaid Services (CMS).

A whopping 59% of home health payments in 2015 were improper, according to CMS. By comparison, the overall fee-for-service (FFS) improper payment rate was 12.09% in 2015 and 11% in 2016, CMS told Home Health Care News. Errors and poor training contribute heavily, but the Medicare system has several vulnerabilities that enable high rates of fraud and abuse, as well.

That was the take-home message for providers, suppliers, and other stakeholders who tuned in for a special Open Door Forum call on Wednesday, which laid out some of the most prevalent forms of fraud plaguing the industry, from CMS’ perspective.


Common Schemes

Beyond lying or producing false documents, home health agencies committing fraud are typically involved in at least one of two common schemes “that turn the system upside down,” an assistant U.S. attorney based in Illinois said during the call. He based his statements on his observations of home health care fraud criminal investigations.

Kickback payments to doctors are commonly used to get referred patients.


“We see marketers show up to doctors’ offices with two envelopes—one with cash and one with [home health] orders to sign,” the attorney said Wednesday.

Fraud schemes also commonly stem from “physician shopping” by home health agencies, the attorney said. The scheme involves home health agencies finding patients and referring them to physicians who are not primary care physicians. Those physicians then sign off on home health orders and refer the patient back to the original agency.

“We see them with a doctor with some other financial incentive to keep patients at home—physicians who work at companies that primarily do home visits, who get their referrals from home health agencies,” the attorney said.

Medicare Vulnerabilities

Part of the reason the improper payment rate for home health is so high is because the Medicare system has significant opportunities for fraud, waste and abuse, the attorney said.

“Medicare generally does not verify claims or conditions before making payment,” he said. “[It puts] a lot of trust in doctors and nurses to make proper diagnoses. …There is a lot of trust placed, and that trust can be abused.”

CMS has undertaken initiatives to improve the claims process in order to reduce improper payments, including by implementing the Pre-Claim Review Demonstration (PCRD), which is currently underway in Illinois and set to roll out in Florida beginning April 1, 2017.

Instead of relying on audits to later ensure payments were proper for Medicare beneficiaries who receive home health care, PCRD authorizes payments earlier in the care process. The demonstration, which is set to be implemented in five pilot states, including Illinois, has proven controversial. Several industry groups and lawmakers have pushed to have it repealed.

Despite its choppy start, PCRD takes aim at one vulnerability in Medicare’s payment system, but others remain.

Another major area susceptible to fraud and abuse is how agencies find their patient referrals, the attorney said. In many instances, there are financial incentives in place to refer patients back and forth between physicians and nurses. Agencies that pay nurses on a per-visit basis may also be putting in place incentives to keep patients in home health care longer, even when they don’t need it.

A lack of a financial incentives for a patient to have some stake in the home health care process could also be at fault, the attorney said. However, industry advocates argue reintroducing a copayment to the home health benefit would actually deter qualified patients from utilizing these services.

Red Flags 

The Office of Inspector General (OIG) has taken steps to crack down on home health care fraud, identifying more than 500 agencies and 4,500 physicians last year as having suspicious practices.

There are several red flags the office has identified that help weed out which agencies are likely abusing the system or even unknowingly administering home health services improperly, including several discharges followed by readmissions, multiple episodes of observation and assessment of chronic conditions.

While CMS and OIG may have identified some common fraud schemes and red flags, their approaches to reduce fraud have often come under fire from home health providers as being ineffective, and unfairly burdensome for above-board agencies.

One expert—a former Inspector General for the state of New York—has penned an article for Home Health Care News about his ideas for how to address fraud without impacting the whole home health system. Look for that article to be posted on HHCN in the coming days.

Written by Amy Baxter

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