Why OIG is Cracking Down on Home Health Fraud
This summer, the Justice Department announced the largest health care fraud takedown ever, involving schemes across several health care settings resulting in approximately $1.3 billion in false billings. Major home health schemes were uncovered as part of the takedown, and the announcement sent a message to fraudsters—federal agencies are cracking down.
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) charged more than 400 individuals for their roles.
“In general, and home health care would be a part of this, the Office of Inspector General (OIG), has really ramped up their focus on health care fraud from the recent settlements,” Venson Wallin, managing director, CPO for the BDO Center for Healthcare Excellence & Innovation. The BDO Center is a consulting firm for the health care industry with advisory services, a capital investment bank, and audit and tax professional services.
In addition, sentences for home health care fraud are, arguably, getting harsher, as evidenced by the 75-year sentence handed down to a woman for her part in a $13 million fraud scheme. Another case resulted in a 40-year sentence. More recently, OIG announced it will perform a 2018 review of a new, optional Medicaid benefit, Health Homes, which coordinates care for patients with chronic conditions.
Growth in Home Health
The crackdown may be a response to the growth of the home health care space, according to Wallin.
“With the proliferation of patients, there is a proliferation of providers offering services,” Wallin said. …”When you have an uptick in the market, you also have some players that come into the market and their intent is to take advantage of the system.”
With more players, not everyone is playing by the rules, and a number of recent cases underscore just how rife with fraud the industry can be.
“The demand has spurred more players,” Steven Shill, national co-leader of The BDO Center, told HHCN. “Obviously, there are some very large home health companies out there. More and more people have been attracted to the industry. Mom-and-pop [providers] have been attracted because of the demand and relative ease with which they can access the industry. And I think that’s another reason why it’s being looked at very carefully [by the OIG].”
Fraud investigations may also appear to be ramping up, with bigger grabs by federal agencies, due to the introduction of increasingly sophisticated tools used to identify patterns of unsavory business practices. In other words, the good guys now have data analytics to find the bad guys quickly.
“The introduction of data analytics into the process, into the investigatory process, has provided them with a tool that, before the last couple years, they did not have,” Wallin said. “Now, they have the ability to run data analytics on claims by providers, and can tell when things don’t look right. …Whereas before, they just happened to come across something, now they actively pursue and go after outliers [in the data].”
With this in mind, it’s more important than ever that home health care providers have a solid understanding of their own data—and how they match up against their peers.
“There may be an excellent reason why you’re an outlier,” Wallin said. “You need to have a story as to why you’re an outlier, why it’s appropriate. It could be because you have better quality outcomes metrics than anybody else in the area, and are more critically responsive [to] patients.”
The use of these new resources also coincides with the implementation of a new revenue recognition rule, ASC 606. The rule essentially requires health care providers to report revenues in a way that is a bit more universal, rather than industry-specific, and it impacts all entities that enter into contracts with customers for goods or services. In health care, the new standards are easier said than done, as revenues are often diverse across different business lines and can be tied in with initiatives like value-based purchasing models.
“The revenue recognition is going to add some complexity, and could lead to misreporting as well,” Wallin said. “It will be easy to misinterpret some of the rules and lead to another set of issues.”
The rule goes into effect for the fiscal period after December 15, 2017 for public companies, and 2019 for non-public entities. It will have particular impacts in M&A for home health by increasing complexity and costs, as entities will likely undergo more stringent auditing of financial records when conducting a transaction.
The investigations of fraud aren’t likely to slow down anytime soon, as the return on investment of going after fraudsters is a huge payoff for federal agencies.
“The government makes $6 for every $1 they spend [on these cases],” Wallin said. “There is not shortage of intent by the government to content to pursue incidents of fraud and alleged fraud.”
However, there are many practices for home health care providers to avoid being at high risk for compliance issues.
For one, providers should understand their position in the market and data.
“It behooves most providers to have systems and processes in place so they do understand where they are on the spectrum,” Shill said. “It’s definitely great business practice from a regulatory and operational standpoint to understand what the landscape looks like. From there, you need good data and quality individuals entering the data.”
Data will also play a key role in the new revenue reporting requirements.
“If you do have a decent way to analyze your outcomes and the data that relates to your operations, you would do better to have a lock on what your costs are,” Shill said. “That, in the new world of value-based care, is going to be tremendously important.”
Written by Amy Baxter