CMS Made $3.2 Billion in Improper Home Health Payments in 2018

Despite increased oversight efforts, improper payments under Medicare and Medicaid are costing the federal government billions of dollars, a new report from the watchdog arm of Congress has found.

And home health providers appear to be the root of the problem.

In fiscal year 2018, improper Medicare fee-for-service (FFS) payments totaled $31.6 billion for all services provided, according to the Government Accountability Office (GAO), which audits, evaluates and investigates government programs on behalf of Congress to ensure appropriate use of taxpayer money. Of that amount, at least $3.2 billion was tied to home health improper payments.


Nearly 18% of all home health payments were categorized as improper.

Overall Medicare FSS spending in fiscal year 2018 totaled $389 billion.

Broadly, improper payments are defined as payments that should not have been made or those that were made in incorrect amounts. The sheer size and complexity of the Medicare and Medicaid programs make them especially vulnerable to improper payments, according to GAO.


Due to a lack of available data, GAO was not able to total fiscal year 2018 improper Medicaid payments in its report.

In fiscal year 2017, Medicare FFS spending was an estimated $381 billion, while combined federal and state spending for Medicaid FFS was an estimated $320 billion, according to GAO. In the same year, estimated Medicare FFS improper payments were $36.2 billion and estimated Medicaid FFS improper payments were $41.2 billion.

Insufficient documentation is — by far — the most common reason for home health improper payments.

Documentation from home health providers that doesn’t include actual clinical notes for a face-to-face encounter visit examination is an example of insufficient documentation in Medicare. Providers submitting a plan of care that did not apply to the sampled day of care associated with a given claim is an example of insufficient documentation in Medicaid.

Officials from the Centers for Medicare & Medicaid Services (CMS) told GAO that documentation requirements for the face-to-face examination policy for home health services, in particular, led to an increase in insufficient documentation.

When initially implemented in April 2011, home health providers had to submit separate documentation from the referring physician detailing the examination and the need for home health services. Beginning January 2015, CMS changed the requirement to allow home health providers to instead use documentation from the referring physician, such as progress notes, to support the examinations.

GAO made several recommendations to CMS for reducing improper payments.

CMS should institute a process to more routinely assess and take steps to ensure documentation requirements are effective at keeping providers compliant with Medicare and Medicaid policies, GAO suggested.

Additionally, CMS should take steps to ensure that Medicaid medical reviews provide “robust information” about — and result in — corrective actions that effectively address the underlying causes of improper payments.

Home health corrective actions have resulted in a $6.92 billion decrease in estimated improper payments from 2015 to 2018, CMS previously reported. The home health improper payment rate has plummeted dramatically since 2015, when it hit a high of 58.95%.

CMS’ active measures to reduce improper home health payments include the agency’s Review Choice Demonstration (RCD), which is primed to start soon in Illinois.

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