Legislation and Regulations To Address Abuses in the Home Health Care Industry

GAO presented its views on the adequacy of present legislation and regulations to prevent profiteering in the home health care industry. It discussed the effectiveness of the cost-reimbursement system or proposed alternatives, the effectiveness of intermediary audit coverage, the effectiveness of oversight and administration by the Health Care Financing Administration (HCFA), the means by which disallowances can be recovered by the Federal Government without rendering insolvent bona fide home health agencies, and the means by which the Federal Government may terminate irresponsible agencies from participation in federally funded programs. The existing legislation and regulations give HCFA sufficient authority to address these concerns with two exceptions relating to the need for strengthening the regulations for government reimbursement in related organization situations and the desirability of establishing limits on Medicare reimbursement for home health agency (HHA) management and clerical costs. Providers are paid the actual cost of providing quality care, although the cost may vary widely from provider to provider. The HHA's have insufficient uniformity of cost data to make upper limits for reimbursements meaningful. It is hard to determine which costs are related to patient care and which are related to administrative expenses. Attempts to make regulations for related organizations more specific have been opposed because of concerns that more rigid regulations would arbitrarily hinder legitimate transactions. The proposed change in the Medicare's Provider Reimbursement Manual for related organizational provisions is an improvement. GAO believes that a proposed prospective system of reimbursment, rather than the retrospective system presently used, would be harder to use for HHA's because of the lack of a uniform unit of service on which to base the rate. This system could also be subject to manipulation and would lower the quality of care provided. To minimize Medicare administrative costs, many provider cost reports are settled or accepted without field audits. HCFA has set up reasonable systems to fulfill its responsibility of monitoring program administration. Recent legislation has been enacted to protect the Government from losses resulting from overpayments that agencies cannot repay and protect agencies from insolvency. There is sufficient authority presently to terminate irresponsible HHA's.