Medicare

Despite many studies documenting inflated billings for home health care benefits, Medicare reviews of home health care claims have decreased in recent years. GAO tested 80 high-dollar claims that had been processed without review and found that in 46 of the claims, 43 percent of the total charges--or more than $135,000--were later denied after being reviewed by a Medicare claims-processing contractor. The reasons for the denials included failure to substantiate medical necessity, noncoverage of services or supplies, and inadequate documentation, including the absence of physician orders. Private insurers use controls that, although not readily adaptable to Medicare's coverage terms or billing rules, are instructive regarding claims monitoring. For example, the insurers employ professional staff, such as nurses, to determine in advance the legitimacy of requests for home health services. Reduced funding for payment safeguards in recent years helps explain the marked absence of adequate claims reviews by Medicare contractors. Ten years ago, more than 60 percent of home health claims were reviewed. In 1996, Medicare reviewed only two percent of all claims. GAO suggests a plan that would identify habitual abusers of the system and make them bear the financial burden of investigative reviews.

GAO noted that: (1) GAO and others have reported on several occasions about problems with Medicare's review of home health benefits; (2) yet, in spite of the need for increased scrutiny indicated by these reports and by the growth in home health expenditures, Medicare's review of home health claims decreased in the 1990s; (3) in GAO's test of just 80 high-dollar claims that had been processed without review, the Medicare claims-processing contractor, after examining each claim and supporting documentation, denied more than $135,000 in charges, about 43 percent of total charges, for 46 of the claims; (4) these findings are consistent with prior federal investigations, one of which estimated that in the month of February 1993 alone, Medicare paid $16.6 million for home health claims in Florida that should have been disallowed; (5) the five private insurers GAO contacted use controls that, although not readily adaptable to Medicare's coverage terms or billing rules, are nevertheless instructive regarding the monitoring of claims; (6) the insurers employ professional staff, such as nurses, to determine in advance the legitimacy of the request for home health services; (7) in contrast, the Health Care Financing Administration (HCFA) relies on home health agencies' compliance with administrative procedures, such as obtaining a physician's signature for ordered services, to safeguard against the submission of improper claims; (8) while Medicare does not have sufficient administrative funds to undertake the intensity of claims monitoring done by the private insurers GAO reviewed, the vigilance of private insurers suggests the value of applying more scrutiny in this area; (9) reduced funding for payment safeguards in recent years helps explain the marked absence of adequate claims reviews by Medicare contractors; (10) new and more stable funding provided through the Health Insurance Portability and Accountability Act should help improve Medicare's performance in monitoring home health payments, but HCFA also needs an enforcement tool that will make providers accountable for the propriety of their claims; (11) therefore, GAO is suggesting that the Congress consider directing HCFA to test an approach that would systematically identify and penalize providers that habitually bill Medicare inappropriately; and (12) under this approach, billing offenders would be identified and, if found to have excessively high billing errors, those offenders, rather than the taxpayer, would be required to shoulder the cost burden of investigative claims reviews.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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