Medicare Audit Finds 40% Loss in Home Care

A staggering 40% of Medicare-financed home health care visits in California and three other states should not have been covered by the government, a federal official said Monday, offering the highest estimate yet of the extent of wasteful spending.

The rate of losses in home health care far surpasses the government’s most recent calculation of 14% for unnecessary spending within Medicare as a whole.

The 40% loss, shown in a sample audit in California, New York, Texas and Illinois, is “a scary figure,” said Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Aging Committee, which heard testimony about the problem.

George F. Grob, deputy inspector general for the Department of Health and Human Services, said the government paid for a wide range of improper expenses, including excessive treatments billed by home health care agencies, bills for services that were never performed and charges for patients who were not homebound and therefore not eligible.

“This is not rocket science, to see what happened and why it happened,” said Sen. John B. Breaux of Louisiana, the committee’s ranking Democrat. “We’re spending one hell of a lot more money.”

Congress recently has focused on waste in the Medicare program as it explores ways to get its costs under control. But lawmakers must weigh the amount of improper charges that could be prevented or recovered against the cost of increased enforcement.

In the meantime, legislation now before Congress would change the payment system for home health care to control costs. Agencies would receive a fixed amount for each case rather than reimbursement for assorted services.

Spending for home care jumped from $2.6 billion in 1989 to nearly $18 billion this year. At the same time, Congress has cut back the money allocated for audits and fraud investigations. Currently, fewer than 3% of claims are reviewed, contrasted with 60% in 1989.

The government has identified 600 “problem” home care providers who handled about 45% of total bills in California and the other three states. These firms submitted multiple claims for services that were unnecessary or never rendered. Quality of care was often poor.

Many of the owners “have backgrounds in completely unrelated businesses, for example, trucking, real estate, accounting and the beauty industry,” Grob told the committee.

“The current certification process does not require any background checks into the owner’s credit or financial history, criminal records or past work experience,” he said.

Although the HHS study was limited to four states, Grob said he believes the 40% loss figure would probably apply to the others.

Jeanette Garrison, a nurse now serving a 33-month prison term for Medicare fraud, told the committee how she started a home care agency after being unable to find help for two elderly relatives. She built an empire with 2,700 employees and $100 million in annual revenues.

She paid herself $600,000 a year in salary and benefits and created side businesses that did work for the nonprofit home health agency. A real estate partnership, a pharmacy and an equipment and supply business all piled up impressive profits providing services to the home health agency serving Medicare patients.

She ultimately pleaded guilty to fraud and repaid the government $16 million. Her agency billed Medicare for treatment provided to private patients and for “employee rewards,” such as trips to New York and Las Vegas.

“The system is set up based on costs; there is no incentive to be efficient . . . “ she said.

Home health agencies bill for each visit to a Medicare beneficiary, and there is no limit on the number of visits. The only requirement is that a doctor certify that the recipient is homebound and needs care. The service can range from medical care, such as giving injections or intravenous feeding, to physical therapy or help bathing.