GAO June 1997 United States General Accounting Office Report to the Ranking Minority Member, MEDICARE Senate Permanent Subcommittee EXHIBIT # on Investigations Medicare, the nation's health insurance program for the elderly and This growth and accompanying reports of overutilization of home health services have raised questions about Medicare's ability to detect and prevent inappropriate payments for this component of the Medicare program. Congressional committees have held hearings this year on proposals to control the growth in home health billings. Under any proposal adopted, however, there would be a continued need to monitor Medicare payments effectively. At your request, we (1) examined the weaknesses of existing Medicare controls over the home health benefit, (2) identified lessons learned from examining private insurers' controls over home health payments and recent federal antifraud initiatives, and (3) identified a management approach that could improve Medicare's ability to avoid substantial payments attributable to abusive billing practices. To conduct our study, we selected a sample of 80 high-dollar home health claims that had been processed in May 1995 and had been approved without review. We asked a Medicare claims-processing contractor to review the sample for the appropriateness of the charges and services claimed. We also analyzed information obtained from officials of the Health Care Financing Administration (HCFA), the agency within the Department of Health and Human Services (HHS) responsible for administering Medicare; data obtained from Medicare's claims-processing B-270233 Results in Brief contractors; and information from the HHS Office of the Inspector General. In addition, we analyzed information obtained from officials of private insurance companies and the Office of Personnel Management, which oversees the Federal Employees Health Benefits Program. (See app. I for a more detailed description of our scope and methodology.) We and others have reported on several occasions about problems with The five private insurers we contacted use controls that, although not Reduced funding for payment safeguards in recent years helps explain the marked absence of adequate claims reviews by Medicare contractors. Ten years ago, over 60 percent of home health claims were reviewed. In 1996, Medicare intermediaries reviewed only 2 percent of all claims. New and more stable funding provided through the Health Insurance Portability and Accountability Act (HIPAA) of 1996 (P.L. 104-191) should help improve Medicare's performance in monitoring home health payments, but HCFA B-270233 Background Beneficiary Eligibility for Home Health Agency also needs an enforcement tool-a preventive approach-that will make providers accountable for the propriety of their claims. Therefore, we are suggesting that the Congress consider directing HCFA to test an approach that would systematically identify and penalize providers that habitually bill Medicare inappropriately. 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. We believe that such an approach could also serve as a deterrent to future billing abuses. Medicare is a health insurance program that covers over 38 million elderly and disabled people. The program, authorized by title XVIII of the Social Security Act, provides coverage under two parts. Part A, the hospital insurance program, covers inpatient hospital services, posthospital care in skilled nursing homes, and care in patients' homes. Part B, the supplementary medical insurance program, covers primarily physician services but also a number of other services, including home health care for beneficiaries not covered under part A. Almost all Medicare payments for home health care are made under part A. Since the late 1980s when a court decision obligated HCFA to interpret Services must be furnished under a plan of care prescribed and periodically reviewed by a physician. As long as the care is reasonable and necessary, there are no limits on the number of visits or length of coverage. Medicare does not require copayments or deductibles for home health care, except for durable medical equipment. Medicare law requires that home health agencies be certified to serve Medicare beneficiaries. The agencies obtain certification by meeting specific requirements, commonly referred to as conditions of |