Improper billing charges tar health care industry
Auditors slam home care on medical necessity
A recently released audit of the Health Care Financing Administration’s fiscal year 1996 financial statement reveals a massive number of improper payments totaling $23.2 billion in net overpayments nationwide to health care providers participating in the Medicare program. That figure represents about 14% of total Medicare fee-for-service payments.
Home health providers got their share of those overpayments, according to the Office of Inspector General (OIG) in the U.S. Department of Health and Human Services (DHHS) in Washington, DC, which conducted the audit. Home health care accounted for almost $3.7 billion (15.7%) of the total improper payments. Hospice came in at $942 million, 4.1% of the total.
Documentation errors are common
Insufficient or no documentation is "the most pervasive error type," said DHHS Inspector General June Gibbs Brown in July 17 testimony before the U.S. House of Representatives’ Subcommittee on Health of the Committee on Ways and Means. Documentation problems accounted for 47% ($10.8 billion) of the total $23.2 billion in improper payments. Of that 47%, 33% involved insufficient documentation, and 14% involved a total lack of documentation. For home health agencies, documentation problems came in a close second, accounting for almost $1.7 billion (46%) of the total of overpayments. Documentation was a distant second for hospice providers, involving $179 million (19%) of the overpayments.
But the top problem in home care and the second highest error category overall is lack of medical necessity, which accounted for 53% of the improper home health payments, says OIG. Medical necessity was not cited as a problem for hospices.
Because of the different payment methodology, patients with a documented terminal prognosis of six months or less are automatically viewed as medically eligible for hospice. However, the determination of a qualifying terminal prognosis has been a major bone of contention in Operation Restore Trust audits of hospices by OIG. Noncovered/unallowable services accounted for 81% ($763 million) of hospice’s total unallowable payments.
Fraud or mistake?
Whether fraud or "inadvertent mistakes" are the primary culprit responsible for the overpayments is debatable. "We cannot quantify what portion of the error rate is attributable to fraud," Brown says. "Specifically, 99% of the improper payments were detected through medical record reviews coordinated by the OIG in conjunction with medical personnel. When these claims had been submitted for payment to Medicare contractors, they contained no visible errors."
Despite OIG’s admission that the amount of fraud involved cannot be quantified, several senators and congressmen (and consequently the national media) are latching onto the specter of fraudulent activity and equating the OIG report with fraud and abuse. Sen. Chuck Grassley (R-IA) chairman of the Senate Special Committee on Aging, refers to home health as a "jackpot for criminals."
Such reactions by government officials indicate "they haven’t read [the report]," suggests Ann Howard, executive director of the American Federation of Home Health Agencies in Silver Spring, MD. "The Inspector General is not saying this is $23.2 billion worth of fraud," she says. "It’s carelessness on the part of the press or members of Congress or the Senate or the public who say that this is a report about fraud."
Amendments to the Medicare hospice benefit, contained in the 1997 Budget Reconciliation bill, passed both houses of Congress at the end of July. President Clinton signed the bill into law Aug. 5. The new law will:
• restructure the hospice benefit into two 90-day periods followed by an unlimited number of 60-day periods;
• amend the core services requirement to allow hospices to contract for physician services with independent contractors or medical groups;
• allow a waiver of certain staffing requirements for rural hospices;
• clarify the waiver of liability for submitted claims;
• clarify the requirement that a hospice must cover services contained in the hospice plan of care;
• require hospices to submit claims for routine or continuous home care based on where the service is provided, not where the hospice is located;
• confirm the current practice that for Medicare-risk HMOs not assuming financial risk for hospice care, HCFA can pay hospice directly for enrollees who elect the hospice benefit;
• reinstate hospice cost reporting;
• subtract 1% from previously mandated inflationary increases in hospice rates for the years 1998 to 2002.
Most of these provisions will go into effect immediately or with the new fiscal year starting Oct. 1. Except for the final provision, these measures are generally viewed by the industry as an enhancement of the benefit. Considering the problems hospice’s near neighbors in the home health care industry are going through, the passage of these measures suggests that hospice is still viewed by Congress as a special kind of caring.
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