Home care crackdown can be a time bomb’
Agency acquisitions make you a target
The recently announced federal crackdown on Medicare fraud signals trouble for any risk manager whose operations include a home care component, say Medicare fraud experts. Whether you think your facility has committed any violations or not, you will be under incredible scrutiny in the next months.
The federal scrutiny will mean that every aspect of your home care operations must be beyond reproach, they say, and chances are good that you’re going to be found at fault for something even if you’re one of the most squeaky clean operations around. And heaven help you if you’re guilty of serious Medicare fraud, because every indication is that the federal government is serious about its health care crackdown.
President Clinton announced the crackdown in September and declared for the first time ever a six-month moratorium on the admission of new home health care providers into the Medicare program. Home health has been the most rapidly expanding part of Medicare, with nearly 100 new providers entering the Medicare program each month. In addition to the moratorium, Clinton announced these new actions:
• The Health Care Financing Administration (HCFA) will re-enroll home health providers every three years, as a means of aggressively screening out the bad apples. Home health agencies will be required to submit an independent audit of their records and practices at the time of re-enrollment.
• The U.S. Department of Health and Human Services also will implement new regulations that make it easier to eliminate home health providers who are more likely to cheat Medicare. Currently, HCFA can kick providers out of Medicare only if they have been convicted of fraud.
• HCFA will nearly double the number of comprehensive home health agency audits it performs every year, from about 900 to 1,800. HCFA also will increase the number of claims reviews by 25%, from 200,000 to 250,000 per year. The increased oversight will aid efforts already under way to increase investigations, prosecutions, and audits under Operation Restore Trust, the department’s comprehensive anti-fraud initiative.
• Existing home health operations will be required to report ownership in other companies, a move the government hopes will reveal any possible Medicare fraud that is routed through subsidiary companies.
• When the moratorium is lifted, new home health operations will be required to post a surety bond of at least $50,000. That rule is intended to eliminate some fly-by-night operations that don’t have enough money to post the bond.
Acquisitions pose special problems
The crackdown on home health fraud was inevitable, says Tim Hoover, CPCU, vice chairman of the National Health Group for the Sedgwick Corporation, a health care consulting firm in Harrisburg, PA. Home health has been one of the last bastions of cost-reimbursed federal funds, and by its very nature, home health care is difficult to monitor and audit, he notes.
"In the past, much of the home health business has been small, entrepreneurial-type enterprises," Hoover says. "But now the major health providers are getting into it, mostly through mergers and acquisitions, and that’s where I see the source of the problem for risk managers. Risk managers suddenly have a new risk facing them that they haven’t really dealt with before."
Hoover says risk managers should be extremely cautious about mergers and acquisitions that involve any home care component. This can be difficult, he notes, because risk managers tend to become involved with mergers and acquisitions only at the last minute. "You tend to get called in at the tail end of all the courting that goes on before a merger or acquisition, and then you have to focus on malpractice coverage, funded and unfunded liabilities, whether you’re self-insured all the big things," he says. "But now the risk manager suddenly has to be concerned with whether you’re buying into a compliance audit and the fraud risk. You have to ask whether you’re buying into a federal audit that will be a trigger into other parts of your existing business. A home care component now represents a time bomb that didn’t exist before."
Hoover tells Healthcare Risk Management that part of the problem involves the marriage of two traits usually found separately in home care and large health care organizations. It is a fact that many of the smaller entrepreneurial home care providers are operated on the edge of fraud, if not outright fraud. Until now, much of that fraud has gone unreported because of the inherent difficulty in monitoring home care and the fact that there are few whistle-blowers in such small operations.
But in larger health care networks, and even in the typical acute care hospital, the practice of whistle-blowing is firmly entrenched. Many health care workers clearly understand there are safe avenues and often financial rewards for reporting health care fraud. Many of the current investigations into Medicare fraud, in home care and other settings, are prompted by whistle-blowers.
"So the types of mergers and acquisitions that are going on so much now represent a real risk," Hoover explains. "You’re inviting in an industry that is at high risk for fraud investigations, and putting it in an environment in which you have a culture of questioning and employees who are familiar with whistle-blowing procedures. All you have to do is wait for them to find each other, and then it blows up."
The best way to prevent such problems is to thoroughly investigate the home care component of any potential merger or acquisition, Hoover suggests. To do that effectively, you may have to join the mergers and acquisition process much earlier than you have before. It would be a good idea to formally warn your superiors about this explosive new risk and advise that you participate in the decision process early enough to help your organization steer clear of any home care operations that could bring trouble.
A risk manager’s investigation should include a detailed look at how the home care organization has been billing for services. To do a thorough job, you should have your organization’s billing experts, and possibly outside experts, assess the home care operation.
"You can’t do a shallow look at this because you are talking about taking on a great deal of liability, and all the scrutiny that comes when the home care arm is investigated," Hoover warns. "These types of probes are always green lights into other investigations. If you take on a fraudulent home care business, you’re throwing your hospital’s doors open to federal investigators and asking them to come on in."
Form committee to assess home care
Much of the investigation necessary to screen out fraudulent home care operations is beyond the scope of a risk manager, says Jeff Thompson, CPA, senior consultant with AIG Healthcare Management Services in Dallas. But he says the risk manager is the perfect person to get the ball rolling. "Someone in the organization has to take the lead on this, and risk managers are in a good position to do that, " he says. "Even if you aren’t familiar with all the detailed billing rules and regulations, you can be the one to warn the whole operation that there is a huge risk here that must be dealt with."
The severity of the risk is perhaps the most important message you can deliver, he says. The federal crackdown on home care providers is as serious for the health care industry as the savings and loan crisis of the 1980s was for the banking industry. Many savings and loan institutions were closed after the discovery of widespread fraud. "The government has increased funding for investigations, and it has passed legislation that grants more authority to the Department of Justice to prosecute criminally and impose civil money penalties," he says. "When the government does all that, you know serious trouble is coming."
For any organization with existing home care services, the risk manager should be instrumental in establishing a committee to ensure that no home care fraud happens from this point forward, Thompson adds. The committee should include a broad range of in-house experts in billing, accounting, clinical services, legal counsel, and senior management (preferably the chief financial officer and/or the chief executive officer). The committee should develop detailed procedures to conduct self-audits that will highlight any improper billing.
Given the apparent seriousness of the government crackdown, Thompson suggests that the in-house committee try to take an equally tough stance. The goal should be to have the organization’s home care billing absolutely in compliance, erring on the side of less reimbursement if necessary. That may be a hard choice when it means passing up dollars that might be a legitimate reimbursement, but Thompson says this is no time to dance on the edge of Medicare fraud.
"Just say that you’re going to do everything right from this day forward, and be serious about it," he suggests. "You don’t want to start looking backward too much to see what you did wrong then, because you’re obligated to report any overpayments and give the money back. But you better take the hint from the Justice Department and get things in order from now on."
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