A Lot of Home Health Business? That’s a Lot of Home Health Claims for Medicare and Medicaid to Suspend

I’ve been thinking a good bit about home health care lately.  A lot of that is the concerted effort in the Affordable Care Act to promote home health in lieu of placement in a skilled nursing facility.  It seems like every other long term care provider out there – including most of the big ones – is trying to expand its home health presence as quickly as possible.  Some of that may be my recent experience with my grandmother’s end-of-life care over the past six or seven months, which was spent in a skilled nursing facility (first), an assisted living facility (second), and at her home receiving home-based hospice care (last).  Her last few weeks at home left me with a positive impression of home health care.

Anyway, I hate to be a stick in the mud, but one thing does concern me.  As this blog shows, I write a lot about Medicaid fraud-based temporary suspensions.  The same remedy (technically suspension, effectively termination) exists under Medicare.  As that regulation and Medicaid counterpart show, it’s a broad power.  The applicable federal or state agency need only show a “credible allegation of fraud,” at which point it can withhold all payments owed to the provider – including those that have nothing to do with the alleged fraud, and even when the provider can show that the vast majority of claims are legitimate.  Indeed, after the ACA, federal and state regulators are now told that they must have good cause to release any of the owed claims, and they can only do so under a limited set of circumstances.  As one colleague recently put it to me, “temporary suspension” is really code for “lazy man’s termination.”

So what does that have to do with home health care?  Regulators have long recognized that home health care carries an increased risk of fraud.  It makes sense, of course.  There is no direct supervision when a home health caregiver provides care in the home of a recipient.  Usually, the only way to know what the caregiver did, and for how long, is the say so of the caregiver and the recipient.  The opportunity for collusion is more-or-less unchecked.  Add in lower level managers responsible for scheduling and supervising the caregiver (inasmuch as supervision is possible), and it becomes very difficult to police fraud.  And indeed, from 2010 to 2014, OIG has identified over one billion dollars associated with fraudulent home health claims – and that’s without looking.  The real amount likely is a multiple of that.

That should cast the rapid expansion of the home health care industry in an ominous light.  The sorts of institutional providers looking to increase their home health presence quickly undoubtedly will be able to garner a large share of the market quickly.  And that’s a good thing for the most part.  But a lot of business means a lot of opportunities for fraud.  It’s a lot of caregivers, a lot of lower level managers, and a lot of recipients – which means a lot of risk that some small number of them might (for example) collude to record care for services not provided, and then split the proceeds.

And remember from above, if federal or state regulators believe that they have any credible allegation of fraud, they can suspend all payments owed to the company, not just those associated with the fraud.  Ouch.  Now, is it realistic that regulators would step in and turn the revenue spigot off entirely for a company providing home health services to thousands or even tens of thousands of recipients?  Probably not – at least not without a back-up provider lined up to step in.  But it’s certainly a lot of leverage on the part of Medicare and Medicaid, and there’s a strong likelihood that regulators might use that leverage to pressure institutional providers into favorable settlements (both financially and in terms of a going-forward corrective action plan).

So how should companies aspiring to a big share of the home health market protect themselves in such a perilous area?  That’s something I intend to address in the next few posts.