This is a computer translation of the original webpage. It is provided for general information only and should not be regarded as complete nor accurate.
[Federal Register: August 10, 1995 (Volume 60, Number 154)]
[Notices]
[Page 40847-40851]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au95-87]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
Publication of OIG Special Fraud Alerts: Home Health Fraud, and
Fraud and Abuse in the Provision of Medical Supplies to Nursing
Facilities
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Notice.
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SUMMARY: This Federal Register notice sets forth two recently issued
OIG Special Fraud Alerts concerning fraud and abuse practices in the
home health industry and in the provision of medical supplies to
nursing facilities. For the most part, the OIG Special Fraud Alerts
address national trends in health care fraud, including potential
violations of the Medicare anti-kickback statute. These two Special
Fraud Alerts, issued directly to the health care provider community and
now being reprinted in this issue of the Federal Register, specifically
address fraud and abuse in the provision of (1) home health services
and (2) medical supplies to nursing facilities, including the
submission of false claims and anti-kickback violations.
FOR FURTHER INFORMATION CONTACT: Joel J. Schaer, Office of Management
and Policy, (202) 619-0089.
SUPPLEMENTARY INFORMATION:
I. Background
The Office of Inspector General (OIG) issues Special Fraud Alerts
based on information it obtains concerning particular fraudulent and
abusive practices within the health care industry. These Special Fraud
Alerts provide the OIG with a means of notifying the industry that we
have become aware of certain abusive practices that we plan to pursue
and prosecute, or bring civil and administrative action, as
appropriate. The alerts to serve as a powerful tool to encourage
industry compliance by giving providers an opportunity to examine their
own practices.
The Special Fraud Alerts are intended for extensive distribution
directly to the health care provider community, as well as the
charged with the Medicare and Medicaid programs. On
December 19, 1994, the OIG published in the Federal Register the texts
of 5 previously-issued Special Fraud Alerts, and announced the
intention to publish in the same manner subsequent issuances as a
regular part of distribution of these Special Fraud Alerts (59 FR
65372).
The first of these new Special Fraud Alert serves to point out the
prevalence of certain types of home health care fraud, including (1)
cost report frauds; (2) billing for excessive services or services not
rendered; (3) use of unlicensed or untrained staff; (4) falsified plans
of care (5) forged physician signatures on plans of care; and (6)
kickbacks that the OIG has uncovered.
The second new Special Fraud Alert, focusing on the provision of
medical supplies to nursing facilities, identifies some of the illegal
practices that the OIG has recently uncovered. These include (1) the
submitting of claims to Part B of Medicare for medical supplies and
equipment that is not medically necessary; (2) submitting claims for
Items that are not provided as claimed (3) double billings; and (4)
paying or receiving kickbacks in exchange for Medicare or Medicaid
referrals.
End of Translation
These two issuances are the first in a series of new Special Fraud
Alerts being developed by the OIG over the next year to heighten both
the public's and industry's awareness of fraudulent health care
practices. A reprint of both of these Special Fraud Alerts follows.
II. Special Fraud Alert: Home Health Fraud
(June 1995)
The Office of Inspector General was established at the Department
of Health and Human Services by Congress in 1976 to identify and
eliminate fraud, abuse and waste in Health and Human Services programs
and to promote efficiency and economy in departmental operations. The
OIG carries out this mission through a nationwide program of audits,
investigations and inspections.
To help reduce fraud and abuse in the Medicare and Medicaid
programs, the OIG actively investigates schemes to fraudulently obtain
money from these programs and, when appropriate, issues Special Fraud
Alerts which identify segments of the health care industry that are
particularly vulnerable to abuse. This Special Fraud Alert focuses on
the home health industry and identifies some of the illegal practices
the OIG has uncovered.
What Is Home Health Care And Who Is Eligible To Receive It?
Medicare's home health benefit allows people with restricted
mobility to remain non-institutionalized and receive needed care at
home. Home health services and supplies are typically provided by
nurses and aides under a physician-certified plan of care.
Medicare will pay for home health services if a beneficiary's
physician certifies that he or she:
is homebound--i.e., confined to the home except for
infrequent or short absences or trips for medical care, and requires one or more of the following qualifying services:
physical therapy, speech-language pathology, or intermittent skilled
nursing.
If a homebound patient requires a qualifying service, Medicare also
covers services of medical social workers and certain personal care
such as bathing, feeding, and assistance with medications. However, a
beneficiary who needs only this type of personal or custodial care does
not qualify for the home health benefit.
Fraud and Abuse in the Home Health Industry
Home care is consuming a rapidly increasing portion of the federal
health budget. This year, Medicare payments for home health will reach
close to $16 billion, up from $3.3 billion in 1990--nearly a five fold
increase. Home health care is particularly vulnerable to fraud and
abuse because:
[[Page 40848]] Medicare covers an unlimited number of visits per patient;
Beneficiaries pay no co-payments except on medical
equipment;
Patients don't receive explanations of benefits (EOBs) for
bills submitted for home health services; and There is limited direct medical supervision of home health
services provided by non-medical personnel.
The OIG has learned of several types of fraudulent conduct,
outlined below, which have or could result in improper Medicare
reimbursement for home health services.
False or Fraudulent Claims Relating to the Provision of Home Health
Services
The government may prosecute persons who submit or cause false or
fraudulent claims for payment to be submitted to the Medicare or
Medicaid programs. Examples of false or fraudulent claims include
claims for services that were never provided, duplicate claims
submitted for the same service, and claims for services to ineligible
patients. A claim for a service that a health care provider knows was
not medically necessary may also be a fraudulent claim.
Submitting or causing false claims to be submitted to Medicare or
Medicaid may subject a person to criminal prosecution, civil penalties
including treble damages, and exclusion from participation in the
Medicare and Medicaid programs. OIG has uncovered the following types
of fraudulent claims related to the provision of home health services.
Claims For Home Health Visits That Were Never Made And For Visits to
Ineligible Beneficiaries
OIG has uncovered instances where home health agencies are
submitting false claims for home health visits. These include:
Claims for visits not made.
Claims for visits to beneficiaries not homebound.
Claims for visits to beneficiaries not requiring a
qualifying service.
Claims for visits not authorized by a physician.
One home health agency billed Medicare for 123 home health visits
to a patient who never received a single visit, and submitted claims
for beneficiaries who were in an acute care hospital during the period
the agency claimed to have provided home visits. Another agency
provided a home health aide to a beneficiary so mobile that he
volunteered at a local hospital several times a week.
A third agency claimed nearly $26 million during one year in visits
that were not made, visits to patients that were not homebound, and
visits not authorized by a physician. OIG interviews indicated that
beneficiary signatures were forged on visit logs and physician
signatures were forged on plans of care. This agency had subcontracted
with other entities to provide home health care to its patients, and
claimed that the subcontractors falsely documented that visits were
made and services were provided.
Medicare permits a home health agency to contract with other
organizations, including agencies not certified by Medicare, to provide
care to its patients. However, the agency remains liable for all billed
services provided by its subcontractors. The use of subcontracted care
imposes a duty on home health agencies to monitor the care provided by
the subcontractor.
Home health agencies, as well as the physicians who order home
health services, are responsible for ensuring the medical necessity of
claims submitted to Medicare. A physician who orders unnecessary home
health care services may be liable for causing false claims to be
submitted by the home health agency, even though the physician does not
submit the claim. Furthermore, if agency personnel believe that
services ordered by a physician are excessive or otherwise
inappropriate, the agency cannot avoid liability for filing improper
claims simply because a physician has ordered the services.
Fraud in Annual Cost Report Claims
In addition to submitting claims for specific services, home health
agencies submit annual cost reports to Medicare for reimbursement of
administrative, overhead and other general costs. For these costs to be
allowable, Medicare regulations require that they be (1) reasonable,
(2) necessary for the maintenance of the health care entity, and (3)
related to patient care. However, the OIG has audited cost reports
which include costs for entertainment, travel, lobbying, gifts, and
other expenses unrelated to patient care such as luxury automobiles and
cruises. One home health agency claimed several million dollars in
unallowable costs during one cost reporting year. These included
utility and maid service payments for the owner's condominium, golf pro
shop expenses, lease payments on a luxury car for the owner's son at
college, and payment of cable television fees for the owner's mother.
Medicare also requires home health agencies to disclose in their
cost reports the identity of related parties with whom they conduct
business, in order to adjust costs that are likely to be inflated by
health care providers who self-deal (i.e., purchase goods or services
from related companies). A related party issue exists when there is
common control or common interest between the provider and the
organization with whom it is doing business. OIG has investigated home
health agencies which failed to disclose ownership or other
relationships with entities with whom they contracted for accounting
services, management/consulting services, and medical supplies. These
agencies billed Medicare unallowable amounts for marked-up supplies and
services.
Paying Or Receiving Kickbacks In Exchange For Medicare or Medicaid
Referrals
Kickbacks in exchange for the referral of reimbursable home health
services is another type of fraud that OIG has observed. The Medicare
program guarantees freedom of choice to its beneficiaries in the
selection of health care providers. Because kickbacks violate that
principle and also increase the cost of care, they are prohibited under
the Medicare and Medicaid programs. Under the anti-kickback statute, it
is illegal to knowingly and willfully solicit, receive, offer or pay
anything of value to induce, or in return for, referring, recommending
or arranging for the furnishing of any item or service payable by
Medicare or Medicaid.
OIG is aware of home health providers offering kickbacks to
physicians, beneficiaries, hospitals, and rest homes in return for
referrals. Kickbacks have taken the following forms:
Payment of a fee to a physician for each plan of care
certified by the physician on behalf of the home health agency.
Disguising referral fees as salaries by paying referring
physicians for services not rendered, or in excess of fair market value
for services rendered.
Offering free services to beneficiaries, including
transportation and meals, if they agree to switch home health
providers.
Providing hospitals with discharge planners, home care
coordinators, or home care liaisons in order to induce referrals.
Providing free services, such as 24 hour nursing coverage,
to retirement homes or adult congregate living facilities in return for
home health referrals.
Subcontracting with retirement homes or adult congregate
living facilities for the provision of home
[[Page 40849]]
health services, to induce the facility to make referrals to the
agency.
Parties that violate the anti-kickback statute may be criminally
prosecuted, and also may be subject to exclusion from the Medicare and
Medicaid programs.
Marketing Uncovered Or Unneeded Home Care Services to Beneficiaries
OIG has learned of high pressure sales tactics employed by some
agencies in the home health community to maximize their patient
population and their profits. These agencies target healthy
beneficiaries on the street or in their homes and offer non-covered
services, such as grocery shopping or housekeeping, in exchange for
Medicare identification numbers. Physicians have also reported that
some agencies attempt to pressure them to order unnecessary personal
care services by informing them that their patients are requesting
these services and will find another physician if their demands are not
met.
These abusive marketing practices can result in false claims
liability on the part of agencies and/or physicians, and may also
constitute illegal kickbacks.
III. Special Fraud Alert: Medical Supplies to Nursing Facilities
(August 1995)
The Office of Inspector General was established at the Department
of Health and Human Services by Congress in 1976 to identify and
eliminate fraud, abuse and waste in Health and Human Services programs
and to promote efficiency and economy in departmental operations. The
OIG carries out this mission through a nationwide program of audits,
investigations and inspections.
To help reduce fraud and abuse in the Medicare and Medicaid
programs, the OIG actively investigates schemes to fraudulently obtain
money from these programs and, when appropriate, issues Special Fraud
Alerts which identify segments of the health care industry that are
particularly vulnerable to abuse. This Special Fraud Alert focuses on
the provision of medical supplies to nursing facilities and identifies
some of the illegal practices that the OIG has uncovered.
How Nursing Facility Benefits are Reimbursed
Many nursing facilities receive reimbursement from Medicare and
Medicaid for care and services provided to eligible residents. Under
Medicare Part A, skilled nursing facility services are paid on the
basis of cost, and compensate the provider for covered nursing stays of
a limited length. For Medicaid-eligible residents, extended nursing
facility stays may be reimbursed by state-administered programs
financed in part by Medicaid. Nursing facility residents may be
concurrently eligible for benefits under Medicare Part B. These
benefits may include payment for medically necessary equipment,
prosthetic devices and supplies.
Nursing facilities and their residents have become common targets
for fraudulent schemes involving medical supplies. The OIG has become
aware of a number of fraudulent arrangements by which medical suppliers
profit from inappropriate business dealings, in the name of unwitting
nursing facility residents.
Sometimes, nursing facility management and staff also are involved
in these schemes.
False or Fraudulent Claims Relating to the Provision of Medical
Supplies
The government may prosecute persons who submit or cause the
submission of false or fraudulent claims to the Medicare or Medicaid
program. Examples of false or fraudulent claims include claims for
items that were never provided or were not provided as claimed,
duplicate claims submitted for the same item, and claims for items that
the supplier knows are not medically necessary.
Submitting or causing false claims to be submitted to Medicare or
Medicaid may subject the individual or entity to criminal prosecution,
civil penalties including treble damages, and exclusion from
participation in the Medicare and Medicaid programs. The OIG has
uncovered the following types of fraudulent transactions related to the
provision of medical supplies to nursing facilities.
Claims for Medical Supplies and Equipment That Are Not Medically
Necessary Many of the supplies and equipment used in the care of
nursing facility residents are provided by the nursing facility and
should be reflected in the facility's Medicare cost report. The OIG has
uncovered numerous instances in which suppliers provide the nursing
facility with general medical supplies such as tape, adhesive remover,
skin creams and syringes, but rather than bill the facility, the
supplier submits claims to Medicare Part B. The claims misrepresent
that the items are medically necessary for individual beneficiaries and
therefore reimbursable under Part B.
For example, one supplier billed Part B for an ``oral/nasal hygiene
program'' which consisted of supplies, such as saline solution, latex
gloves and cotton swabs, marketed as prepackaged kits. Upon
investigation, the OIG determined that these items, which were shipped
to the facility in bulk quantities, were neither medically necessary,
nor used for the care of the residents identified on the claims. In
such a case, the supplier may be liable under criminal, civil and
administrative laws for submitting fraudulent claims. The nursing
facility may also be liable if the OIG determines that the nursing
facility knew or should have known that the claims were false and
participated in the offense.
Claims for Items That Are Not Provided as Claimed or Double Billed Many inappropriate transactions involve marketing of
incontinence supplies. In one case, a supplier was found to have
delivered adult diapers, which are not covered by Medicare Part B, and
improperly billed these items as expensive prosthetic devices called
``female external urinary collection devices.'' In another case, a
supplier delivered only incontinence care products, such as lubricants
and cleansers. These items are covered only as accessories to medically
necessary prosthetic devices such as female external urinary collection
devices. Medicare received bills for each accessory, even though the
primary item was not provided.
In some cases, multiple payments are made for particular
items shipped to nursing facilities. For instance, a nursing facility
ordered and accepted delivery of certain medical supplies for the
facility's general use. The nursing facility appropriately claimed the
supplies as expenses related to patient care on its Medicare cost
report. However, the supplier also submitted separate claims to
Medicare Part B on behalf of each resident in the facility. In order to
receive Part B reimbursement, the supplier misrepresented its
entitlement to payment, as well as the eligibility and coverage of
individual beneficiaries. Other payment sources, such as Medicaid or
private payers, may also have been billed by the supplier. The supplier
may be liable under criminal, civil and administrative provisions if
the supplier claimed falsely that the beneficiary met the required
eligibility and coverage criteria. The nursing facility may also be
liable for falsifying its Part A cost report if it knew or should have
known of the duplicate billing and participated in the offense.
[[Page 40850]]
Paying or Receiving Kickbacks in Exchange for Medicare or Medicaid
Referrals
It is illegal under the anti-kickback statute to knowingly and
willfully solicit, receive, offer or pay remuneration in cash or in
kind to induce or in return for referring, recommending or arranging
for the furnishing of any item or service payable by Medicare or
Medicaid.
Violation of the anti-kickback statute may carry criminal
penalties, program exclusion, or both. Immunity may be available where
otherwise illegal conduct meets the criteria specified in ``safe
harbor'' regulations published by the Secretary of the Department of
Health and Human Services. These regulations may be found in 42 CFR
part 1001.
A supplier gives a nursing facility non-covered medical
products at no charge, provided the facility assists in the ordering of
Medicare-reimbursed products. For instance, incontinence care kits may
consist of reimbursable supplies as well as non-reimbursable items,
such as disposable underpads or adult diapers. The OIG has identified
instances where suppliers have billed the program for providing nursing
facilities with thousands of medical supplies contained within
incontinence kits which were not medically necessary for the care of
the patients. The nursing facilities accepted delivery of the kits,
removed the diapers and other items useful in general patient care, and
discarded the remainder of the kits. At the same time, the supplier
received Medicare reimbursement for shipment of products which were not
medically necessary and often not used.
Both the supplier and the nursing facility may be liable for false
claims as in the previous examples. However, both parties may also be
liable under the anti-kickback statute, if one purpose of providing the
free diaper was to induce the nursing facility to arrange for the
procurement of items paid for by Medicare or Medicaid.
Other Examples of Fraudulent Practices
The OIG has received many complaints from nursing facility
administrators and staff about suppliers that deliver unordered goods
which are billed to Medicare. Analysts and investigators also have
found that many nursing facilities do not always report such abuses,
perhaps because the nursing facilities may gain a benefit from the use
of these ``free'' supplies. In other cases, nursing facilities actively
solicit unauthorized deliveries or other items of value, such as cash
and in-kind rewards. In exchange, the nursing facility offers the
equipment supplier access to patients' medical records and other
information needed to bill Medicare.
Note: Under 42 CFR 483.10(e), it is a violation of a resident's
rights, and therefore of the facility's conditions of participation,
to make unauthorized disclosures from the resident's medical
records.
The OIG has investigated suppliers who supply nursing
facilities with low-cost items, but submit Part B claims for high-
priced items. For instance, one supplier provided simple restraining
devices, but claimed that custom-made orthotic body jackets were
provided to specified Part B beneficiaries.
The OIG also has investigated a case in which a supplier
gathered information on the death of nursing facility residents.
Immediately thereafter, the supplier back-dated orders of medical
supplies in quantities consistent with Medicare's 30-day limitation on
after-death shipments.
What To Look For in Nursing Facility Supply Transactions
Suppliers engaged in the fraudulent schemes described above attempt
to avoid detection in a variety of ways. Nursing facility
administrators and staff aware of supplier fraud may be bribed through
the payment of kickbacks and other illegal remuneration. Also,
beneficiaries may be kept unaware of fraudulent billings if a supplier
routinely ``waives,'' or fails to collect, co-payments from the
residents for Part B items. The following factors may also indicate
improper supply transactions:
Excessive volumes of medical supplies delivered to, or
solicited by, nursing facilities and kept as inventory for lengthy
periods.
Items provided directly to nursing facility residents that
are unordered, unnecessary or unused.
Unusually active presence in nursing facilities of medical
supply sales representatives who are given, or request, unlimited
access to patient medical records.
Questionable documentation for medical necessity of
supplies.
IV. Contacting the OIG About Fraud and Abuse
The following common language is set forth in both OIG Special
Fraud Alerts:
What To do If You Have Information About Fraud and Abuse Against the
Medicare and Medicaid Programs
If you have information about the types of activities described
above, contact any of the regional offices of the Office of
Investigations of the Office of Inspector General, U.S. Department of
Health and Human Services, at the following locations:
------------------------------------------------------------------------
Regions States served Telephone
------------------------------------------------------------------------
Boston.................... MA, VT, NH, ME, RI, CT.... 617-565-2660
New York.................. NY, NJ, PR, VI............ 212-264-1691
Philadelphia.............. PA, MD, DE, WV, VA........ 215-596-6796
Atlanta................... GA, KY, NC, SC, FL, TN, 404-331-2131
AL, MS (No. District).
Chicago................... IL, MN, WI, MI, IN, OH, 312-353-2740
IA, MO.
Dallas.................... TX, NM, OK, AR, LA, MS 214-767-8406
(So. District).
Denver.................... CO, UT, WY, MT, ND, SD, 303-844-5621
NE, KS.
Los Angeles............... AZ, NV (Clark Co.), So. CA 714-836-2372
San Francisco............. No. CA, NV, AZ, HI, OR, 415-556-8880
ID, WA.
Washington, D.C........... DC and Metropolitan areas 202-619-1900
of VA & MD.
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[[Page 40851]]
To Report Suspected Fraud, Call or Write: 1-800-HHS-TIPS,
Department of Health and Human Services, Office of Inspector General,
P.O. Box 23489, L'Enfant Plaza Station, Washington, D.C. 20026-3489.
Dated: August 4, 1995.
June Gibbs Brown,
Inspector General.
[FR Doc. 95-19731 Filed 8-9-95; 8:45 am]
BILLING CODE 4150-04-P
End of 
These two issuances are the first in a series of new Special Fraud
Alerts being developed by the OIG over the next year to heighten both
the public's and industry's awareness of fraudulent health care
practices. A reprint of both of these Special Fraud Alerts follows.
II. Special Fraud Alert: Home Health Fraud
(June 1995)
The Office of Inspector General was established at the Department
of Health and Human Services by Congress in 1976 to identify and
eliminate fraud, abuse and waste in Health and Human Services programs
and to promote efficiency and economy in departmental operations. The
OIG carries out this mission through a nationwide program of audits,
investigations and inspections.
To help reduce fraud and abuse in the Medicare and Medicaid
programs, the OIG actively investigates schemes to fraudulently obtain
money from these programs and, when appropriate, issues Special Fraud
Alerts which identify segments of the health care industry that are
particularly vulnerable to abuse. This Special Fraud Alert focuses on
the home health industry and identifies some of the illegal practices
the OIG has uncovered.
What Is Home Health Care And Who Is Eligible To Receive It?
Medicare's home health benefit allows people with restricted
mobility to remain non-institutionalized and receive needed care at
home. Home health services and supplies are typically provided by
nurses and aides under a physician-certified plan of care.
Medicare will pay for home health services if a beneficiary's
physician certifies that he or she: