Home Health & Hospice Week

Ten denied claims lead to $2.1M overpayment.

The latest improper payment rate for fee-for-service Medicare home health services has fallen drastically to 12.1 percent in 2019, but you wouldn’t know that from reading the latest report about an HHS Office of Inspector General audit of a home health agency.

“For calendar year (CY) 2016, Medicare paid home health agencies (HHAs) about $18 billion for home health services,” the OIG says in a report released amidst full COVID-19 activity on April 9.“The Centers for Medicare & Medicaid Services (CMS) Comprehensive Error Rate Testing program determined that the 2016 improper payment error rate for home health claims was 42 percent, or about $7.7 billion.”

The OIG audited 2015 and 2015 claims from Residential Home Health, which it identifies as “a for-profit home healthcare provider with locations throughout the Midwest.” Residential serves patients in Illinois, Michigan, and Pennsylvania.

Why Residential? “Using computer matching, data mining, and data analysis techniques, we identified HHAs at risk for noncompliance with Medicare billing requirements,” the OIG says.Resi­dential “was one of these HHAs.”

The OIG audited a sample of 100 claims from those years and knocked down 11 of them based on lack of homebound status (six claims) and no skilled need (six claims). The OIG extrap­olated the error rate to Residential’s $83 million in payments for the audit period to estimate a $2.1 million overpayment.

The OIG also urged Residential to identify and return the overpayments, since the claims are past reopening. The agency also told the company to “exercise reasonable diligence to identify and return any additional similar overpayments outside of our audit period.”

Residential isn’t taking the overpayment assessment and other recommendations lying down.

Residential’s counsel, Adam Bird at Calhoun Bhella & Sechrest in Washington, D.C., submitted a 25-page letter challenging the OIG on many areas ranging from the qualifications and competence of its review staff to its extrapolation methodology to its “misleading” overpayment amount.

“We have verified and documented that our medical reviewers have sufficient competence, expertise, and technical knowledge,” the OIG says in response.“Two clinicians review all claims that need a medical necessity determination before giving them to OIG. Second-level reviews are conducted by the medical director or a physician with appropriate qualifications and experience.”

And the OIG shoots down Residential’s extrapolation protests.“Our extrapolation approach results in a conservative estimate that is almost always less than what we would have obtained from reviewing all the claims in our sampling population,” the OIG says.“Using extrapo­lation rather than reviewing all population claims drastically reduces the burden on both the provider and the Government.”

Note: The 66-page audit report is at https://oig.hhs.gov/oas/reports/region5/51600063.pdf.