Home Health & Hospice Week

A federal watchdog agency is up to its usual tricks in auditing home health agencies and finding their claims incorrectly billed, but audit errors are piling up in those cases.

The latest examples are in HHS Office of Inspector General audit reports addressing for-profit Gem City Home Care in Dayton, Ohio, and non-profit Visiting Nurse Association of Central Jersey Home Care and Hospice Inc. in Holmdel.

In the Gem City audit, the OIG ruled 36 of 100 claims reviewed as noncompliant based mostly on homebound and medical necessity problems, according to the agency’s audit report. But after Gem City enrolled a consultant to help it fight the denials, the OIG reduced that number to 25 claims with a resulting $40,621 overpayment.

Even under the lower amount, the OIG still slapped Gem City with a whopping $2.67 million overpayment estimate for 2016 and 2017, using extrapolation.

“$40,621 in disputed claims equaling a $2.67 million demand for overpayment,” observes home health financial expert Tom Boyd. “Love government math,” quips Boyd, CEO of Aftercare Nursing Services.

In its 17-page letter commenting on the report, Gem City says “the audit process undertaken by the OIG was flawed. The Gem City billing error rate, based on an expert audit, was 2.86 percent, validating the diligent billing practices, dedicated compliance program, and robust audit process of the agency.” The agency continues, “the OIG Reviewer ... repeatedly misapplied CMS standards which resulted in misidentified errors and a grossly overstated error rate.”

In the VNA case, the OIG found 16 of the 100 claims it reviewed noncompliant, also based mostly on homebound and medical necessity grounds. After the VNA engaged a law firm to help it fight the denials, the OIG reduced the disallowed claims to 14.

That’s still too many, the VNA contends in its response letter penned by attorney Anna Grizzle with Bass Berry & Sims. “The OIG’s medical reviewer applied incorrect criteria to determine the beneficiaries’ homebound status and consistently failed to consider the complete record reflecting each beneficiary’s individualized clinical condition and needs,” the VNA argued. “The beneficiaries’ medical records fully support both the homebound status and the medical necessity of skilled services for all of the audited beneficiaries.”

Plus: The OIG’s extrapolation methods are invalid, the VNA maintained in its letter. “Extrapolation ... is only appropriate where the extrapolation was made from a represen­tative sample and was statistically significant,” the letter says. “The OIG has not established that its sample is representative of the universe of VNA’s claims, and … the sample is not representative of the broader universe. The audit results cannot be extrapolated to those claims.”

The Gem City letter also took aim at extrapolation, contending that Medicare statutes say “extrapolation of Medicare payments is inappropriate unless there is a ‘sustained or high level of payment error.’” That’s not the case for this audit, it argues.

Note: The 51-page Gem City report released Oct. 16 is at https://oig.hhs.gov/oas/reports/region5/51800011.pdf and the 65-page VNA report released Oct. 29 is at https://oig.hhs.gov/oas/reports/region2/21701025.pdf.