oversight

Medicare Home Health Agencies: Certification Process Is Ineffective in Excluding Problem Agencies

Published by the Government Accountability Office on 1997-07-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Special Committee on Aging, U.S. Senate




For Release on Delivery
Expected at 1:00 p.m.
Monday, July 28, 1997
                          MEDICARE HOME
                          HEALTH AGENCIES

                          Certification Process Is
                          Ineffective in Excluding
                          Problem Agencies
                          Statement of Leslie G. Aronovitz, Associate Director
                          Health Financing and Systems Issues
                          Health, Education, and Human Services Division




GAO/T-HEHS-97-180
Medicare Home Health Agencies:
Certification Process Is Ineffective in
Excluding Problem Agencies
                Mr. Chairman and Members of the Committee:

                I am pleased to be here today as the Committee examines fraud and abuse
                associated with one of the fastest growing components of the Medicare
                program—the home health benefit. We believe the foundation for
                protecting this benefit rests on controlling which home health agencies
                (HHA) are allowed to bill Medicare and ensuring that they provide quality
                services for each Medicare dollar they receive.

                Only HHAs that are surveyed and certified as meeting Medicare’s conditions
                of participation and associated standards may be paid by Medicare for
                their services. As a result of changes in Medicare law, regulations, and
                policy in the 1980s, more people are receiving home health services for
                longer periods of time. This has led to rapid growth in the number of
                certified HHAs—from 5,700 in 1989 to almost 10,000 at the beginning of
                1997. In some states, the number of HHAs has more than doubled. During
                this same period, Medicare payments for home health care jumped from
                $2.7 billion to about $18 billion and are estimated to reach $21.9 billion in
                fiscal year 1998.

                Because of this Committee’s concerns about whether the rapid growth of
                HHAs  in the Medicare program has been effectively managed, you and
                Senator Breaux asked us to determine how Medicare (1) controls the entry
                of HHAs into the Medicare program and (2) ensures that HHAs in the
                program comply with Medicare’s conditions of participation and
                associated standards. Today, I will discuss the preliminary results of our
                ongoing review of Medicare’s survey and certification process for HHAs. In
                conducting our review, we obtained information from the Health Care
                Financing Administration’s (HCFA) central office and regional offices in
                California, Illinois, Massachusetts, and Texas; state survey agencies in
                California, Maine, Massachusetts, and Texas; the offices of Medicare
                claims processing contractors, known as regional home health
                intermediaries, located in California, Iowa, Maine, and South Carolina; the
                Department of Health and Human Services’ (HHS) Office of the Inspector
                General; and several industry groups. Our final report to the Committee
                this fall will address in greater detail the issues I am about to discuss.

                In summary, we are finding that Medicare’s survey and certification
                process imposes few requirements on HHAs seeking to serve Medicare
                patients and bill the Medicare program. The certification of an HHA as a
                Medicare provider is based on an initial survey that takes place so soon
                after the agency begins operating that there is little assurance that the HHA



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                                    is providing or is capable of providing quality care. Moreover, once
                                    certified, HHAs are unlikely to be terminated from the program or
                                    otherwise penalized, even when they have been repeatedly cited for not
                                    meeting Medicare’s conditions of participation and for providing
                                    substandard care.


                                    HHS is charged with ensuring that HHAs meet conditions of participation in
Background                          the Medicare program that are adequate to protect the health and safety of
                                    beneficiaries. As shown in table 1, Medicare has 12 conditions of
                                    participation covering such areas as patient rights; acceptance of patients,
                                    plans of care, and medical supervision; and skilled nursing services. Most
                                    conditions, in turn, comprise more detailed standards; for example, the
                                    skilled nursing condition has two standards—one addresses the duties of
                                    registered nurses and the other the duties of licensed practical nurses. The
                                    conditions and standards are further clarified in interpretive guidelines,
                                    which explain relevant statutes and regulations.

Table 1: Medicare’s Conditions of
Participation and Associated        Conditions of participation                       Standards
Standards for HHAs                  Patient rightsa
                                                                                      — Notice of rights
                                                                                      — Exercise of rights and respect for
                                                                                      property and person
                                                                                      — Right to be informed and to
                                                                                      participate in planning care and
                                                                                      treatment
                                                                                      — Confidentiality of medical records
                                                                                      — Patient liability for payment
                                                                                      — Home health hotline
                                    Compliance with federal, state, and local laws;   — Compliance with federal, state,
                                    disclosure and ownership information; and         and local laws and regulations
                                    accepted professional standards and principlesa   — Disclosure of ownership and
                                                                                      management information
                                                                                      — Compliance with accepted
                                                                                      professional standards and principles
                                                                                                                (continued)




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Medicare Home Health Agencies:
Certification Process Is Ineffective in
Excluding Problem Agencies




Conditions of participation                            Standards
Organization, services, and administration             — Services furnished
                                                       — Governing body
                                                       — Administrator
                                                       — Supervising physician or
                                                       registered nurse
                                                       — Personnel policies
                                                       — Personnel under hourly or per-visit
                                                       contracts
                                                       — Coordination of patient servicesa
                                                       — Services under arrangements
                                                       — Institutional planning
                                                       — Laboratory services
Group of professional personnel                        — Advisory and evaluation function
Acceptance of patients, plan of care, and medical — Plan of care
supervisiona                                      — Periodic review of plan of care
                                                  — Conformance with physician
                                                  orders
Skilled nursing services                               — Duties of the registered nurse
                                                       — Duties of the licensed practical
                                                       nurse
Therapy services                                       — Supervision of physical therapy
                                                       assistant and occupational therapy
                                                       assistant
                                                       — Supervision of speech therapy
                                                       services
Medical social services
Home health aide servicesa                             — Home health aide training
                                                       — Competency evaluation and
                                                       in-service training
                                                       — Assignment and duties of the
                                                       home health aide
                                                       — Supervision
                                                       — Personal care attendant:
                                                       evaluation requirements
Qualifying to furnish outpatient physical therapy or
speech pathology services
Clinical recordsa                                      — Retention of records
                                                       — Protection of records
Evaluation of the agency’s program                     — Policy and administrative review
                                                       — Clinical record review

a
Conditions and standards reviewed during a standard survey.

Source: 42 C.F.R. 484.



Medicare—as authorized by title XVIII of the Social Security Act—can
reimburse only those HHAs that have been surveyed and certified as being




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                         in compliance with its conditions of participation. This survey and
                         certification process is administered by HCFA through state survey
                         agencies—usually components of the state health departments. HCFA funds
                         these survey agencies to assess HHAs against Medicare’s conditions of
                         participation and associated standards. Surveys are conducted on-site at
                         the HHA and involve activities such as clinical records review and home
                         visits with patients. HCFA’s State Operations Manual provides guidance to
                         state surveyors on conducting their surveys.

                         Once an HHA passes its initial survey and meets certain other requirements,
                         HCFA certifies it as a Medicare provider and issues a provider number,
                         which the agency uses to bill Medicare. To retain its certification, an HHA
                         must remain in compliance with all of the conditions of participation.
                         Each HHA is supposed to be recertified every 12 to 36 months following the
                         same process used in the initial survey process, with the frequency
                         depending upon factors such as whether ownership changed and the
                         results of prior surveys. But complaints about HHA services may trigger an
                         earlier survey. HHAs can lose their certification and be terminated from the
                         program if they do not comply with one or more conditions; for example,
                         an HHA providing substandard skilled nursing care that threatens patient
                         health and safety can be terminated. However, HHAs not complying with a
                         condition of participation can avoid termination by implementing
                         corrective actions.


                         Practically anyone who meets state or local requirements to start an HHA
HHAs Easily Obtain       can be virtually assured of Medicare certification. It is rare that any new
Medicare Certification   HHA is found not to meet Medicare’s three fundamental certification
                         requirements: (1) being financially solvent; (2) complying with title VI of
                         the Civil Rights Act of 1964, which prohibits discrimination; and
                         (3) meeting Medicare’s conditions of participation. HHAs self-certify their
                         solvency, agree to comply with the act, and undergo a very limited initial
                         certification survey that few fail. Currently, HCFA certifies about 100 new
                         HHAs each month.


                         Once an HHA meets state and local laws, regulations, and licensing
                         requirements, Medicare imposes few additional restrictions to becoming
                         certified. Title XVIII of the Social Security Act does not require HHA owners
                         to have prior health care experience. For example, we found one owner
                         whose most recent work experience was driving a taxi cab and another
                         who owned and operated a pawn shop in addition to his HHA. Finally, there
                         are no capitalization requirements, and a criminal background is not a



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    deterrent to agency certification unless that criminal activity specifically
    prohibits the individual from Medicare participation.

    Each certified HHA must provide skilled nursing services and one other
    covered service—physical, speech, or occupational therapy; medical
    social services; or home health aide services. HHAs can offer all of these
    services if they choose to do so. Only one of an HHA’s services must be
    delivered exclusively by its staff; any additional covered services the HHA
    offers can be provided either directly or under contract with another
    health care organization that does not have to be Medicare certified.

    During the initial certification process, surveyors conduct what is called a
    standard survey; this survey is required by statute to assess the quality of
    care and scope of services the HHA provides as measured by indicators of
    medical, nursing, and rehabilitative care. The standard survey addresses
    an HHA’s compliance with 5 of the 12 conditions of participation plus one
    of the standards associated with a sixth condition that HCFA believes best
    evaluate patient care (see table 1). If surveyors identify substandard care
    during the standard survey, they are to conduct a more in-depth review of
    the HHA’s compliance with the other conditions of participation.

    These initial surveys often take place so soon after an HHA begins
    operating that surveyors have little information with which to judge the
    quality of care an HHA provides or the HHA’s potential for providing such
    care. We found that initial surveys frequently are made when HHAs have
    served as few as one patient for less than 1 month and have not yet
    provided all the services for which they are to be certified. The surveyor
    may never see any patients or otherwise assess the care the HHA is
    providing, even though visiting patients is recognized by HCFA and state
    surveyors as the best way to evaluate an HHA’s care. Furthermore, the HHAs
    are typically caring for non-Medicare beneficiaries at the time of their
    initial survey; these patients may have medical conditions that differ from
    those of Medicare beneficiaries needing home health care.

    The fact that the law allows this ease of entry into Medicare has probably
    contributed to the rapid growth in the number of Medicare-certified HHAs;
    it has also allowed some questionable agencies to participate in the
    program. For example:

•   An individual with no experience in health care started her Texas HHA in
    the pantry of her husband’s restaurant. Within 4 months of the HHA’s
    certification, state surveyors started receiving complaints that the HHA had



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    been (1) enrolling patients who were either ineligible for the Medicare
    home health benefit or who had been referred for care without a
    physician’s orders and (2) hiring home health aides on the condition that
    they first recruit a patient. Approximately 10 months following initial
    certification, state surveyors substantiated the complaints and also found
    that the HHA was not complying with four conditions and multiple
    standards, including four standards that the HHA had been cited for
    violating during its initial survey. The surveyors also identified 13 cases in
    which they suspected the HHA provided unnecessary services or served
    ineligible beneficiaries; the surveyors referred these cases to the Medicare
    claims processing contractor. One month later, the surveyors conducted a
    follow-up survey and found that the agency had implemented corrective
    actions, as it had following its initial survey. No further surveys had been
    conducted at the time of our review.
•   Another individual with no home health care experience started a
    California HHA, which was Medicare certified in 1992. Within 1 year of
    certification, state surveyors and the Medicare claims processing
    contractor received numerous complaints alleging that the HHA had served
    patients ineligible for the Medicare benefit, falsified medical records,
    falsified the credentials of the director of nursing, and used staff
    inappropriately. A recertification survey about 15 months after initial
    certification found that the HHA was not complying with multiple
    conditions of participation and had endangered patient health and safety.
    By September 1993, after Medicare had paid the HHA over $6 million, the
    HHA closed. The owner, a former drug felon, and an associate later pled
    guilty to defrauding Medicare of over $2.5 million.

    HCFA  regional office and state survey officials have acknowledged that the
    initial certification survey provides little assurance that an HHA can and
    will provide quality care. They believe that newly certified HHAs should be
    resurveyed after they are fully operational and that, at that time, they
    should also be assessed for compliance with all of Medicare’s conditions
    of participation for all of the services the HHA provides. HCFA central office
    officials told us that, while they have the statutory authority to assess new
    HHAs against all of the conditions of participation at any time and it would
    be desirable to resurvey an agency several months after initial
    certification, this would require additional funding for state survey
    agencies—funding that they said is not available. Another alternative, also
    within HCFA’s statutory authority, is to require that HHAs seeking Medicare
    certification have treated a minimum number of patients. Several HCFA
    regional offices now suggest that an HHA should have cared for at least 10
    patients at the time of its initial survey. However, HCFA central office



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                            officials said that this would not be a reasonable requirement for all HHAs
                            seeking certification. In some rural states, 10 patients may represent an
                            entire year’s patient workload. Setting a 10-patient minimum on a national
                            basis could therefore result in denying beneficiaries access to home health
                            care services if they live in sparsely populated areas of the county,
                            according to the HCFA officials.


                            Medicare’s recertification process does not ensure that only those HHAs
Medicare’s                  that provide quality care in accordance with Medicare’s conditions of
Recertification             participation remain certified. The primary problems are that (1) HHAs do
Process Contains            not have to periodically demonstrate compliance with all of Medicare’s
                            conditions of participation; (2) surveyors do not fully review an HHA’s
Serious Weaknesses          branch office operations; (3) rapidly growing HHAs do not receive more
                            frequent surveys, even though rapid growth has been linked to difficulties
                            in complying with Medicare’s conditions; and (4) HHAs repeatedly cited for
                            serious deficiencies identified during a standard survey are rarely
                            terminated or otherwise penalized.


HHAs Are Not Assessed       HCFA initially certifies and then recertifies most HHAs without requiring
Against All Conditions of   them to ever demonstrate compliance with all the conditions of
Participation               participation. Instead, HCFA asks the surveyors to initially limit their
                            evaluation of HHAs to the standard survey and then expand the survey to
                            the other conditions only if they find problems. As a result, HCFA and
                            Medicare patients usually do not know whether an HHA is complying with
                            conditions not included in the standard survey.

                            A recent Operation Restore Trust (ORT) project in California targeted 44
                            HHAs that provided unusually high numbers of services to their patients
                            and received high levels of Medicare payments compared with their peers.1
                            HCFA and state surveyors evaluated these HHAs against 11 of the 12
                            conditions of participation, rather than initially limiting their evaluation to
                            the 5 conditions and 1 standard reviewed during a standard survey.2 HCFA
                            and state surveyors identified a significant number of HHAs that were
                            noncompliant with conditions typically excluded from review—conditions

                            1
                             ORT initially was a 2-year, multiagency effort in five states that targeted fraud and abuse by three
                            types of Medicare providers: HHAs, skilled nursing facilities, and durable medical equipment suppliers.
                            In May 1997, the Secretary of HHS announced that ORT would continue for another 2 years and
                            include projects in 12 additional states.
                            2
                             This project did not cover HHA compliance with the condition regarding qualifications to furnish
                            outpatient physical therapy or speech pathology services because none of the HHAs provided such
                            services on an outpatient basis at their parent or branch offices.



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                                    that address the HHA’s operations and the care it provides to Medicare
                                    beneficiaries. Nearly three-quarters of the HHAs failed to comply with at
                                    least one of the conditions not covered in the standard survey, and 21 of
                                    the 44 HHAs either voluntarily withdrew their certification or had their
                                    certification terminated by HCFA. Although this project targeted HHAs
                                    suspected of problems, it does demonstrate that criteria other than those
                                    used in the limited standard survey may be better predictors of
                                    compliance with all the conditions of participation.


Branch Offices of HHAs              HCFA defines a branch office of an HHA as a unit within the geographic area
Are Frequently Not                  served by the parent office that shares administration, supervision, and
Evaluated                           services with the parent office. Since the mid-1980s, many HHAs have
                                    created branch offices. As shown in figure 1, about 2,200 HHAs operated
                                    nearly 5,500 branch offices in January 1997—over four times the number
                                    in November 1993. In Texas, for example, we identified 106 HHAs with 3 or
                                    more branches, and 1 HHA had 25 branch offices.


Figure 1: Growth in the Number of
HHA Branch Offices                  6000      Number of branch offices
                                                             5484
                                    5500

                                    5000

                                    4500

                                    4000

                                    3500

                                    3000

                                    2500

                                    2000

                                    1500      1247

                                    1000

                                     500

                                       0
                                                  3



                                                                97
                                              99



                                                            19
                                             r1



                                                           ry
                                              e
                                           mb




                                                         a
                                                      nu
                                       ve



                                                      Ja
                                      No




                                    Source: HCFA’s On-line Survey Certification and Retrieval System.




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                             Since they are considered to be an integral part of an HHA, branches are
                             not required to independently meet the conditions of participation.
                             Further, HCFA does not require surveyors to visit patients served by each
                             branch office. Since new branch offices do not undergo an initial
                             certification survey, HCFA cannot be assured that they meet Medicare’s
                             definition of a branch office. And, most importantly, not directly surveying
                             branch operations means that quality-of-care issues within an HHA’s overall
                             operations may be missed. When branches have been surveyed because
                             the HHA wanted to convert them to parent offices, significant problems
                             have been found. Several examples follow:

                         •   In California, surveyers found that one branch of an HHA cared for 581
                             patients over the 12 months ending September 1996—more than the
                             average number of patients cared for by an HHA in the state during that
                             time. Moreover, the branch was not complying with one condition of
                             participation, and the surveyers recommended denial of the HHA’s initial
                             certification. Among its problems was that the branch had no system in
                             place to ensure that its contractor staff had the appropriate qualifications
                             and licenses.
                         •   Similarly, a branch office of a Massachusetts HHA had cared for 69 patients
                             since the HHA’s last survey. The branch was denied initial certification as a
                             parent office because it failed to meet nine standards associated with
                             several conditions of participation. For example, the surveyors found that
                             the branch office, in 10 of 12 cases examined, did not follow the plan of
                             care and provide services as frequently as ordered by a physician. At the
                             time of our review, the HHA had not yet submitted its correction plan and
                             had not been certified as a parent office.

                             While HCFA’s guidance allows surveyors to conduct the entire
                             recertification survey of an HHA at a branch office, state surveyors told us
                             that this is seldom, if ever, done. Branch offices typically do not maintain
                             all the personnel files or clinical information that surveyors need in their
                             evaluation. As a practical matter, surveyors told us that they may not have
                             time to conduct home visits with branch office patients and still finish the
                             survey within their allotted time and resources.


No Thresholds Exist to       Increasing workload may necessitate changes in an HHA’s operations; this,
Trigger More Frequent        in turn, can affect its compliance with Medicare’s participation
Surveys of Rapidly           requirements. While HCFA’s criteria for setting survey frequency include
                             many factors, they do not include consideration of whether an HHA is
Growing Agencies



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                                         growing rapidly or maintaining a stable level of operations—information
                                         state surveyors generally would not have before conducting their survey.

                                         New HHAs have the potential for rapid growth and, as a result, are more
                                         likely to have difficulties complying with Medicare’s conditions of
                                         participation. As shown in table 2, we found that nearly one-fourth of the
                                         HHAs initially certified in 1993 in California and Texas received Medicare
                                         payments exceeding $1 million in 1994—their first full year of Medicare
                                         certification—and the average number of patients they treated in a year at
                                         least tripled between 1993 and 1995. For example, in 1993, one California
                                         HHA treated 11 patients and received $33,000 from Medicare; in 1995, the
                                         HHA treated 1,810 patients and received $12.7 million in Medicare
                                         payments. Also, the percentage of these rapidly growing HHAs cited for
                                         noncompliance with the conditions of participation exceeded the national
                                         norm. Nationwide, about 3 percent of all HHAs each year are cited for
                                         failing to meet Medicare’s conditions of participation. In contrast,
                                         40 percent of the high-growth HHAs in California and 11 percent of the
                                         high-growth Texas HHAs did not meet the conditions in their most recent
                                         surveys.

Table 2: Characteristics of
High-Growth HHAs in California and                                                    California   Texas
Texas That Were Initially Certified in   Number of HHAs initially certified in 1993   116          174
1993
                                         Number of these HHAs that received more      30           44
                                         than $1 million in Medicare payments in 1994
                                         Average Medicare payments to these HHAs $2.9 million      $3 million
                                         in 1995
                                         Change in average number of patients         Quadrupled   Tripled
                                         treated between 1993 and 1995 by these
                                         HHAs
                                         Percentage of these HHAs that did not meet 40             11
                                         conditions of participation in latest survey

                                         HCFA issued its survey frequency criteria in May 1996, after legislation
                                         authorized it to increase the maximum interval between surveys from 15
                                         months to 3 years. As previously noted, HCFA’s criteria consider factors
                                         such as an HHA’s prior survey results, changes in ownership, and
                                         complaints. By not considering an HHA’s rate of growth when setting
                                         survey frequency, however, HCFA is missing an opportunity to more quickly
                                         identify and correct compliance deficiencies. Such information is available
                                         from Medicare contractors and HCFA.




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Few HHAs Are                   Once certified as a Medicare provider, an HHA is virtually assured of
Involuntarily Terminated       remaining in the program even if repeatedly found to be violating
                               Medicare’s conditions of participation and associated standards. There are
                               no penalties short of termination because HCFA has not developed
                               intermediate sanctions as it was authorized by the Congress to do a
                               decade ago. HCFA officials told us that they wanted experience with the
                               skilled nursing facility intermediate sanctions, which became effective in
                               July 1995, before implementing intermediate sanctions against HHAs.

                               Until the advent of ORT, the likelihood of an HHA’s being terminated from
                               the Medicare program was remote. In fiscal years 1994, 1995, and 1996,
                               about 3 percent of all certified HHAs were terminated, and most of these
                               were voluntary terminations arising from either mergers or closures. Only
                               about 0.1 percent of all certified HHAs in fiscal years 1994 and 1995 and
                               0.3 percent in fiscal year 1996 were involuntarily terminated as a result of
                               noncompliance with the conditions of participation. California accounted
                               for almost half of the 32 involuntary terminations nationwide in 1996, with
                               8 of its 15 involuntary terminations that year stemming from the ORT
                               project.

                               To terminate an HHA, the surveyors must find that it did not comply with
                               one or more conditions and remained out of compliance 90 days after a
                               survey first identified the noncompliance.3 If an HHA threatened with
                               termination takes corrective action and state surveyors verify through site
                               visits that this action has brought the HHA back into compliance, HCFA will
                               cancel the termination process.

                               Under Medicare’s termination procedures, HHAs remain in the program, to
                               the potential detriment of beneficiaries, even if they repeatedly fail to
                               comply with Medicare’s conditions of participation.

                           •   In California, for example, an HHA’s second recertification survey revealed
                               that the HHA was deficient in meeting five standards, three of which had
                               been identified in the previous year’s survey and supposedly corrected.
                               Several months later, at this same HHA, an ORT survey team found eight
                               conditions and numerous standards not met. When this HHA was
                               resurveyed 5 months later, the surveyors found that it was back in
                               compliance with all conditions but that it had yet to meet seven standards.
                               Most of these deficiencies in meeting standards had been cited in the
                               preceding surveys, and some had existed for a long time. For example, for

                               3
                                If the deficiency jeopardizes patient health and safety and is considered immediate and serious, HCFA
                               places the HHA on an accelerated termination timetable.



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    the three most recent surveys, this HHA had been cited for not following
    physicians’ orders in the written plan of care. The HHA remains certified
    despite its repeated problems.
•   Moreover, on a Texas HHA’s first recertification survey, 1 year after initial
    certification, the state surveyor found four standards not met and referred
    several cases of possible fraud to the Medicare contractor. Within 10
    months of that survey, state surveyors resurveyed the HHA and found it was
    not in compliance with seven conditions of participation, and the
    previously cited deficiencies in meeting standards had not been corrected.
    HCFA issued a termination letter, but within 2 months of the last survey the
    HHA had corrected the deficiencies, and the termination process was
    halted. On a complaint investigation 6 months after the deficiencies had
    been corrected, the surveyors found the HHA was again out of compliance
    with three of the same seven conditions. On this most recent survey, the
    surveyors attributed the death of one patient directly to this HHA. At the
    time her attorney advised her to surrender her state license and Medicare
    certification, the owner/operator of this HHA had already hired a nurse
    consultant to bring the HHA back into compliance.

    HHAs  are not threatened with termination if they are complying with the
    conditions of participation but are violating one or more standards and
    subsequently submit a corrective action plan. But surveyors often do not
    revisit the HHA to verify that it has implemented the plan and actually
    corrected the deficiencies. For example, Illinois surveyors did not revisit
    13 of 21 HHAs that had submitted plans to correct their violations of
    Medicare’s standards.

    Because of circumstances such as those discussed above, the threat of
    termination has little, if any, deterrent value. The Congress, recognizing
    that HCFA should have more enforcement options than that of terminating
    an HHA, enacted provisions in the Omnibus Budget Reconciliation Act of
    1987 to address this issue. These provisions authorized the Secretary of
    HHS to impose intermediate sanctions for a period not to exceed 6 months
    on HHAs violating Medicare’s conditions of participation. If the HHA
    continued to violate conditions after that 6-month period, it was to be
    terminated from the program. The act required the Secretary of HHS to
    develop and implement, not later than April 1, 1989, a range of
    intermediate sanctions that were to include civil monetary penalties for
    each day of noncompliance, suspension of Medicare payments to the HHA,
    and HCFA’s appointment of a temporary manager to manage the HHA. HCFA
    proposed alternative sanctions for HHAs in August 1991 but never finalized
    its implementing regulations. Therefore, the only alternative currently



    Page 12                                                     GAO/T-HEHS-97-180
              Medicare Home Health Agencies:
              Certification Process Is Ineffective in
              Excluding Problem Agencies




              available to HCFA to penalize deficient HHAs is to terminate them from the
              program.


              HHAs  provide valuable services that enable a growing number of
Conclusions   beneficiaries to continue living at home. Accompanying this increase in
              beneficiaries have been sharply increasing Medicare payments and rapidly
              rising numbers of certified HHAs. HCFA’s HHA survey and certification
              process, however, fails to provide beneficiaries with reasonable assurance
              that their HHA meets Medicare’s conditions of participation and provides
              quality care. Yet, certification represents Medicare’s “seal of approval” on
              the services provided by an HHA.

              Our ongoing work suggests that it is simply too easy to become Medicare
              certified. Before they are certified, HHAs do not have to demonstrate a
              sustained capability to provide quality care to a minimum number of
              patients for all types of services. And because the requirements are
              minimal, HCFA certifies nearly all HHAs seeking certification. While many
              HHAs are drawn to the program with the intent of providing quality care,
              some are attracted by the relative ease with which they can become
              certified and participate in this lucrative, growing industry. HHAs can
              remain in the program with little fear of losing their certification. Most will
              never have to demonstrate compliance with all of the participation
              conditions, and, even if they are found out of compliance, temporary
              corrective actions are sufficient to allow them to continue to operate.

              These problems suggest that HCFA needs to pay closer attention to how it
              surveys and certifies HHAs. We expect that our upcoming report will
              contain specific recommendations on how HCFA can strengthen the survey
              and certification process so that it provides greater assurance that only
              those HHAs that provide quality care in accordance with requirements
              participate in Medicare.


              Mr. Chairman, this concludes my prepared statement. I would be pleased
              to respond to any questions you or Members of the Committee may have.




(101501)      Page 13                                                      GAO/T-HEHS-97-180
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