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Audit Finds Fraud, Poor Care Under Medicare Services Gao Investigation Alleges Rampant Abuse

Federal investigators say they have found widespread fraud, overcharges and substandard care in the medical services provided to frail homebound elderly people under Medicare.

The General Accounting Office, an auditing arm of Congress, said that almost any business could be certified as a home health agency, with little or no experience, and that hardly any were expelled from the booming, highly profitable field. The amount of federal money available for inspections and enforcements has lagged far behind the demand for home health care services, which are immensely popular with Medicare beneficiaries.

More than 3.8 million of the 38 million Medicare beneficiaries receive services from 10,000 home health care agencies, at a cost to the federal government of $19 billion a year. The total number of home health visits financed by Medicare doubled from 1992 to 1996, reaching 280 million last year.

Home health agencies can be initially certified for payment under Medicare even if they are not complying with federal health and safety standards, the auditors said.

Moreover, “home health agencies repeatedly cited for serious deficiencies are rarely terminated or otherwise penalized,” said Leslie G. Aronovitz, an associate director of the General Accounting Office.

In testimony prepared for a hearing of the Senate Special Committee on Aging on Monday, Aronovitz said that home care agencies cited for violations of federal standards could avoid expulsion from Medicare merely by submitting “corrective action plans” to federal or state authorities. In many cases, she said, Medicare inspectors do not revisit the agencies to verify that they actually correct the violations.

Thus, she said, the government “certifies nearly all home health agencies seeking certification,” and “the threat of termination has little, if any, deterrent value.” Such terminations, she said, have been “exceptionally rare - about 0.3 percent of all certified home health agencies in 1996.”

Sen. Charles E. Grassley, the Iowa Republican who is chairman of the Committee on Aging, said, “The fraudulent providers are giving the whole home care industry a black eye.” Grassley has led efforts to curtail such abuse.

Val J. Halamandaris, president of the National Association for Home Care, which represents 6,000 home health agencies, agreed with the criticism of how agencies are inspected.

“Everybody and nobody is responsible,” Halamandaris said. “The federal government says, ‘We’re trusting the states.’ The states are supposed to do it. But they say they don’t have the money to do it.”

The General Accounting Office said Medicare officials reviewed few claims to check whether patients were eligible, needed home care or even received the services billed to Medicare. The government reviewed 60 percent of claims filed 10 years ago, but only 2 percent of those filed last year. The money for such reviews has lagged far behind the increase in the number of claims.

In a separate report, June Gibbs Brown, inspector general of the Department of Health and Human Services, which runs Medicare, estimated that more than one-third of Medicare payments to home health care agencies in some states were improper or unjustified. Payments were classified as improper if records did not show a need for the services provided, if the services were never provided, if they were not covered by Medicare, if the provider’s staff members were not licensed or if doctors’ signatures were forged.

Details of the reports to be issued on Monday were provided by officials eager to focus attention on the abuses being investigated by Senator Grassley.

Certification represents Medicare’s seal of approval on the services provided by a home health agency. As a condition of receiving federal money, the agencies are supposed to comply with federal standards for patients’ rights, the training and supervision of home aides, medical records, physical therapy and other services. Violations like the failure to follow doctors’ orders may pose a direct threat to patients.

In 1987, Congress authorized Medicare officials to impose fines and other penalties short of terminating all payments to an agency. But Ms. Aronovitz said Medicare officials had not developed or imposed such penalties.

In an intensive review of 44 agencies in California, Aronovitz said, Federal auditors found that nearly three-fourths failed to comply with at least one Federal standard. Most violations were not detected in the “standard survey,” which assesses compliance with only half the federal standards, she said.

“It is simply too easy” for agencies to be certified for Medicare, Aronovitz said. federal law does not require the owners to have experience providing health care.

In one case, Aaronovitz said, “an individual with no experience in health care started a Texas home health agency in the pantry of her husband’s restaurant.” Inspectors found that the company had hired home health aides on the condition that they first recruit patients. The agency was suspected of providing unnecessary services and was cited for violating federal standards.

The General Accounting Office also made these points:

The government certifies about 100 new agencies a month. “Initial certifications frequently occur when agencies have been serving as few as one patient for less than one month.” Inspectors “may never see any patients” served by the agencies they certify.

“Branch offices of home health agencies frequently escape any evaluation.” The number of branches has grown fourfold in four years, to 5,500, and some are extremely large. But Medicare inspectors rarely review their operations or visit their patients to assess the care.

“While many home health agencies are drawn to the Medicare program with the intent of providing quality care, some are drawn because of the relative ease with which they can become certified and participate in this lucrative, growing industry.”

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