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Audit Finds ‘Scary’ Wasteful Spending On Medicare 40 Percent Of Home Health Care Visits Should Not Have Been Covered By Government, Official Says

A staggering 40 percent of Medicare-financed home health care visits in four states should not have been covered by the government, a federal official said Monday, offering the highest estimate yet of the extent of wasteful spending.

The rate of losses in home health care far surpasses the government’s most recent calculation of 14 percent for unnecessary spending within Medicare as a whole.

The 40 percent loss, shown in a sample audit in California, New York, Texas and Illinois, is “a scary figure,” said Sen. Charles Grassley, R-Iowa, chairman of the Senate Aging Committee, which heard testimony about the problem.

George F. Grob, deputy inspector general for the Department of Health and Human Services, said the government paid for a wide range of improper expenses, including for excessive treatments billed by home health care agencies, bills for services that were never performed and charges for persons who were not home-bound and therefore not eligible.

“This is not rocket science, to see what happened and why it happened,” said Sen. John Breaux, D-La., the committee’s ranking Democrat. “We’re spending one hell of a lot more money.”

Congress recently has focused on waste in the Medicare program as it explores ways to get the program’s costs under control. But lawmakers must weigh the amount of improper charges that could be prevented or recovered against the cost of increased enforcement.

In the meantime, legislation now before Congress would change the payment system for home health care to control costs. Agencies would receive a fixed amount for each individual case, rather than reimbursement for assorted services.

Spending for home care jumped from $2.6 billion in 1989 to nearly $18 billion this year. At the same time, Congress has cut back the money allocated for audits and fraud investigations. Currently, fewer than 3 percent of claims are reviewed, compared with 60 percent in 1989.

The government has identified 600 “problem” home care providers, which handled about 45 percent of total bills, in the four states audited. These companies submitted multiple claims for services that were unnecessary or never rendered. Quality of care was often poor.

Many of the owners “have backgrounds in completely unrelated businesses, for example, trucking, real estate, accounting and the beauty industry,” Grob told the committee. “The current certification process does not require any background checks into the owner’s credit or financial history, criminal records or past work experience,” he said.

Although the HHS detailed study was limited to four states, Grob said he believed the 40 percent loss figure would probably apply as well to the others.

Jeanette Garrison, a nurse now serving a 33-month prison term for Medicare fraud, told the committee how she started a home care agency after being unable to find help for two elderly relatives. She built an empire with 2,700 employees and $100 million in annual revenues.

She paid herself $600,000 a year in salary and benefits and created side businesses that did work for the nonprofit home health agency. A real estate partnership, a pharmacy, an equipment and supply business all piled up impressive profits providing services to Medicare patients.

She ultimately pleaded guilty to fraud and repaid the government $16 million. Her agency billed Medicare for treatment provided to private patients and for “employee rewards,” such as trips to Nashville, New York and Las Vegas.

Home health agencies bill for each visit to a Medicare beneficiary, and there is no limit on the number of visits.


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