Clinton Targets Home Health-Care Fraud Background Checks, Surety Bonds Will Be Required Of Care Providers

President Clinton announced Monday a crackdown on Medicare fraud, targeting the burgeoning home health-care market that accounts for a rapidly growing share of federal spending on the elderly.

Under the president’s plan, Medicare will stop signing up new home health-care providers while the Health Care Financing Administration devises new regulations to better screen applicants.

“During this moratorium we’ll develop tough new regulations to ensure that no fly-by-night providers enter or remain in the Medicare program,” Clinton said in a speech to the Service Employees International Union in Washington.

The administrative action requires current providers to submit to a review process every three years to ensure they are in compliance with the new regulations. An analysis of Medicare home health payments in California and three other states showed that 40 percent of the payments should not have been made, the inspector general’s office said.

That represents $2.6 billion out of the $6.7 billion spent on those services over a 15-month period ending March 31, 1996.

The government paid for an array of improper expenditures, the report showed, including excessive treatments, bills for services never performed and charges for patients who were not homebound and therefore not eligible.

Clinton said the campaign to crack down on abuse will complement a broader effort to rein in Medicare spending under the balanced budget agreement approved by Congress this year.

“No matter what changes we make in the structure of the program, we can’t maintain it for what it should be if we tolerate unacceptable levels of fraud and abuse,” Clinton said.

The new measures are particularly important because the number of elderly people receiving home health-care under Medicare program has mushroomed in recent years, from 1.7 million in 1989 to 3.9 million in 1996.

Medicare outlays for home health-care have grown even more dramatically over the same time, from $2.4 billion in 1989 to $17.7 billion in 1996. By the year 2000, home health-care costs are expected to exceed $21 billion.

Federal officials believe that unqualified entrepreneurs are swarming into the home health-care business to reap potentially huge profits from Medicare. Because the services are provided in homes, verification is difficult. Until now, the certification process did not require basic safeguards such as background checks of an applicant’s financial history or criminal record.

Under the new regulations, which will become effective in six months at the end of the moratorium, home health-care providers who want to be certified by Medicare must:

Post surety bonds of at least $50,000.

Show proof they have served a specified number of patients.

Submit detailed information about their business operations.