Fraud in Home Health Care Demands a Crackdown

One of the few reforms on which everyone has agreed in the fractious debate over how to rein in health care spending is the need to shorten hospital stays.

The resulting shift in this aspect of patient care has been dramatic and has led to the rise of “home health agencies,” private companies that provide a broad range of medical services to homebound people--some fresh out of the hospital, some with chronic physical problems. Home aides assist with injections, intravenous equipment and physical therapy. Since 1989, the number of such agencies has nearly doubled nationally and Medicare payments for home health care have jumped from $2.7 billion to about $18 billion.

This boom, however, has hardly been accompanied by similar growth in policing. Due to reduced funding, the federal oversight agency, the Health Care Finance Administration, now reviews fewer than 3% of home health billing claims, compared to 60% in 1989. It was a classic recipe for the very disaster that the Government Accounting Office outlined to Congress last week: A staggering 40% of federally financed home health care visits in California and three other states were fraudulent or unnecessary.

Congress’ response has been anemic. The Senate committee that heard the GAO testimony called for a “round-table discussion” beginning this fall and concluding in mid-1998. That’s unacceptably slow at a time when millions of dollars a day are being lost to fraud. Congress should instead help the Health Care Finance Administration implement the following reforms now:

Tighten oversight. The most urgently needed change would cost almost nothing. Federal oversight is limited to paper audits, but some states send inspectors to visit home health agencies, thus discovering problems like supposedly critically ill residents who are out playing golf. Or untrained aides receiving a registered nurse’s wage. Currently, however, state and federal inspectors do not share their data. By establishing computer links, federal officials could discover more fraud more quickly. The GAO urges that health care companies, rather than the taxpayer, pay for major fraud investigations.

Sharpen penalties and prosecution. The Health Care Finance Administration should promptly implement “intermediate sanctions” like civil and monetary fines. Congress empowered the agency to impose such sanctions in 1989 but it has failed to do so, leaving no step between accepting fraud and dropping operators altogether. Blame also falls on California and Los Angeles County officials, who have failed to adequately fund state and local oversight.

The misbehavior of some companies, however, should not cast the idea of home health care into question. Such care, done skillfully, grants the ill or the immobile elderly a measure of autonomy, lets them live in familiar surroundings and offers an alternative to long hospital stays.

Beginning reform is more important than apportioning blame or calling for desultory “round-table discussions.” As Sen. John Breaux (D-La.) said during the GAO testimony Monday: “This is not rocket science, to see what happened and why it happened.”