Although still touted as a popular alternative to inpatient hospitalization, home care is grabbing the attention of the federal government-for all the wrong reasons.
Medicare scams, illegal kickbacks, overcharging patients, ghost billing, double dipping, illegal patient referrals, unnecessary prescriptions, falsified patient-care plans, money laundering and racketeering are some of the charges federal investigators are leveling at the multibillion-dollar industry.
And now some of the more serious charges are being filed against the executives who run well-known companies.
"I think you're going to see more (individuals and companies) being thrown out of the Medicare program," said James Kopf, chief inspector of the criminal investigation division at HHS' inspector general's office. "It's going to be the corporate executive who puts out the edict: `We're going to make a lot of money (illegally), and this is how we're going to do it."'
Last month, Michael Mangano, HHS' principal deputy inspector general, told a congressional panel that his agency will focus much of its efforts on identifying companies and individuals profiting through home-care fraud.
In July the owner and two senior executives of one of Georgia's largest home-care companies, Healthmaster, will go on trial to defend themselves against charges they defrauded the federal government for $1.7 million.
Jeannette G. Garrison, owner and president of the Augusta-based company; Dennis J. Kelly, vice president and chief financial officer; and David W. Suba, a former Healthmaster executive, were charged with devising a fraud scheme in which they allegedly laundered Medicare money through several dummy companies.
The charges are part of a 133-count indictment a federal grand jury in Savannah, Ga., returned against Healthmaster in March. All three have pleaded not guilty to the charges.
Meanwhile, Healthmaster's chief Georgia competitor, Brunswick-based ABC Home Health Services, was accused by HHS' inspector general's office in February of filing more than $800,000 in bogus Medicare claims. If found guilty, ABC would be banned from the Medicare and Medicaid programs for seven years. The sanction ultimately could be a death blow for the company (which changed its name to First American Health Care earlier this year). It received more than $300 million in Medicare payments in 1993-90% of its total revenues.
Many of the alleged false claims were for personal items linked to ABC's owners, Robert Mills, chairman and chief executive officer, and Margie Mills, Robert Mills' wife and the company's president and chief operating officer.
The billings, which HHS said were unrelated to patient claims, included:
$5,133 for lease payments on a car used by the owners' son.
$3,832 for maid service for the owners' condominium.
$2,831 for utility fees for the condominium.
$3,263 for golf pro shop expenses.
$1,045 for country club fees.
The sanctions against ABC stem from just one of three separate federal fraud investigations involving the company, government spokesmen said.
ABC officials deny the allegations, saying the charges are groundless and many of the disputed claims are allowed by Medicare. The company has appealed.
The company also attributed its troubles to at least two state and federal health officials with alleged personal vendettas against the company.
Scrutinizing the industry.
Home care, like other alternate-site industries, has come under increased federal scrutiny over the past several years as the government looks for ways to reduce the amount of money Medicare doles out to fraudulent providers.
Investigators from HHS' inspector general's office, the Justice Department, the FBI and the Internal Revenue Service have formed special task forces specifically to deal with Medicare fraud.
It's all part of the Clinton administration's "Operation Restore Trust," a pilot program created to uncover Medicare fraud.
Neither HCFA nor the General Accounting Office has specific figures on the amount of money Medicare loses to fraud each year. However, a report released last year by the Senate Special Committee on Aging estimated there is as much as $100 billion a year in healthcare fraud.
And home care, federal officials say, is a primary field of illegal activity.
The introduction of DRGs to inpatient care in 1983 launched the shift of healthcare services to outpatient care. As a result, home care boomed during the late 1980s and '90s.
Officials say massive increases in Medicare expenditures for home-care services as well as the migration of providers to the industry make home care a key target for scrutiny.
For example, in 1992 Medicare spending for home care totaled nearly $5 billion. By 1994 expenditures exceeded $13 billion-a 160% increase in two years. HHS is predicting Medicare home healthcare spending will skyrocket to as high as $22 billion by the year 2000.
In addition, the number of Medicare-certified home healthcare agencies climbed 42% to 8,100 in 1994 from 5,676 in 1989.
As a result, HHS has stepped up efforts to counter fraud. In 1993 and 1994 the inspector general's office proposed excluding 39 home-care companies from Medicare and Medicaid, officials said. So far, 12 of those providers have been excluded from the programs.
"One of the reasons that kicked us into the home-care arena was the substantial amount of Medicare/Medicaid funds going into (the sector)," said Michael Dyer, HHS' regional inspector general for investigations. "When you observe that much money flowing in, and there clearly are legitimate reasons for this, you also (may) discover substantial fraud."
To help combat fraud, the federal government in January enacted the so-called "Stark II" law, which prohibits physicians from referring patients to companies that compensate them in any way for their services. The law was created to fight alleged illegal kickbacks taking place between physicians and home-care companies.
Also, Sen. William Cohen (R-Maine) for the second time in two years proposed his Health Care Fraud Prevention Act, which would establish tougher laws and stiffer penalties for providers engaging in fraud. The bill has not been acted on by committee.
Facing the feds. Some of the nation's
largest home-care companies-in addition to Healthmaster and ABC Home Health-currently are subjects of criminal federal probes.
Caremark International, Chartwell Home Therapies, Hospital Staffing Services, St. John's Home Health Agency and U.S. Homecare are under federal investigations (See related story, p. 42).
Although the inspector general's office doesn't discuss ongoing investigations, HHS' Dyer said, "I can certainly tell you the OIG has a number of home healthcare agencies under investigation."
Northbrook, Ill.-based Caremark was thrown into the public spotlight last summer after a federal grand jury in Minneapolis indicted the company along with four other individuals on charges of paying a Minneapolis physician $1.1 million in illegal kickbacks.
Caremark was the first major home-care provider to be formally indicted in a federal criminal fraud probe. The company, which is linked to two other ongoing fraud investigations in Ohio and Michigan, denies any wrongdoing.
Caremark goes to trial in Minneapolis July 10.
Meanwhile, Caremark and several others targeted in the investigations claim the government's attempt to curtail Medicare fraud in home care is misdirected. The real focus, they say, should be to alter the existing Medicare and Medicaid fraud statutes so providers clearly understand which business activities are legal and which are not.
For example, Caremark officials throughout the three-year course of the federal investigation blamed vague anti-kickback statutes for their legal situation.
"Over the past seven years, Medicare/Medicaid fraud-and-abuse policies have changed at least 10 times as a result of congressional, regulatory or administrative and judicial decisions," Caremark said in a Jan. 3 press release in which the company announced it was in discussions with federal officials to settle fraud charges related to the August 1994 indictment.
In September 1994 Caremark said it would extend the soon-to-be-implemented Stark law to all its patients.
Caremark, meanwhile, remains in settlement discussions with the government. The company got out of the home infusion business in March, selling its division to Denver-based Coram Healthcare Corp. for $309 million.
While targeting specific home-care providers, federal investigators also are focusing on specific regions of the country where fraud is believed to be more prevalent.
Calling it the largest initiative against healthcare fraud in history, Clinton administration officials last month announced a five-state program concentrating on home health agencies, nursing homes and durable medical equipment. The two-year fraud-and-abuse project will focus on California, Florida, Illinois, New York and Texas (May 8, p. 5). The states account for nearly 40% of all Medicare and Medicaid beneficiaries, HCFA said.
Last October Florida's largest home healthcare corporation, St. John's Home Health Agency, was audited by HHS after the agency suspected Medicare fraud in the company's Miami office.
St. John's, which filed for Chapter 11 bankruptcy last August, billed Medicare for about $80 million between 1992 and 1994. The company recorded more than 1.1 million home-care visits in 1993, more than five times as many visits as its nearest competitor, according to published reports.
Meanwhile, Hospital Staffing Services' and U.S. Homecare's business dealings in South Florida are subjects of ongoing federal probes.
HHS also is establishing a voluntary disclosure program that would allow companies that have uncovered internal evidence of Medicare or Medicaid fraud to turn in that evidence in return for lesser penalties or fines.
Although many companies might balk at such an idea, HHS' Dyer said voluntary disclosure would protect individuals who purchase home-care companies running illegal operations. It also would cut down on the "multitude" of whistleblower lawsuits filed by employees who uncover illegal operations taking place at their companies and are dismissed, Dyer said.
Attention from the industry.
Trade associations such as Washington-based National Association for Home Care and Alexandria, Va.-based National Association for Medical Equipment Services, agree that fraud is a problem within the industry.
"Any type of home-care fraud is unacceptable to us," said Steve Haracznak, NAMES vice president of marketing and communications. "We think the problem has improved over the years thanks to efforts of the (inspector general) and (self-policing) in the industry," he said. "But there's still more fraud out there than we'd like to see."
Both organizations have clearly defined codes of conduct that members willingly adhere to, he said.
Haracznak also said HCFA has helped reduce fraud by consolidating the number of Medicare processing forms. By streamlining reimbursement, HCFA will have a better sense of which companies are overbilling, upcoding to receive higher payments or double billing, he said.
HCFA also has taken steps to register and control Medicare identification numbers, which are required to receive reimbursement. In the old days, scam artists and telemarketers would call senior citizens, ask for their Medicare card numbers, send them unnecessary supplies and supplements, and bill HCFA.
"However, the new HCFA application process is much more strict and appears to be more successful at weeding out fraudulent claims," Haracznak said.
Healthcare insurers also are forging alliances with federal agencies in the fight against fraud. In 1985 a group of providers and insurers formed the National Health Care Anti-Fraud Association, a Washington-based group that comprises 65 insurers as well as representatives from HHS, the FBI and HCFA (See related story, this page).
Home-care trade associations such as NAMES and NAHC say stepped-up efforts by providers and the government already have slowed or will slow the amount of fraud taking place within home care.
Home-care companies, meanwhile, are continuing to consolidate their services. The evolution of the industry, coupled with the rise of managed care, ultimately may eliminate most of the unscrupulous providers, experts say.
But federal law enforcement officials foresee a very clear future for those executives who reaped profits illegally or unethically at the expense of patients and taxpayers.
"You're going to see those individuals going to jail," Kopf said.