Statewide Grand Jury Report
July 7, 1997
IN THE SUPREME COURT OF THE STATE OF FLORIDA -- CASE NUMBER 86,726
(This document has been re-formatted for the Internet)
We, the members of the Thirteenth Statewide Grand Jury, are continuing the task of investigating fraud committed against the State of Florida, with specific emphasis on Medicaid fraud. In this report, we turn our attention to home health agencies. During the course of our investigation, we heard testimony from investigators with the Attorney General’s Medicaid Fraud Control Unit; managers with the Agency for Health Care Administration (hereinafter AHCA); and a representative of the Florida Association of Home Health Industries. To date, we have issued three (3) indictments charging seventeen (17) individuals who were involved with six (6) licensed home health care agencies, with crimes ranging from racketeering, organized fraud, Medicaid provider fraud, kickbacks, and money laundering. Additionally, the Statewide Prosecutor has filed charges against an additional four (4) defendants engaged in fraud involving home health care, three of whom were involved with two (2) additional licensed home health care agencies. Of the above defendants, two (2) are licensed physicians, five (5) are licensed registered nurses, and four (4) are certified home health aides. The total dollar amount alleged to have been illegally obtained from the State in these cases alone exceeds $300,000. There are currently 15 home health agencies under investigation by the Office of the Attorney General's Medicaid Fraud Control Unit.
A. Licensing Home health agencies are governed by Chapter 400 of the Florida Statutes and Chapter 59A-8 of the Florida Administrative Code. These agencies provide health and medical services to homebound individuals, including skilled nursing care and home health aide services. A homebound individual is unable to leave his or her place of residence without assistance due to a medical condition or functional limitation. All home health agencies must be licensed by the Agency for Health Care Administration (AHCA) to operate in Florida and as a prerequisite to enrollment in the Florida Medicaid Program. There are approximately 1700 licensed home health agencies currently operating in this State. Each license application must be accompanied by an application fee, proof of financial ability to operate, proof of liability insurance, and the names, disciplines, and licensure information of each employee. Home health agency employees must submit to a criminal background check through the Florida Department of Law Enforcement, as well as an abuse screening through the Florida Abuse Hotline Information System. However, owners of home health agencies are not required to submit to any background checks. AHCA receives over 1800 licensure applications and license renewal requests each year. AHCA has assigned the equivalent of four (4) full-time program specialists or analysts to the licensing function. All agencies applying for initial licensure must submit to a site inspection by an AHCA surveyor. AHCA has assigned the equivalent of twenty-five (25) full-time surveyors to this function. These surveyors are also responsible for making interim inspections of licensed agencies, which must renew their licenses annually. Once AHCA receives a completed application for a home health agency, it has 60 days to process the application, including the site inspection. At the end of the 60 day period, AHCA must deny or approve the application. The only grounds, by statute, upon which AHCA may deny, suspend or revoke licensure are the failure of the agency to meet the license qualifications or if the agency or one of its employees commits an intentional, reckless or negligent act that "materially affects" a patient's health or safety. B. Medicaid Program Once an agency is licensed, it may apply for enrollment in the Florida Medicaid Program. After enrollment in Medicaid, a home health agency may bill on a "fee-for-services" basis for skilled nursing services (i.e., administration of medicine) and home health aide services (i.e., hygiene, feeding). Services may be initiated only when a physician signs a "plan of treatment" (POT) for a recipient certifying that he or she is homebound, which plan contains the patient's diagnosis, type and frequency of treatment, and orders for specific medically necessary services. The POTs must be updated every 62 days and the home health agency must maintain the POT in its files. In accordance with the POT, the agency may then provide and bill Medicaid for up to four visits (any combination of skilled nursing (RN or LPN) or home health aide) per day per recipient. Practitioners may either be the agency's own employees or contract employees. Home health agencies must maintain records documenting services provided to each recipient, including the POT and progress notes, commonly referred to as nurse's notes and home health aide notes, which contain the date and signature of the practitioner, as well as what services were rendered that day. A licensed home health care agency enrolled in the Medicaid program may sub-contract with another licensed home health agency (even one that is not a Medicaid provider) to provide services to Medicaid recipients. However, by statute (§400.487(5), F.S.), the primary home health care agency must provide at least one home health service to its patients and must monitor and control all services, whether provided by its own employees or those under contract.
During the last several months, our investigations have revealed several types of fraud being perpetrated by unscrupulous individuals: 1. Obtaining home health agency licenses through fraud. Individuals submit license applications containing false information and forged and bogus documents to AHCA and obtain a home health license and enroll in the Medicaid program. In one instance, an individual whose previous home health agency had been suspended from the Medicaid program for suspected fraud, merely set up two more agencies in this manner, listing her relatives as the owners in order to conceal her involvement. She then used these agencies to bill Medicaid for recipients who were not, in fact, receiving any services. The aforementioned scheme was successful even though the individual's name was listed on the applications as an employee, but AHCA's licensure section was unaware that her other home health agency had been suspended from the Medicaid program for fraud. 2. Unlicensed or unauthorized entities using Medicaid providers to commit fraud. Individuals who do not possess a license to operate as a home health agency enter into a contractual relationship with a licensed home health agency that is also a Medicaid provider. The Unlicensed group submits POTs and practitioner notes for its own list of recipients to the Medicaid provider which then bills Medicaid and returns 80% of the Medicaid money to the Unlicensed entity. The Medicaid provider does not provide any services to the patients for which it bills Medicaid, does not supervise the services or even verify whether the services were provided. Investigators have determined that many of the recipients did not receive any services. 3. Fraudulent plan of treatment and progress notes. We have heard that physicians’ and practitioners’ signatures have been forged on plans of treatment and progress notes, that POTs have been altered after a physician signs them, and that kickbacks have been paid to physicians to sign a POT for patients they have never examined or for patients that are not homebound. These acts result in payment for unnecessary services and for services that are never rendered. Fraudulent documentation is created by the owners, the practitioners, the subcontractors, unethical physicians, in any combination. Some schemes include asking a recipient to sign blank progress notes to perpetuate this fraud.
A. Front-End Controls We have again found loopholes in the front-end control mechanisms designed to keep unscrupulous providers out of the Medicaid program. And once again, we have determined that the program operates on an honor system which relies on a “pay and chase” method of fraud detection. The home health licensing process is the first line of defense against admission of “con artists” into the Medicaid program. The licensing process is deficient in two distinct areas: (1) no criminal or abuse background information about the owner of the home health agency is required; and (2) AHCA has no clear authority to deny a license to an applicant who falsifies the application, an applicant who has violated license standards in his or her profession, or to a non-entity that has been B. Accountability The foundation for every home health care claim is the plan of treatment. A POT indicates that a physician has determined that the recipient is “homebound” and in need of home health agency services. The program, once again, is operated on an honor system. 1. There is no definition of “homebound” in the Physicians’ Medicaid Handbook or the POT, although physicians who sign a POT are certifying that the patient is homebound. 2. There is no requirement that the recipient’s primary care physician sign the POT, so any physician may do so without regard to the duration of the physician-patient relationship. 3. When billing for home health services, providers are not required to input the provider number or license number of the physician who signed the POT, so it is not possible to determine from the claim the identity of the authorizing physician. (An exception to this is that if the recipient is in the Medipass system, providers are required to input this information.) Therefore, under the present system, the only way to determine which doctor signed the POT is to examine each recipient’s file at the home health agency in order to verify whether the POT is valid. 4. There is no requirement that the home health agency provide a copy of the signed POT to the authorizing physician. Similarly, there is no requirement that the physician maintain a copy of the POT in his/her patient medical records, thereby creating ample opportunity for forging and alteration of these documents. 5. There is no requirement that nurses and aides note the time each visit begins and ends on their progress notes. Furthermore, there is no requirement that these notes or time sheets be kept in the personnel or payroll file for each employee, which would greatly assist in the deterrence and detection of fraud. For example, if fraud is suspected as to a particular nurse or aide, investigators could determine if that individual claims to have been in more than one recipient’s home at a given time, or made an inordinate number of visits in one day. 6. There is no requirement that recipients or their guardians sign the progress notes to verify that they have received all of the services from the home health agency. 7. There is no requirement that any supporting documents, such as the signed POT, be supplied to Medicaid with the claim for payment for home health services. 8. And finally, there is no automatic backup claim verification method, such as an explanation of medical benefits, sent to recipients. This means that recipients must be interviewed by investigators to determine if the services were actually rendered. The Health Care Financing Administration, which administers the federal Medicare program, has recently implemented the policy of sending an explanation of medical benefits to home health recipients.
A. Home Health Agency Enrollment in Medicaid Effective April 12, 1996, all home health agencies seeking to enroll in the Florida Medicaid Program are required to submit a $50,000 surety bond and the owners must submit to a criminal background check. All those home health agencies that were already enrolled in the program had to re-enroll meeting the above requirements by May 23, 1996, or they would be terminated from the program. As of the date of this report, there are 549 home health agencies enrolled in the Florida Medicaid Program. This represents a significant decrease from the 739 agencies enrolled in Medicaid prior to the re-enrollment process. B. Prior Authorization of Services Prior to March 14, 1995, home health agencies could receive payment for services for any given recipient for an indefinite period of time as long as it procured and maintained a signed POT for each new 62-day certification period. On March 14 ,1995, the Florida Administrative Code was amended to limit home health visits to a maximum of 60 visits per recipient per fiscal year. In order for a facility to receive payment from Medicaid beyond 60 visits, it must receive prior authorization by submitting the POT and an assessment form to the Keystone Peer Review Organization, Inc. (KePRO), which is under contract with AHCA to review, grant or deny all requests for prior authorization for home health services beyond the 60-visit limit. These requests are evaluated on the basis of medical necessity only. We have heard testimony that the pre-certification program has had a significant impact on home health care expenditures by Medicaid. In fiscal year 1994-95, Medicaid paid $45.3 million for 1,844,622 service units (visits) for 27,217 recipients. In fiscal year 1995-96Based on claims adjudicated through November 1996., expenditures dropped 38.8% to $27.7 for 1,205,185 service units for 24,600 recipients. The dollars spent on home health care visits in excess of 60 visits dropped 53.2% from $23.4 million in fiscal year 1994-95 to $10.9 million in 1995-96. C. Legislation. As illustrated by the cases cited above, those employees that process and screen applications, as well as surveyors that perform initial site inspections, are in the best position to detect fraud. However, in order to carry out this mission, they must have more time, training and resources. We have heard from AHCA managers that during the 1997 legislative session, that they were successful in obtaining five (5) additional full-time positions which will be dedicated to processing the license applications. However, AHCA managers also testified that they were unsuccessful in obtaining passage of new laws requiring the following: criminal and abuse history screening for all owners, administrators and managing employees of prospective home health agency licensees; an extension from 60 to 90 days for the processing of license applications; and the authority to deny licensing to applicants who falsify applications or have been suspended or terminated from any state Medicaid program, Medicare or health insurance program. AHCA intends to vigorously pursue this issue during the next legislative session, and we strongly urge passage of these laws to ensure that those individuals who would defraud the Medicaid program of this state are barred from obtaining licenses to operate home health agencies. We also recommend that AHCA utilize the same type of comprehensive background screening process for home health license applicants now utilized by the Florida Medicaid Program during the provider enrollment process. D. Administrative Regulations. We have heard testimony from AHCA managers that they are in the process of making revisions to administrative rules and to the Home Health Services and the Physician Handbook, including the following: 1. Adding the definition of “homebound” and an explanation of Medicaid rules regarding home health services to the Physician’s Medicaid Handbook. 2. Adding the definition of “attending physician” as it relates to home health services to the Physician’s Medicaid Handbook. 3. Adding a more extensive definition of “contract” employees to the Home Health Services Handbook. 4. Requiring home health agencies to provide a copy of the signed POT for each recipient to the authorizing physician. 5. Requiring physicians to maintain a copy of the signed POT in the recipient’s medical record file. 6. Requiring home health agencies attach the physicians’ initial orders, whether written or verbal, as a separate document to the POT. AHCA managers have also testified they are developing a standardized plan of treatment form which all home health agencies enrolled in the Medicaid program will be required to use. AHCA is also studying the feasibility of requiring the provider number of the authorizing physician as part of the claim process for home health services.
The recent actions of AHCA in the areas of enrollment and prior authorization of services have had a positive impact on decreasing fraud and abuse in the area of home health services. The additional efforts AHCA has made in the legislative and administrative arenas should also go a long way toward combating fraud and abuse in the home health field. 1. Physician accountability. We also believe to further prevent abuse and increase physician accountability for home health services, only the recipient’s primary care physician should be permitted to sign a POT. We have heard testimony that this is already required for those individuals that are enrolled in the Medipass program. We also believe that this requirement should become part of the claims process, that is, when a home health agency submits claims to Medicaid for home health services, they should be required to input the Medicaid provider number of the primary care physician. In the instances where the primary care physician is not a Medicaid provider, AHCA should develop a system which assigns some type of unique number to that physician. If the home health agency does not input the appropriate number into the space provided for the primary care physician, the claim should be denied. We believe that developing and implementing such a system would insure the integrity of the process whereby individuals are certified for home health care, would prevent home health agencies from shopping around or procuring doctors to sign POTs by offering kickbacks or other “incentives”, and would also aid investigators in the detection of fraud when they are alerted that a particular doctor or doctor’s name and provider are being utilized to commit fraud. We have been advised by AHCA staff that the feasibility of adding this requirement is being studied. We have also been advised by a representative of the home health industry that this requirement would not be opposed by the industry. We urge AHCA to impose this requirement as to all recipients. 2. Developing and requiring standardized, multi-part plan of treatment forms. We have heard that AHCA is in the process of developing a standardized plan of treatment form that all home health agencies enrolled in the Florida Medicaid program must utilize in order to bill Medicaid for services. We urge AHCA to move swiftly to complete and implement this form. We also recommend a copy of the signed POT be provided to each home health recipient. 3. Fraud detection and reporting training for prior authorization employees. The prior authorization program has been very successful in deterring abuse in the home health system by limiting the length of service to a time period which is justified by medical necessity. However, as we have heard during our investigations into fraud in the home health industry that some fraud artists are very clever and can create what appear to be authentic plans of treatment for the re-certification process. Therefore, we believe it is necessary for KePRO employees to be trained in fraud detection, and that they be required to confirm, even on a random basis, by contacting the physician whose name appears on the POT that he or she actually signed the POT and has retained a copy in his or her files. 4. Standardized time sheets for service providers. There is presently no requirement that nurses and aides complete any type of standardized time sheet or progress note and the format for these notes or time sheets varies from agency to agency. We believe requiring each agency to include a space on nurse and aide progress notes or time sheets to include the time each visit begins and ends, and to maintain copies of these documents in the practitioner’s personnel or payroll file as well as the patient file would assist in the deterrence and detection of fraud. 5. Recipient verification of services. We believe that home health agencies should be required to have recipients or their guardians sign and date time sheets and forms; that these forms should be required to be printed in English and Spanish, and above the blank for the recipient’s signature language should be required indicating that by reading and signing the form, the recipient acknowledges receipt of services on that date only. We have heard that AHCA sends out surveys to selected groups of recipients asking them to fill out a pre-addressed, pre-stamped card verifying whether or not they have received services by a particular agency. These cards are printed in English and Spanish. We believe this should be routinely done for all home health recipients. 6. Sub-contract arrangements. We have heard testimony that sub-contracting arrangements are often ploys for illegal kickback contracts wherein individuals refer their list of recipients to a home health agency, which then bills Medicaid for services. These individuals provide all of the necessary paperwork to the Medicaid provider, i.e., POTs, progress notes, time sheets, etc. The Medicaid provider does not provide any services to the recipients, does not verify that services are being provided, and merely acts as a billing agent. We believe this practice facilitates fraud and contravenes the statutes and rules governing home health agencies which require the home health agency to manage and supervise all services rendered to its patients. We believe that home health agencies enrolled in Medicaid should be advised via a revised provider handbook and through provider education programs of the following: If a home health agency has insufficient staff to provide services to all of its recipients and utilizes contract employees to provide those services, it must supervise and verify through the agency’s own employees that services are being provided. Paying any type of remuneration or consideration for referrals to doctors, practitioners, other agencies or any individual is strictly prohibited. Allowing another agency or group of individuals to utilize a home health agency as nothing more than a billing agent is strictly prohibited. (Effective July 1, 1997, the Health Care Financing Administration plans to utilize new provider enrollment forms which require the provider to certify that they understand and agree that their Medicare billing number can only be used by the provider that applied for it. We urge AHCA to implement the same certification.)
Due to the nature of home health services and the ease with which paperwork and documentation can be created by unscrupulous individuals to enable them to bill Medicaid for a large number of services for numerous recipients, we believe the system needs tighter controls in this area from the licensing stage through the claims process. We believe AHCA has recognized this and has implemented programs and proposed legislation to combat fraud and abuse. We urge the implementation of their proposed legislation and regulations, as well as the implementation of our suggestions. We would like to thank Associated Home Health Industries for their input and support, and are encouraged that there will be increased communication between regulators, civil and criminal investigators, prosecutors and the private sector to combat fraud.
THIS REPORT IS RESPECTFULLY SUBMITTED to the Honorable F.E. Steinmeyer, III, Presiding Judge of the Thirteenth Statewide Grand Jury, this ____ day of June, 1997.
ALVAND R. WILLIAMS
Thirteenth Statewide Grand Jury of Florida
I, MELANIE ANN HINES, Statewide Prosecutor and Legal Adviser, Thirteenth Statewide Grand Jury of Florida, hereby certify that I, as authorized and required by law, have advised the Grand Jury which returned this report this ___ day of June, 1997.
MELANIE ANN HINES
Thirteenth Statewide Grand Jury of Florida
I, GINA G. SMITH, Assistant Statewide Prosecutor and Assistant Legal Adviser, Thirteenth Statewide Grand Jury of Florida, hereby certify that I, as authorized and required by law, have advised the Grand Jury which returned this report this ___ day of June, 1997.
GINA G. SMITH
Assistant Statewide Prosecutor
Assistant Legal Adviser
Thirteenth Statewide Grand Jury of Florida
THE FOREGOING Report of the Thirteenth Statewide Grand Jury was returned before me this ___ day of June, 1997, and is hereby sealed until further order of this Court, upon proper motion of the Statewide Prosecutor.
F.E. STEINMEYER, III
Thirteenth Statewide Grand Jury of Florida
I, GINA G. SMITH, Assistant Statewide Prosecutor and Assistant Legal Adviser, Thirteenth Statewide Grand Jury, hereby certify that a scrivener’s error appears in the last sentence of the third full paragraph on Page 7 of the document entitled: IN THE SUPREME COURT OF THE STATE OF FLORIDA, CASE NUMBER 86,726, FOURTH INTERIM REPORT ON MEDICAID FRAUD, CONTAINING: REPORT ON MEDICAID FRAUD IN THE AREA OF HOME HEALTH CARE. Said sentence should read: The licensing process is deficient in two distinct areas: (1) no criminal or abuse background information about the owner of the home health agency is required; and (2) AHCA has no clear authority to deny a license to an applicant who falsifies the application, an applicant who has violated license standards in his or her profession, or to a non-entity that has been excluded, suspended, or terminated from Medicaid or Medicare.
GINA G. SMITH
Assistant Statewide Prosecutor
Assistant Legal Adviser
Thirteenth Statewide Grand Jury of Florida
STATE OF FLORIDA )
COUNTY OF LEON )
Sworn to and subscribed before me by Gina G. Smith, who is personally known to me, this ____day of June, 1997.