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OIG Audit Suggests Home Health Agencies Submit Unsupported Visits to Trigger Higher Medicare Reimbursement

Posted  July 31, 2020

OIG released results from its targeted audit of certain home health care claims submitted for payment and found $191.8 million of overpayments in 2017 alone. OIG’s objective was to determine whether payments for home health services with five to seven visits in a payment episode complied with Medicare requirements.

During the 2017 audit period, under Medicare’s home health prospective payment system, home health agencies received payment for each 60-day “episode of care” a beneficiary receives.  This episodic payment was roughly $3,000 per episode of care and covered 5 or more visits. If, however, an HHA provided four or fewer visits in the 60-day episode, Medicare paid a standardized per-visit payment, or a Low Utilization Payment Adjustment (LUPA), generally around $150 per visit.  Given the large payment increase triggered by the fifth visit, HHAs had an incentive to improperly bill claims with visits slightly above the LUPA threshold.

With this in mind, OIG conducted an audit to determine whether payments for home health services with five to seven visits in a payment episode complied with Medicare requirements.  To do so, auditors selected a stratified random sample of 120 home health agency claims submitted in 2017 with 5, 6, or 7 visits in a payment episode – slightly above the 4-visit LUPA threshold that triggers a substantially higher Medicare payment.

Of the 120 sampled claims reviewed, 91 complied with requirements, and for 4 claims there was no documentation available to make a compliance determination. However, the remaining 25 claims did not comply with requirements.  As a result, OIG concluded Medicare improperly paid for a portion of the payment episode (14 claims) and for the full payment episode (11 claims), totaling $41,613.  On the basis of the sample results, OIG estimated that Medicare overpaid home health agencies nationwide $191.8 million in 2017 alone.

In November 2018 (after the audit period), the Centers for Medicare & Medicaid Services (CMS) finalized a new home health payment methodology, effective for home health periods of care beginning on or after January 1, 2020. The new methodology revised the LUPA threshold from four visits to a threshold varying from two to six visits. Nonetheless, the majority of the claims in the audit sample (20 of 25) that did not comply with Medicare requirements under the previous PPS methodology would also have not complied with those requirements under the new methodology.

Based on the findings from the audit, OIG had several recommendations for CMS: (1) direct Medicare to recover the $41,613 in identified overpayments made to HHAs for the sampled claims; (2) require Medicare auditors to perform data analysis and risk assessments of claims with visits slightly above the applicable LUPA threshold and target these claims for additional review; and (3) instruct Medicare auditors to educate HHA providers on properly billing for home health services with visits slightly above the applicable LUPA threshold, which could have saved Medicare as much as $191.8 million during the audit period. CMS concurred with the OIG’s recommendations and described actions that it had taken or planned to take to address the recommendations.


Tagged in: Healthcare Fraud, Home Health and Hospice, Medicare,