United States: OIG Delivers Home Care A One – Two Punch: Release Of Report And Alert On Home Health Fraud Highlights Increased OIG Scrutiny Of Home Care Agencies

Last Updated: July 4 2016
Article by Aaron Buchman, Jared L. Facher and Brian T. McGovern

Most Read Contributor in United States, September 2017


On June 22, 2016, the Office of Inspector General ("OIG") issued two communications that underscore its continued focus on fraud in home health care, along with the role of physicians as "gate keepers" in authorizing Medicare-covered services and facilitating improper billing across the care spectrum.

First, in its report entitled "Nationwide Analysis of Common Characteristics in OIG Home Health Fraud Cases" ( the "Report") the OIG examined 2014—2015 Medicare home health claims data and identified certain home health agencies ("HHAs"), supervising physicians, and geographic areas associated with Medicare claims having "characteristics similar to those observed by OIG in cases of home health fraud." OIG highlighted five characteristics commonly found in OIG-investigated cases of home health fraud, and found that 5% of HHAs and 1% of supervising physicians were "statistical outliers" for these characteristics. OIG also identified geographic "hotspots" in which there was a high prevalence of outliers. While the OIG offers the caveat that these characteristics are "not necessarily indicative of fraudulent activity," they do "warrant greater scrutiny," according to OIG.

Second, in a companion alert entitled "Alert: Improper Arrangements and Conduct Involving Home Health Agencies and Physicians" ( the "Alert"), the OIG warns about possible fraud associated with the compensation arrangements between HHAs and physicians, under which the physician, in a position to make referrals to the HHA, is paid to serve as "medical director" at a level above "fair market value," and without providing bona fide services to the agency. The OIG noted that in the past year, the Federal government obtained criminal convictions and reached civil settlements with HHAs and physicians that defrauded Medicare by "making (or accepting) payments for patient referrals, falsely certifying patients as homebound, and billing for medically unnecessary services or for services that were not rendered."

The Report as well as the Alert foreshadows increased OIG scrutiny and underscores the need to review and remediate any improper arrangements or billing practices -- before the next round of OIG action.

The Report

OIG identified 562 HHAs -- 5%-- and 4,502 physicians who supervise home health care --1%-- as statistical outliers on two or more characteristics commonly found in OIG-investigated cases of home health fraud. OIG noted that while there was no finding of fraud and there may be "legitimate explanations" for why these providers were outliers, "further scrutiny" of such conduct is warranted. OIG also determined that there were 27 geographic "hotspots" in 12 States with statistical outliers in two or more of the characteristics. According to the OIG, 119 physicians and one HHA were outliers in New York, Northern New Jersey and Long Island.

Below are the five characteristics identified by OIG as correlated with home health fraud:

  1. High Percentage of Episodes for which the Beneficiary had No Recent Visits (6 months) with the Supervising Physician

    470 HHAs and 16,789 physicians were identified as outliers on this characteristic. OIG explained that, based on its prior fraud investigations, this characteristic may signal that the supervising physician "did not appropriately evaluate the beneficiary's medical condition" before certifying eligibility for home care and may evidence the use of "recruiters" to collect Medicare numbers for use in fraudulent billing.
  2. High Percentage of Home Health Episodes that were Not Preceded by a Hospital Or Nursing Home Stay (Within 30 Days)

    1,751 physicians were found to be outliers. OIG acknowledged that beneficiaries may legitimately require home care in situations other than upon a discharge from an institutional care setting. Nevertheless, OIG noted that this characteristic may indicate that the home health ordered by the physician is not medically necessary, citing the situation of recruiters soliciting unqualified patients from the community for home care services.
  3. High Percentage of Episodes with a Primary Diagnosis of Diabetes or Hypertension

    483 HHAs and 7,937 physicians were identified as outliers on this characteristic. According to OIG, past investigations have revealed HHAs and physicians providing medically unnecessary care, with a disproportionate mix of those patients reported to have diabetes or hypertension as their primary diagnosis.
  4. High Percentage of Beneficiaries with Claims from Multiple HHAs (3 or more HHAs within 2 years)

    OIG cited 770 HHAs and 7,510 physicians as outliers on this characteristic. This characteristic is common in home health fraud because, OIG has found, "recruiters" move beneficiaries from agency to agency "to avoid suspicion or obtain more favorable financial arrangements for fraudulent billing."
  5. High Percentage of Beneficiaries with Multiple Home Health Readmissions in a Short Period of Time (under 2 years)

778 HHAs and 3,822 physicians were outliers. OIG explained that it has previously uncovered situations where HHAs and physicians tried to hide the lengthy duration of home care covered by Medicare by "periodically discharging and re-enrolling" their beneficiaries.

OIG's Follow Up

OIG intends to further investigate and audit the "outliers" and to continue closely watching the geographic "hotspots" for potential home health fraud. OIG warns that it looks forward to "continued collaboration with CMS, DOJ, States and private-sector partners" to fight home health fraud, waste, and abuse.

The Alert

In the Alert, the OIG expressed its concern that HHAs may be rewarding physicians for referrals by hiring and paying them as "medical directors" under "sham" arrangements. The federal Anti-Kickback Statute ("AKS") prohibits both the offering and receiving of payments, directly or indirectly, for referrals of patients insured by a Federal health care program. 42 U.S.C. § 1320a-7b. Consequently, both the HHA and the physician can be liable, regardless of who instigates the kickback arrangement.

The Alert in particular cautions that suspect compensation arrangements between a HHA and a physician employed as medical director may violate the AKS so long as one purpose is to remunerate the physician for his or her past or future referrals, noting the potential for "corruption of medical judgment, patient steering, increased costs to Federal health care programs, and unfair competition," irrespective of the quality of care. The Alert advises that HHAs and physicians ensure that their arrangements are genuine and that the associated compensation reflects "fair market value" and is "commercially reasonable" -- the hallmarks of the "personal services" safe harbor (42 C.F.R. § 1001.952(d)) under the AKS.

The Alert is another iteration of the continued oversight of providers' business relationships with physicians. Notably, last year, OIG issued a similar alert about physician compensation arrangements, highlighting recent settlements with physicians who entered "questionable medical directorship" with providers. Moreover, in October of last year, the Department of Justice settled Stark law-related claims against the Tuomey Healthcare System. U.S. ex rel. Drakeford v. Tuomey, 792 F.3d 364 (4th Cir. 2015). The Department of Justice alleged that Tuomey had illegally billed the Medicare program for hospital services referred by physicians who were tainted by improper financial relationships with the hospitals. After judgment in the amount of $237 million was sustained on appeal, the parties settled for $72.4 million.

In addition to suspect compensation arrangements, the Alert points to other types of home health fraud uncovered by the government: (i) HHAs have often billed Medicare for medically unnecessary nursing services provided to patients who were not confined to the home; (ii) physicians have "upcoded patient visits;" (iii) physicians billed for oversight services that were not provided; and (iv) physicians falsely certified patients as confined to the home when they were not actually homebound.

Take Aways for Providers

With continued focus on fraud and abuse in the home health industry, HHAs should consider steps to minimize risks going forward. In particular, providers can incorporate the five characteristics identified by the OIG into their compliance reviews and audit plans. Should those reviews find high "outlier" rates with respect to any of these characteristics, HHAs should examine the record support for representative claims, to verify that the services were medically necessary and to determine whether any of the claims were improper and should be refunded or self-disclosed. Additionally, HHAs should review their contracts with physicians, particularly medical directors, to confirm that the compensation terms are based on fair market value and are commercially reasonable, and that the physicians are actually providing the services they were ostensibly hired to perform. Depending upon the results of the reviews, HHAs may need to investigate further to determine the root cause and scope of any potential concerns and take additional remedial action to prevent recurrences.

With the Report and OIG's companion Alert, the OIG has now given HHAs a roadmap of its "red flags" for home health fraud. Providers who do not follow this roadmap in their compliance activities may be exposed to future OIG action and the risk of False Claims Act liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.