Highlight on Florida: Prison for administrator involved in home health Medicare fraud conspiracy

Medicare was scammed of $2.5 million in false and fraudulent claims and another of the conspirators is heading to prison. A home health administrator was sentenced to 126 months in prison for his role in the scheme after a two-week jury trial convicted him in December 2016 of one count of conspiracy to commit health care fraud and wire fraud and one count to defraud the U.S. and pay and receive health care bribes and kickbacks.

While the administrator was the manager of Mercy Home Care Inc. and a billing employee for D&D&D Home Health Care Inc. in Miami-Dade County, Florida, he and others submitted false claims through the companies to Medicare between October 2014 and June 2015, based on services that were (1) not medically necessary, (2) not provided, and (3) for patients brought to the companies through payment of illegal kickbacks to providers and recruiters. The claims the administrator submitted to Medicare were based on forged prescriptions and falsified medical documentation, backdated so services were supposedly provided in prior years, and for beneficiaries who were coached to say they needed services when they were not homebound. According to evidence from trial, he also destroyed evidence prior to his arrest. Medicare paid approximately $2.5 million for false and fraudulent claims submitted by Mercy and D&D&D.

Ten other co-conspirators previously pleaded guilty or were convicted by the Southern District of Florida, including the owner and president of Nerey Professional Services, Inc. That co-conspirator was convicted of one count of receiving kickbacks in connection with a federal health care program and one count of conspiracy to defraud the U.S. and pay health care kickbacks and sentenced to 60 months in prison on May 27, 2016. According to evidence from trial, the co-conspirator was involved in the conspiracy to accept kickbacks in return for referring Medicare beneficiaries to Mercy and D&D&D to serve as patients, even those who did not qualify for home health care services, between October 2014 and September 2015.

Demonstration requires earlier home health documentation in high-risk areas

A new demonstration project will require pre-claim review for home health agencies (HHAs) prior to payment in five states. In an advance release, CMS stated that this demonstration will serve as an anti-fraud tool to prevent improper payments and protect program integrity. CMS assures beneficiaries that they will continue to receive immediate care once services are ordered, but agencies will be required to submit supporting documentation during the provision of care.

Earlier submission

The demonstration will not impose new documentation requirements on HHAs, and does not change the home health service benefit for beneficiaries. HHAs in the participating states (Illinois, Florida, Texas, Michigan, and Massachusetts) will be required to submit all supporting documentation while providing care. Beneficiaries are also permitted to submit documentation for pre-claim review. CMS has established a timeframe of about 10 days for a decision, giving the HHA or the beneficiary an option to submit additional documentation if the agency finds that the original submission is inadequate.

Errors and fraud

HHAs are prone to errors in documentation and present a risk of fraud, abuse, and waste to federal health care programs. The improper payment rate for HHAs was 59 percent in 2015, which can be largely attributed to insufficient documentation. Research indicates that the majority of home health payment errors occur when the narrative portion of the documentation did not sufficiently show that the patient was homebound and in need of home health services. CMS plans to use the demonstration to educate HHAs on what is required, and will allow HHAs to submit documentation as many times as necessary during review.

HHAs are so prone to fraud and abuse that CMS has issued a moratoria preventing new enrollment of home health providers in markets indicating high risk, including Miami, Chicago, Dallas, and Houston (see Home health fraud bigger in Texas; convictions in $376M scheme, Health Law Daily, April 14, 2016; Fighting home health and ambulance fraud by putting providers on a map, Health Law Daily, February 23, 2016). CMS believes that the pre-claim review process will be another tool available to prevent fraud, rather than attempting to reclaim fraudulent payments.

Home health claim amounts vary widely across the country

A new data set containing information about home health agency use reveals how the $18 billion paid out by the Medicare program for home health claims broke down among home health resource groups (HHRGs) and across the states for calendar year (CY) 2013. The most popular HHRG by both total Medicare payment amount ($1.19 billion) and total number of episodes (490,127) is HHRG 1CGK (Early Episode, 0-13 therapies, Clinical Severity Level 3, Functional Severity Level 2, Service Severity Level 1). Although some patterns appear when mapping per episode and per beneficiary amounts paid out by state, the amounts are not consistent within a region.


CMS compiled the home health agency utilization and payment public use file (Home Health Agency PUF) from fee-for-service administrative claims data in an effort to increase transparency. The data includes claims from over 11,000 home health agencies. CMS notes that this information contains certain limitations, as the data does not reflect quality of care and is not risk-adjusted for severity of disease in patient populations. Out of the top 10 HHRGs by total payment, eight involve service severity level one and six involve clinical severity level three. The number of unique beneficiaries served for each of the top 10 HHRGs ranges from 430,045 to 122,938.

The numbers also revealed how payment amounts varied by state. Nationally, the per episode standardized payment averaged $3,037, but the actual amounts varied widely across the country. In general, the southeast and mountain state regions had the highest payment amounts while Texas and some of the surrounding states were in the lowest bracket. However, when the home health average standardized payment per beneficiary was calculated, the map changed drastically, revealing that Florida and the southwest have much higher payments per beneficiary (including Texas and the surrounding states that ranked low when calculating per episode).