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A Decline in Home Health and Long Term Care Providers

Hello and Happy birthday Medicare and Medicaid. You are now 56 years old. Medicaid was never supposed to be long-lasting or a primary insurance that it has become. Over 81 million citizens rely on Medicaid. President Lyndon Johnson signed both landmark social programs into law on July 30, 1965.

I have two newsflashes to discuss today. (1) Nursing homes will be targeted by audits because few surveys occurred during COVID, according to a newly published OIG Report; and (2) long-term care facilities, in general, are decreasing in number while the need escalates.

First, the OIG, Addendum to OEI-01-20-00430, published July 2021, “States’ Backlogs of Standard Surveys of Nursing Homes Grew Substantially During the COVID-19 Pandemic,” which is an audit of a mass number of nursing homes across the country.

Nationally, 71 percent of nursing homes (10,913 of 15,295) had gone at least 16 months without a standard survey as of May 31, 2021. By State, the backlogs for standard surveys ranged from 22 percent to 96 percent of nursing homes. Expect a surge of standard audits.

Insert chart.

Second, enrollment in fee-for-service (FFS) Medicare and Medicaid has skyrocketed in recent years, especially due to COVID and longer life-expectancies. This equates to more consumers. It means a need for more providers willing to accept the low reimbursement rates offered by Medicare and Medicaid. More providers plus more consumers equals more RAC and MAC audits. Medicare remains the nation’s largest single purchaser of health care, with home health care services accounting for a decent chunk of spending. Of the $3.2 trillion spent on personal health care in 2019, Medicare accounted for 23% — or $743 billion — of that total.

There were 11,456 home health agencies operating in 2020. That total is down slightly compared to the 11,571 agencies operating in 2019. The number of home health agencies has actually been declining since 2013. Before that, the industry had experienced several years of substantial growth in terms of new agencies opening. The decline in agencies has been most concentrated in Texas and Florida. The number of skilled nursing facilities (SNFs) is also decreasing, though not quite as fast.

My humble opinion? The government needs to be more aware of how aggressive Medicare and Medicaid auditors are. How overzealous. Congress needs to pass legislation to protect the providers who accept Medicare and Medicaid. Like the military, we should be saying, “thank you for your service.”

Medicaid Fraud Control Units Performed Poorly During the Pandemic: Expect MFCU Oversight to Increase

OIG just published its annual survey of how well or poor MFCUs across the country performed in 2020, during the ongoing COVID pandemic. Each State has its own Medicaid Fraud Control Unit (“MFCU”) to prosecute criminal and civil fraud in its respective State. I promise you, you do not want MFCU to be calling or subpoena-ing you unexpectedly. The MFCUs reported that the pandemic created significant challenges for staff, operations, and court proceedings, which led to lower case outcomes in FY 2020. But during this past “lower than expected” recovery year, the MFCUs still recovered over $1 billion from health care providers. It was a 48% drop.

2020 MFCU Statistics at a Glance

As MFCUs initially moved to a telework environment, some staff reported experiencing challenges conducting work because of limitations with computer equipment and network infrastructure. Field work was also limited. To help protect staff and members of the public from the pandemic, MFCUs reported curtailing some in-person field work, such as interviews of witnesses and suspects. These activities were further limited because of an initial lack of personal protective equipment that was needed in order to conduct similar activities in nursing homes and other facilities. Basically, COVID made for a bad recovery year by the MFCUs. Courts were closed for a while as well, slowing the prosecutorial process.

The report further demonstrated how lucrative the MFCU agencies are, despite the pandemic. For every $1 dollar spent on the administration of a MFCU, the MFCUs rake in $3.36. In 2020, the MFCUs excluded 928 individuals or entities. There were 786 civil settlements and judgments; the vast majority of judgments were pharmaceutical manufacturers. Convictions decreased drastically from 1,564 in 2019 to 1,017 convictions in 2020.  Interestingly, looking at the types of providers convicted or penalized, the vast majority were personal care services attendants and agencies. Five times higher than the next highest provider type – nurses: LPN, RNs, NPs, and PAs.

And the award goes to Maine’s MFCU – The Maine MFCU received the Inspector General’s Award for Excellence in Fighting Fraud, Waste, and Abuse for its high number of case outcomes across a mix of case types.

OIG also established the desired performance indicators for 2021. OIG expects the MFCUs to maintain an indictment rate of 19% and a conviction rate of 89.1%.

The OIG Report Foreshadows 2021 MFCU Actions:

  1. Hospice: Expect audits. $0 was recovered in 2020.
  2. Fraud convictions increased for cardiologists and emergency medicine. Expect these areas to be more highly scrutinized, especially given all the COVID exceptions and rule amendments last year.
  3. Expect a MFCU rally. The pandemic may not be over, but with increased vaccines and after a down year, MFCUs will be bulls in the upcoming year as opposed to last year’s forced, lamb-like actions due to the pandemic.

While Medicare is strictly a federal program, Medicaid is funded with federal and State tax dollars. Therefore, each State’s regulations germane to Medicaid can vary. Medicaid fraud can be prosecuted as a federal or a State crime.