LegalEase: State Medicaid programs target home care

By Elizabeth E. Hogue, Esq.
Burtonsville, MD

State Medicaid Programs have increasing concerns about the fiscal burden of caring for elderly and chronically ill patients. These concerns were certainly enhanced by the Balanced Budget Act of 1997 (BBA). The New York Times reported Feb. 2, 2002, that at a recent conference of governors, participants "pleaded" with the federal government for financial help with ever-increasing spending for Medicaid programs.

It now appears that state Medicaid programs may try to reduce reimbursement for home care services and/or recoup past payments in order to save money. In some instances, officials of state Medicaid programs may attempt to characterize the activities that produced alleged overpayment as fraudulent. For example, the Medicaid program in North Carolina recently tried to implement changes to reimbursement for home-care services that might have drastically reduced payments to home health agencies and, most importantly, reduced access to home-care services by Medicaid recipients. Specifically, the North Carolina Medicaid Program proposed the following changes in reimbursement:

  • If agencies initiated services based on attending physicians’ verbal orders, these verbal orders must be signed by physicians and returned to agencies within 30 days of the date of admission. If agencies did not receive the signed verbal orders within the 30-day time period, agencies would not be paid for services provided to patients.
  • If patients eligible for services paid for by both the Medicare and Medicaid programs, so-called "dually eligible" patients, began receiving Medicare home-care services, they could no longer receive Medicaid home-care services even though those services were not provided on the same day as home health services.

Agencies in North Carolina first learned of these changes in reimbursement when they were published in bulletins from Medicaid.

At the same time, the Medicaid program in North Carolina conducted a series of audits and attempted to recoup money based on those changes.

The Association for Home and Hospice Care of North Carolina went to court and obtained a Temporary Restraining Order (TRO) that prohibited the Medicaid program from implementing these changes or recouping money based on the likelihood that the association would prevail at a hearing. The association then successfully converted the TRO into one that remains in effect until a hearing is held.

Agencies should be concerned that Medicaid programs in other states will follow the lead of the program in North Carolina as they shoulder ever-increasing costs of caring for elderly and chronically ill patients. Instead of direct cuts in reimbursement, programs may attempt to save money through the back door by changing payment criteria and auditing retrospectively to recoup money based on modified payment criteria. When these audits result in allegations of fraud and/or abuse, the potential consequences for agencies are even more serious.

Home-care providers legitimately may wonder why they are the target of many attempts to save money when other segments of the health care industry, such as long-term care providers, for example, may receive funds from Medicaid in far greater amounts than those received by the home-care industry. The answer may be that when long-term care facilities close, state officials are left with the problem of what to do with the patients. But when home health agencies close, the patients seem to just disappear.

Although this may seem like a practical explanation that at least borders on cynicism, some regulators occasionally have verbalized this rationale. In other words, home-care providers and patients may be "easy pickings" as compared to institutional providers.

The next major area of concern for home-care providers may be the payment, audit, and recoupment practices of state Medicaid programs.

Providers and their representatives must remain vigilant on this front.

[A complete list of Elizabeth Hogue’s publications is available by contacting: Elizabeth E. Hogue, Esq., 15118 Liberty Grove, Burtonsville, MD 20866. Telephone: (301) 421-0143. Fax: (301) 421-1699. E-mail:]