Medicare home health moratorium is lifted

Saying the new protections to prevent fraud

are in place, including a new requirement

for surety bonds to protect consumers and the Medicare trust fund, the Department of Health and Human Services (HHS) in January lifted the moratorium on enrolling new home health agencies.

President Clinton announced the moratorium Sept. 15, 1997, saying it would remain in effect while fundamental changes were made in the way Medicare does business with home health agencies. New regulations implementing many of these changes were published this week, and other actions have been put in place over the past three months.

In a statement released by the White House, Clinton said, in part, "These regulations will help keep the bad apples — the providers who commit fraud and abuse — out of the home health industry. These actions — combined with other anti-fraud initiatives and other savings initiatives — have helped slow the growth of home health spending. In fact, the Medicare actuary now reports that the rate of increase in Medicare spending on home health has slowed to just 5.4% from previous rates that exceeded 25%.

"These efforts to root fraud and abuse out of the home health industry build on my administrations’ longstand efforts to combat fraud and abuse."

According to the Health Care Financing Administration (HCFA), home health has been one of the fastest growing expenditures in Medicare, rising from just 2.9% of all payments in 1990 to nearly 9% now. In that same time, the average number of visits per beneficiary doubled from 33 to 76 per year, and total home health spending increased from $3.1 billion in 1990 to $16.7 billion in 1996.

While much of this growth is warranted, given the increasing number of elderly Americans seeking an alternative to costly nursing homes, investigations by the HHS Office of Inspector General have also found significant fraud and abuse in this program. At the same time, efforts to prevent fraud and abuse have already helped to slow home health spending growth.

The new regulations require all home health agencies serving Medicare to obtain surety bonds of $50,000 or 15% of annual Medicare payments received, whichever is greater. Agencies must obtain bonds covering them from the period beginning Jan. 1, 1998, and they must certify to Medicare that they have these bonds by Feb. 27, 1998. Surety bonds also soon will be required for durable medical equipment suppliers.

The regulations also establish minimum capital requirements to make certain that new home health agencies have enough funds to operate for at least three months before they start caring for Medicare patients. t