Home Health Billing Fraud Study Sheds Light on Growing Problem

Providers who outsource home health billing see multiple benefits, but one of the most important is access to a tool in navigating home health billing fraud.

Healthcare billing fraud is a pressing problem, and a recent study out of Dartmouth’s Geisel School of Medicine offers a deeper understanding of how home health billing fraud has spread in recent years [1].

To best understand the results of the survey, it’s important to first understand the type of home health care billing fraud you might encounter [2]. 

Fraud in Billing for Non-Existent Services

This is one of the most common types of fraud to look out for. In this case, services are billed but never performed. It can involve extra services being added to a legitimate patient bill or a situation that is more extreme, where someone finds a patient’s name and insurance information and uses this to create a fraudulent bill with services that were never performed. 

Medical Necessity

Another common type of fraud involves a party billing for services that weren’t medically necessary. For example, a diagnosis code like hypertension or diabetes that might not justify home health care services. 

Unbundling

In home health billing, there are some services that are often performed together that should also be billed together. In some cases, charging for these services separately can result in higher rates of reimbursement. By breaking them up, a billing party can receive higher payments. 

Durable Medical Equipment

Durable medical equipment (DME) is also an area that’s at risk for billing fraud. This can include examples like orthotics, patient lifts, walkers, glucose meters, traction equipment, pressure mattresses, and crutches. 

Upcoding Billing Issues

This type of fraud is a misrepresentation of services where a provider falsifies a claim to get paid for services that reimburse at a higher rate.

The Dartmouth study took on the work of examining the network structure of home health agencies (HHAs) to identify a set of characteristics that were shared across the regions where fraud was most common. These characteristics included: 

• Sharing patients across multiple agencies
• Higher rates of expenditures across hospital referral regions along with fast increases in rates
• Significant growth in the number of HHAS
• Whether or not a region attracted a Department of Justice anti-fraud office

There was also a peer effect between local agency billing, which suggested sharing fraudulent practices between these local agencies. 

Types of Fraudulent Behavior

The study documented the most common types of fraudulent behavior, including:

• Owners of agencies billing for services that were unnecessary or nonexistent
• Physician kickbacks
• Recruiting for patients
• Staffing groups that got patients referred to an agency
• Cross-network sharing of patient IDs in HHAs owned by organized crime

Activity Has Been Increasing

The researchers found a notable increase in home health care activity over the period between 2002 and 2009 which corresponded with expenditures doubling from $14.9 billion to $33.7 billion. This increase was mostly concentrated in just a few hospital referral regions (HRRs) which supported their findings that the regions were also areas where the Department of Justice had set up local anti-fraud offices. 

As an example, the average home health care billing per enrollee (Medicare) in Miami, FL and McAllen, TX increased by $2,422 and $2,127 respectively. In other HRRs where the DOJ wasn’t targeting, the average increase was $289. Study Lead Author, James O’Malley explains the difference in expansion rates, “it more or less makes the argument that if the benefits exceed the risks in the eyes of the perpetrators, then it's more likely that you'll see this type of fraudulent behavior where people are willing to risk conviction, fines, and imprisonment to make larger profits.”

While the study stands on its own, one additional outcome has been the development of tools that could be useful in the future in identifying more issues of home health billing fraud. The index (BMIX) looks promising in predicting excessive billing behavior from HHAs in the future. This means that it could be valuable for approaches based on machine learning to address billing fraud. The study authors expressed excitement at the idea of the methods being used to create generalized and alternative versions for organizations responsible for policing billing in healthcare. They look forward to the chance that the tools might be used to prosecute more violators, earlier, before fraud escalates, potentially saving the healthcare system and tax payers money. 

If you’re looking for ways to build an approach to home health billing that removes some of the internal and local risk of fraud, outsourcing should be on your short list of considerations. Outsourcing can be a path to end-to-end monitoring of your billing processes, increased efficiency, and easier response to a fast-changing regulatory environment. To learn more about how our services align with your needs, contact us today.