Response to the Senate Permanent Subcommittee on Investigations' Queries on Abuses in the Home Health Care Industry

HRD-81-84: Published: Apr 24, 1981. Publicly Released: May 14, 1981.

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GAO views were requested on whether existing legislation and regulations are adequate to prevent profiteering in the home health industry under the federally financed health programs. GAO was asked for specific comments on: (1) the effectiveness of the cost-reimbursement system or proposed alternatives; (2) the effectiveness of intermediary audit coverage; (3) the effectiveness of oversight and administration by the Health Care Financing Administration (HCFA); (4) the means by which disallowances can be recovered by the Federal Government without rendering insolvent the bona fide home health agencies (HHA's); and (5) the means by which the Federal Government may terminate irresponsible HHA's from participation in federally funded home health care programs.

With two exceptions, GAO believes the existing legislation and regulations give HCFA sufficient authority to address the Subcommittee's concerns. The exceptions relate to the need for strengthening the regulations or related guidelines governing reimbursement in related organizational situations, and the desirability of the Department of Health and Human Services (HHS) establishing limits on Medicare reimbursement for HHA management and clerical costs. The organizational regulations are designed to eliminate profits between parties related by ownership and/or control. Prior GAO work has identified excessive costs in the areas of management and clerical costs. HHS has specific authority to extablish reimbursement limits for such costs but has not done so. HCFA believes that the cost data presently being reported by HHA's lack sufficient uniformity to make such limits meaningful. GAO also pointed out that significant budget cuts can hamper the intermediaries' ability to assess compliance with existing legislation and regulations.

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