Improper Activities by Mid-Delta Home Health

OSI-98-5: Published: Mar 12, 1998. Publicly Released: Mar 19, 1998.

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Eljay B. Bowron
(202) 512-3000


Office of Public Affairs
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Pursuant to a congressional request, GAO investigated allegations of Medicare improprieties by home health care provider Mid-Delta Home Health of Belzoni, Mississippi, and affiliated companies, focusing on allegations that Mid-Delta: (1) routinely requested and received leave or bonuses back from its employees while charging Medicare their full amount; (2) paid the owner's daughter a full-time salary and charged it to Medicare although she was a full-time nursing student; and (3) conducted unnecessary and excessive home health care patient visits.

GAO noted that: (1) Medicare, through the intermediary, reimbursed Mid-Delta Home Health for payroll costs between January 1993 and December 1996 that, in GAO's opinion, were improperly claimed because they did not represent actual costs to the provider; (2) specifically, the owner of the company, Clara T. Reed, regularly asked employees to return to the company the cash value of unused leave and about 20 percent or more of bonuses received; (3) the employees were told that the returned money was needed for, among other things, a Mid-Delta Home Health-sponsored indigent care fund; (4) however, rather than use the fund to provide home health care to those who could not afford it, Mid-Delta officials stated that the money was used to offset unpaid bills of private-pay patients of Mid-Delta's affiliated rural health clinics; (5) Mid-Delta Home Health also improperly claimed and was reimbursed by Medicare for other costs that did not meet Medicare cost reimbursement principles since they were not related to patient care; (6) one example involved salary paid to the owner's daughter as a P&T Management executive vice president for over half of 1996 while she attended school full-time; (7) further, GAO questions the reasonableness of the daughter's $65,000 in 1996 bonuses claimed by Mid-Delta for Medicare reimbursement; (8) in addition, Mid-Delta was reimbursed by Medicare for the payroll costs of some P&T Management employees whose positions appeared to focus on marketing activities; (9) GAO questions the propriety of these claims because Medicare does not reimburse providers for marketing costs used to increase patient utilization of the provider's facilities; (10) in another payroll-cost matter, Mrs. Reed purchased a business from a third party, hired that individual to work for P&T Management, and gave the individual a $10,000 bonus that was considered partial payment of the purchase price; (11) Mid-Delta then improperly claimed the bonus as part of its payroll costs and was reimbursed by Medicare for this payment; (12) the purchase of a business does not qualify as a payroll cost; and morever, Medicare does not reimburse providers for the cost of purchasing a business; (13) as alleged by current and former Mid-Delta Home Health nurses, Mid-Delta staff visited individual Medicare beneficiaries whose eligibility or need for the visits was questionable; and (14) GAO visited or reviewed case files for 41 of the patients identified by the nurses and determined that for at least 14, or 34 percent, of the patients, eligibility for Medicare-reimbursed services was questionable.

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