OIG Report Investigates Palmetto GBA and Florida ZPIC Oversight of HHAs

hhsoigThe Centers for Medicare & Medicaid Services, Medicare Administrative Contractors (MACs), including Palmetto GBA, and Zone Program Integrity Contractors (ZPICs), including SafeGuard Services, were subjects of a report released this week by the U.S. Department of Health and Human Services Office of the Inspector General, which found vulnerabilities in their efforts to identify and investigate potential fraud and abuse by home health agencies.

For this report, OIG collected information and supporting documentation from CMS, two MACs and four ZPICs from January to October of 2011 regarding activities to prevent improper payments on home health claims and to detect and deter fraud. An OIG report released earlier this year found that one in four home health agencies (HHAs) had questionable billing, which was concentrated in certain geographic areas, including Miami-Dade County and Tampa.


OIG’s review found that the two MACs, including Palmetto GBA, collectively prevented $275 million in improper payments and referred 14 instances of potential fraud. The four ZPICs, including SafeGuard Services in Florida, did not identify any HHA vulnerabilities and varied significantly in their efforts to detect and deter fraud.

In Region C (Palmetto GBA), 6,525 home health claims were reviewed and 2,718 resulted in improper payments. Palmetto GBA prevented $6.17 million in improper claims, or 2%. MAC C is made up of 6,812 Medicare-certified HHAs in 16 states, which includes the fraud-prone areas of Miami, Baton Rouge, La., Dallas and Houston. The report notes that Palmetto referred three HHAs to the ZPIC for various reasons, such as consistently high numbers of therapy visits, for which two of these agencies were paid $2.2 million in 2011 alone.

ZPIC 7, which oversees the 1,444 HHAs in Florida, Puerto Rico and the U.S. Virgin Islands, investigated 147 agencies in total. These 147 HHAs amount to 10% of providers in the region but accounted for 58% of the HHAs investigated nationwide by ZPICs that year. Comparatively, ZPIC 4 (Colorado, New Mexico, Oklahoma and Texas) investigated 2% (33) of the 2,886 HHAs in its region, even though fraud-prone areas like Dallas and Houston are located in the region. Together, these two ZPICs recommended administrative actions and referred law enforcement cases for approximately eight times the number of HHAs of the other ZPIC zones in the report’s review, which also included fraud-prone areas.

The report found that in some cases, CMS did not act on ZPIC recommendations to suspend/revoke payments. For instance, ZPIC 7 recommended the revocation of 17 HHAs billing privileges in Florida, and Palmetto GBA took actions on all of them. Specifically, the report notes, Palmetto approved 16 of the 17 recommendations in an average of 12 days. However, ZPIC 4 sent five revocation recommendations to CMS for HHAs in Texas, but CMS did not take action. As a result, Medicare paid two HHAs a total of $651,777 after receiving the recommendations that their billing privileges be revoked.


Based on its report, OIG recommended that CMS take the following steps:

  1. Establish additional contractor performance standards for high-risk providers in fraud-prone areas;
  2. Develop a system to track revocation recommendations and respond to them in a timely manner; and,
  3. Follow up on and prevent inappropriate payments made to HHAs with suspended or revoked billing privileges.

CMS concurred with all three of OIG’s recommendations. In light of this report and CMS’ adherence to its recommendations, HCAF will closely monitor and report to members any changes in Palmetto GBA’s and SafeGuard Services’ protocols to address fraud and abuse.

To read the complete report, click here. To listen to a brief podcast about this report, click here.

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