Recent audits by the Department of Health and Human Services Office of Inspector General (“OIG”) conclude that state survey agencies in a number of states and a leading national accrediting agency serving the home health and hospice industry failed to identify a significant number of deficiencies related to worker qualifications. Based on these findings, OIG concluded that reliance on these surveyors by the Center for Medicare and Medicaid Services (“CMS”) could be inadequate to ensure quality of care and protection of Medicare beneficiaries receiving home health, hospice and nursing facility services.

Since May 15, OIG’s Office of Audit Services has issued reports detailing audits of home health and hospice providers surveyed by state agencies in New York, New Jersey and Puerto Rico, as well as one audit of a hospice provider surveyed by Community Health Accreditation Partners, a CMS-approved national accreditation agency. The audits focused on compliance with federal conditions of participation and state laws and regulations related to quality and safety, including requirements regarding professional licensing, criminal background checks and training.

As detailed below, each of the audits identified a significant portion of employees reviewed to be “unqualified,” ranging from 11 percent (New York) to 70 percent (Puerto Rico). In two of the audit reports, the OIG provided estimates of substantial federal dollars paid out for services provided by “unqualified” workers, i.e., $4 Million in New Jersey and $27.9 Million in New York. OIG did not estimate the federal dollars tied to the deficiencies identified in the Puerto Rico or CHAP audits.

Details of Recent OIG Audit Reports Regarding Survey Adequacy

Report: A-02-11-01028

Agency: Servicios Suplementarios de Salud, Inc. (Puerto Rico Department of Health)

Types of Claims Reviewed:  hospice

Number of Claims Reviewed: 170

Number of Claims with Deficiencies: 130

Error Rate: 70%

Types of Deficiencies Identified: licensure, prescribing certification, annual health certificate and training

View the Audit Report

Report: A-02-11-01027

Agency: Community Health Accreditation Partners

Types of Claims Reviewed: hospice

Number of Claims Reviewed: 100

Number of Claims with Deficiencies: 51

Error Rate: 51%

Types of Deficiencies Identified: criminal background checks, annual health assessments, annual performance evaluations, training, professional licensure and experience

View the Audit Report

Report: A-02-11-01019

Agency: New Jersey Department of Health

Types of Claims Reviewed: home health

Number of Claims Reviewed: 112

Number of Claims with Deficiencies: 38

Error Rate: 34%

Types of Deficiencies Identified: health screening, background check certifications, list of unvaccinated workers, supervision and education

View the Audit Report

Report: A-02-11-01013

Agency: New York Department of Health

Types of Claims Reviewed: home health

Number of Claims Reviewed: 135

Number of Claims with Deficiencies: 15

Error Rate: 115

Types of Deficiencies: annual health screening, tuberculosis and rubella screening, in-service education and basic training

View the Audit Report

Potential Implications for Hospice and Home Health Providers

In response to each audit report, CMS agreed with OIG’s recommendations that it should work with the survey agency to increase monitoring and focus on worker qualifications. As a result, hospice and home health providers will likely see increased surveyor focus on compliance with federal and state worker qualification requirements. To avoid deficiencies, providers should ensure that they are tracking and maintaining adequate documentation of compliance with qualification requirements like licensure, experience, background checks, health screening and training.

On the positive side, although OIG estimated the financial impact of services provided by “unqualified” workers in two of the audit reports, it did not recommend recoupment. This is consistent with the principle that compliance with conditions of participation is not a condition of payment and should be helpful to providers seeking to challenge efforts by state agency auditors to recoup payments following a finding that a worker failed to meet federal or state qualification standards.

Finally, at first blush, the 51% error rate tied to the CHAP survey might cause some to question the deemed status process (i.e., the exception that permits certain types of providers to avoid state survey requirements if they achieve accreditation through a CMS-approved national accreditation organization). However, when viewed together with the audits reflecting on the adequacy of state survey agencies, the CHAP error rate cannot be considered an outlier. Though hospice and home health providers who contract with CHAP or similar CMS-approved accreditation agencies should expect increased focus on worker qualifications, the OIG audit findings are unlikely to trigger significant changes in the availability of deemed status.