Thanks to significant advances in medicine in the past decades, Americans are living longer, with nearly 15 percent of the population age 65 or older. With this spike in the aging population has come a significant increase in the need for long-term health care. Rather than relying upon expensive hospital stays or moves to nursing homes, many have turned to home health care agencies to meet the needs of the nation’s elderly. By one recent estimate, approximately 3.4 million Americans receive Medicare-subsidized skilled home health care. While the increase in options for elder care is largely a positive development, it has also invited unscrupulous actors to abuse the system, particularly in Illinois. According to a recent study by the Chicago Tribune, home health care fraud is rampant in the state, costing the taxpayer millions while hurting the most vulnerable in society.
The Rapid Rise of Home Health Care
The home health care industry has grown rapidly since 2007, when government programs such as Medicare began shifting funding to “aging in place” plans in order to reduce or avoid much costlier hospital stays and admissions to nursing homes.
With the new funding available to a once stagnant industry, the number of home health care agencies – which provide nurses, housekeepers, and personal aides to the homebound and others requiring assistance – exploded, perhaps nowhere more dramatically than in Illinois. As of September 2017, 759 private businesses offering home health services held state licenses, with the greatest percentage of these in the Chicago metropolitan area. In fact, there are more home health companies in Cook County than in all of the state of New York, which has a significantly larger population.
The glut of home health care businesses in Illinois may largely be a result of the state’s dramatically low barrier to entry. Most anyone wishing to own a home health care business in Illinois can do so for a $25 license fee, with no criminal background check required. Moreover, oversight from government regulators is limited, with inspections only taking place every three years.
A System Rife with Fraud
If you think that the ease with which somebody can start and maintain a home health care business in the state might attract people looking to scam the system, you’re probably right. According to estimates by federal investigators, Chicagoland home health care companies have wrongfully collected at least $104 million from public agencies.
Many of these home health care agencies bill Medicare and Medicaid for services not provided while wrongfully certifying patients as homebound and in need of care in an effort to collect unwarranted or inflated fees.
For home health care agencies to engage in these deceptive practices, they require the assistance of bad actors from another related industry: physician-staffing companies.
The Role of Physician-Staffing Companies
Physician-staffing companies dispatch doctors-for-hire to private residences – think of a temp agency for physicians. And if the barrier to entry for home health care agencies in Illinois is already very low, the barrier to entry for physician-staffing companies is practically nonexistent. In Illinois, physician-staffing companies are exempt from state licensing requirements, and they are not subject even to minimal oversight from regulators, such as unannounced inspections, because Illinois does not define these businesses legally as home health companies.
According to the Tribune’s study, certain home health care agencies routinely commission physician-staffing companies to certify patients as requiring in-home service to Medicare. The doctors are then induced by their own employers to be liberal in certifying patients because it benefits the home health care agencies financially, who in turn go on to rehire the physician staffing services.
Consequently, patients who do not require in-home care are certified as needing it, fraudulent bills are submitted to Medicare, and these companies profit.
A Network of Kickbacks
Incidentally, if it sounds unusual that a medical service provider can seek out a patient first, then find a doctor to verify that the patient needed that service, rather than the other way around, it is – though it’s not illegal. Unlike most areas of medicine, where physicians have to refer their patients to medical providers in order for them to qualify for insurance coverage, Medicare allows home health care agencies to recruit patients before they are certified for care.
Understandably, this incentivizes a network of kickbacks, with physicians receiving or paying bribes for names of patients. There are even “patient brokers” who scour public places, such as churches and bus stops, looking for likely targets.
All of this is violates the federal Anti-Kickback Statute, which prohibits payments inducing or rewarding patient referrals under Medicare and Medicaid, though it seems to be a relatively widespread practice. In the past seven years, at least fifteen physicians in the Chicago area have been charged or convicted of accepting or paying kickbacks for home health patients.
The Real Victims: Patients
While the practices of a laxly regulated home health care industry hurt the government and the taxpayer, the real victims are ultimately the patients.
Physician-staffing companies historically were historically limited to certifying patients for Medicare – the reason they are not licensed as home health agencies – but now many in the greater Chicago area are focused chiefly on home care. They repeatedly bill Medicare for examinations, diagnostic testing, and powerful prescription drugs, many of which are medically unnecessary and potentially dangerous.
Tens of thousands of Chicago-area patients have reportedly had their medical files altered with false diagnoses for the enrichment of both home health care agencies and doctors-for-hire – and to the potential detriment of the patients’ health. According to the Tribune’s analysis of every federal home health care fraud case in the last three years, “The Chicago area has more physician-staffing businesses convicted of health crimes than any metropolitan area nationally.”
Moreover, the fraudulent billing practices of home health care providers can lead to later denials from Medicare when the patients actually need similar treatment. For example, one man in his eighties was denied a wheelchair from a government insurance program because one had already been “purchased” in his name. Another man was denied transfer to a rehabilitation center because a home health company had fraudulently submitted a claim for convalescent care.
Attempts at Fighting Home Health Care Fraud
The ongoing problem of home health care fraud, in Chicago and elsewhere, has not gone unnoticed by government regulators, though their ability to properly regulate the system has often been hamstrung by limited resources.
In 2013, for example, federal regulators banned Illinois from issuing new home health care licenses. This moratorium was soon extended to Florida, Michigan, and Texas, also significant centers of home health care fraud.
Meanwhile, significant federal resources, including a prosecutorial unit and an investigative strike team, have been dedicated to home health care fraud in Chicago. In the last seven years, fraud charges have been filed against 96 people involved with two dozen physician staffing and home health care companies throughout Chicagoland.
Still, because these resources are limited, and the rate of home health care fraud remains high, prosecutors have been forced to focus on the most obvious violators, letting hundreds of others go free. For example, at least 357 different Chicago home health care companies have been linked to potential fraud but never charged.
The difficulty of pursuing home health care fraud extends nationwide, with 2,000 investigative complaints outside of Illinois closed because of a lack of resources.
Even the moratorium on Illinois issuing new home health care licenses may be falling short because existing licenses – and the patients that come with them – are routinely sold online.