Michigan Medicaid Audit Reveals $160 Million in Overpayments for Home Care Services – Should Providers be Worried?

The results of an audit conducted by the state of Michigan were released on Tuesday, June 17, 2014. The audit found that the state Medicaid program improperly spent $160 million over a three-year period – from October 2010 through August 2013 – on home care services under the Medicaid Home Help Program.

Home care services provide assistance to those residents with disabilities or cognitive impairments who wish to remain in their own homes instead of a care facility. Some services provided include assistance with eating, bathing, and dressing. The overpayments were the result of state administrators of the Medicaid Home Help program failing to obtain invoices and other required documents from service providers. Home care services differ from home health services in that home health services provide continuous medical treatment that a beneficiary would normally receive in an outpatient or inpatient setting, in the home, over extended periods of time. In order to be reimbursed for home health services, home health providers must also meet numerous requirements that home care providers are not subject to (e.g., the face-to-face requirements under the Affordable Care Act).

The Medicaid Home Help Program serves about 67,000 people per year and expenditures from the program account for about 18 percent of all joint federal-state Medicare spending in the state of Michigan. What is particularly important that providers should take note of – and keep a watchful eye out for – is that the state of Michigan may be required to pay back nearly $100 million to the Federal government under regulations governing the matching of state Medicaid expenditures with Federal dollars. If such a repayment is required, the state will likely seek to recoup part, if not all, of the funds from providers who were improperly paid. In fact, the director of the Department of Human Services (DHS) – one of the state agencies responsible for administering the program – says it has already begun the process of recouping payments from some providers. However, DHS notes that it does question the estimated amount of improper payments, challenging it on the basis that it was extrapolated from a small sample size.

The audit report also noted that the state of Michigan overpaid some $6.8 million to 80 home care agencies by not enforcing requirements that the agencies get higher fees than individual aides and also improperly paid $3.5 million for home care services when the beneficiaries were hospitalized or in a care facility.

As a result, home care providers should be on the lookout for audits of their payments. In order to best defend against these audits, providers should ensure that they have all necessary and proper documentation available, including patient notes and invoices. If you have any questions about the audit report, or are the subject of a Medicaid, Medicare or third party payor audit, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.