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The 5 Pitfalls of Home Healthcare

Lynette Byrd
Attorney Lynette Byrd
Healthcare Fraud Team Lead
Former Federal Prosecutor
Nick Oberheiden
Attorney Nick Oberheiden
Healthcare Fraud Team
Kevin M. Sheridan
Kevin M. Sheridan
Healthcare Fraud Team
Former FBI Special Agent
Wade McFaul
Wade McFaul
Healthcare Fraud Team
Former HHS-OIG Assistant Special Agent-in-Charge

Few areas within the healthcare industry experience such constant, aggressive, and relentless enforcement activity as home healthcare. The Centers for Medicare and Medicaid Services (CMS), Department of Justice (DOJ), Federal Bureau of Investigation (FBI), and Office of Inspector General (OIG) have all made enforcing Medicare compliance within the home healthcare sector a top priority. With this in mind, home health agency owners, participating nurses, and medical doctors have to make an important decision: Do I risk becoming the next target and the next sensational story on local TV; or, am I willing to follow some simple rules to protect myself, my license, and my freedom?

Compliance is possible. However, most home health agency owners targeted in highly-publicized CMS, DOJ, FBI, and OIG investigations fail to appreciate how easy it is to make critical, irreparable compliance mistakes. As a result, they claim that they have followed the law – and believe they are innocent – when in reality they have recklessly subjected themselves to dangerous federal prosecution.

About Federal Lawyer Dr. Nick Oberheiden

Attorney Dr. Nick Oberheiden has served as federal defense counsel for hundreds of Medicare providers across the country in Zone Program Integrity Contractor (ZPIC) audits and federal investigations. Nick offers this front-line experience and the insights gained from the witnessed mistakes of others to help his clients avoid exposure to prosecution.

Nick’s representation of home health agencies, their owners, and medical professionals has allowed him to identify the following five areas as being particularly prone to regulatory, clinical, and legal mistakes that can trigger CMS, DOJ, FBI, and OIG investigations:

1. Certifications and Re-certifications

What often appears to be an easy decision – to declare a Medicare patient to be in need of home healthcare services – can easily lead to a federal indictment once the DOJ and other federal agencies get involved.

Signing Medicare Form 485 represents, under penalty of federal perjury, that a Medicare beneficiary is homebound and otherwise qualifies for home health services. Who qualifies for home health services, and what exactly does it mean for a patient to be homebound? What mistakes related to patient certification can trigger government scrutiny? The answers to these question surprise many, including experienced medical professionals.

One of the most common issues in this area is that medical professionals often use inappropriate diagnostic methods. Hypertension, mental illness, pain, high blood pressure, obesity, and other frequently-used conditions may supplement a diagnosis for home health services, but none of these conditions are sufficient to support a home health certification. As a result, reliance on these conditions is major red flags for federal prosecutors. Additionally, even when a medical professional cites a qualifying condition qualifies and uses an appropriate diagnostic code, failing to provide an adequate explanation and justification in Medicare Form 485 can trigger a criminal healthcare fraud investigation.

2. Medicare Marketing

Many home health agencies rely on marketing arrangements that violate federal law. Everyone understands that business development constitutes an integral part of any business’s ability to survive. However, unlike the rules that apply to most other industries, the restrictions governing the healthcare industry are complex and unforgiving. For example, simply choosing whether to designate a marketer as a W2 employee or a 1099 contractor can determine whether a home health agency is in violation of the federal Anti-Kickback Statute. The Anti-Kickback Statute prohibits certain compensation structures for referring or directing federally-funded patients. Commissions, percentage-based compensation, and individual rewards are generally prohibited. Another common issue is that many home health agencies do not have written contracts with their marketers – a practice which federal authorities consider to be non-transparent. To avoid scrutiny in this area, structuring Medicare-compliant marketing compensation arrangements should be a centerpiece of compliance.

3. Medical Directors

An issue that is closely related to the use unlawful marketing contracts is reliance on an illegal medical director engagement. Each year, dozens of physicians and home health agency owners are federally prosecuted for receiving or paying illegal kickbacks in conjunction with these engagements. Typically, the home health agency employs a medical director whose role is ostensibly to supervise, direct, and control patients’ treatment plans. In reality, however, the medical director never establishes a doctor-patient relationship with the home health agency’s patients, and he or she does very little other than sign certifications and re-certifications. This type of arrangement can lead to federal criminal prosecution for the home health agency and the medical director.

4. Billing Mistakes

Billing mistakes are a leading cause of federal investigations targeting home health agencies. In particular, in the home healthcare context, federal prosecutors often focus on cases involving upcoding and billing for services not provided.

Upcoding refers to billing for a service at a level that is inconsistent with CMS’s Current Procedural Terminology (CPT) guidelines. For example, if a physical therapist sees a homebound patient and bills for a visit duration that exceeds the actual time spent with the patient, this would constitute a violation of federal law. Similarly, if a home health agency’s medical staff report services that they did not actually provide, this can subject the agency to federal prosecution as well. However, since it is understood that home health agencies cannot control and verify all employee conduct and every service reported on behalf of the agency, home health agency owners can effectively shield themselves from criminal culpability by adopting protection mechanisms that will exonerate them in case of an irregularity.

5. No Compliance Program

Despite these risk factors, almost every home health agency continues to play Russian roulette. At the end of the day, the DOJ and the other federal agencies that investigate and prosecute Medicare fraud will not take an x-ray of anyone’s brain to determine whether or not they had good or bad intent. These agencies aggressively target providers suspected of Medicare fraud; and, as a home health agency owner or certifying physician, it is incumbent upon you to prove that your business or practice is compliant.

How can you meet this burden? Even if you have every intention of complying with federal law, this good intent is meaningless (in the eyes of federal prosecutors) if you do not have a compliance program in place to prove it. As a result, the only way to eliminate an inference of criminal intent, and the only way to keep CMS, DOJ, FBI, and OIG and agents away from your business, is to establish a comprehensive compliance program. A sound compliance program will serve three functions:

  • It will establish written policies and protocols that serve as clear written evidence that you want to do things right.
  • It will signal to your staff that any deviation from your home health agency’s policies will result in an obligation to indemnify you and the business.
  • It will help you avoid federal prosecution as a result of ZPIC audits, patient complaints, and CMS, DOJ, FBI, and OIG investigations by proving your efforts to be compliant.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden



Lynette S. Byrd
Lynette S. Byrd

Former Assistant U.S. Attorney


Ellen Comley
Ellen Comley

Senior Counsel


Roger Bach
Roger Bach

Former Special Agent (OIG)

Steven Taylor
Steven Taylor

Healthcare Compliance Consultant

Susan Sage
Susan Sage

Healthcare Auditor

Contact Federal Healthcare Fraud Defense Lawyer Dr. Nick Oberheiden

Do you have concerns about your home health agency’s ability to withstand scrutiny in the event of a Medicare compliance audit or investigation? If so, you can contact Dr. Nick Oberheiden for a free initial consultation. To speak with Nick about your business’s compliance program in confidence, please call 888-680-1745 or inquire online today.

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