[updated] Hhs Defers Over $1b In Medicaid Payments, Including For Home-based Services

On Tuesday, the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) announced that the agencies deferred over $1 billion in Medicaid payments for certain high-risk Medicaid claims in two states, including home-based services.

HHS and CMS deferred $867.5 million in federal Medicaid payments to California and $199 million to Minnesota, according to the Tuesday announcement.

“In Minnesota, we’re talking about 14 high-risk programs, high-risk service categories like personal care and home-based services,” CMS Administrator Dr. Mehmet Oz said in a press conference. “Again, often these are services that your family would typically have provided for you that the federal government has started to fund, but unfortunately, it can be abused.”

A CMS review identified Minnesota claims that require additional documentation, including payments linked to providers flagged through program integrity reviews and other claims with potential eligibility or billing concerns.

Oz said CMS’ review of California’s in-home services accounted for $646 million of the state’s $867.5 million deferral.

California’s deferrals include payments for certain in-home care programs after the agencies identified “spending growth that far exceeded national trends and other claims that require additional documentation.”

Oz said that California-based in-home supportive services, when done correctly, “could make sense,” but that California’s spending on in-home services has been vastly higher than national averages.

“California increased spending at twice the rate of the average of the rest of the entire nation,” Oz said during the press conference. “That doesn’t make sense. That gap accounts for about $391 million of today’s deferral.”

The agency also deferred $250 million from claims related to high-risk providers, including providers billing more than a year after the service is provided and those billing for four or more patients all at the same time.

CMS’ audit of California’s in-home programs also included red flag issues such as bills paid after a beneficiary’s date of death, in-home services allegedly delivered while a beneficiary is in the hospital and services delivered to beneficiaries outside Medicaid eligibility barriers.

The deferrals are not permanent payment cuts, according to HHS, and both states will have the opportunity to provide documentation showing the claims meet federal Medicaid requirements.

HHS also announced that the agency will expand its exclusion authority, enabling CMS and the HHS Office of Inspector General to remove bad actors from federal healthcare programs. In many cases, this would permanently bar bad actors, according to CMS’ announcement.

According to Dan Brillman, the director of Medicaid and the Children’s Health Insurance Program (CHIP) and deputy administrator at CMS, the Medicaid deferrals will improve access to home- and community-based services for beneficiaries on waitlists, including people with intellectual and developmental disabilities, medically fragile children, people with physical disabilities and veterans.

“If states can clean this up, reinvest those dollars, we can reduce or even eliminate these waitlists immediately,” Brillman said during the press release. “Entirely cleared out, every person could get services so much faster.”

The home-based care crackdown

The deferrals come amid a broader federal crackdown on alleged fraud, waste and abuse across Medicare and Medicaid, with heightened scrutiny of home-based care services.

Oz has previously pointed to home care as a leading driver of Medicaid spending and has highlighted California and Minnesota as hotspots for in-home care Medicaid fraud.

“California shares the problems that we are seeing in Minnesota with in-home supportive services,” Oz said. “What are these? They include personal care like bathing or grooming, household tasks, cleaning and cooking, shopping, transportation. Now, these are tasks that your family could do for you, but having the government pay has generated some significant cash for unethical people.”

As part of the crackdown on Minnesota Medicaid fraud, HHS and CMS deferred $259.5 million in quarterly federal Medicaid funding for Minnesota in February. The deferral was part of an effort to address “unusually high spending and rapid growth in certain service areas,” including personal care services, home- and community-based services and other practitioner services.  

HHS officials have previously come under fire for their characterization of home-based services, including HHS Secretary Robert F. Kennedy Jr., who in April highlighted fraud in consumer-directed personal assistance programs like the one in New York.

“These are family members who are getting paid to do things that they used to do as family members for free,” Kennedy said during a Ways and Means Committee hearing. “And this is rife with fraud, because we have no way at CMS to determine if they actually performed that duty or not.”

Following Kennedy’s statement, ANCOR responded, saying that his characterization of in-home services woefully diminishes the work of direct care workers and implies that family members should remain out of the workforce to care for their loved ones.

Home-based care stakeholders have issued their support for CMS’ work to root out bad actors in the industry, while encouraging the agency to take a targeted approach to avoid inadvertently implicating compliant providers.

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