Performance audit, home health care regulation and expenditures

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Douglas R. Norton
Auditor General
HOME HEALTH CARE
REGULATION
AND
EXPENDITURES
March 1999
Report Number 99-3
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DOUGLAS R. NORTON, CPA
AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
DEPUTY AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
March 15, 1999
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Dr. James Allen, Director
Department of Health Services
Mr. John Kelly, Director
Arizona Health Care Cost Containment System
This report addresses issues related to home health care regulation and expenditures in
Arizona and was conducted in conjunction with the National State Auditors’ Association’s
multi-state audit on this topic. Arizona and nine other states agreed to study their respective
Medicaid-supported home health service delivery systems to determine whether regulation,
claims payment processes, complaint investigations, and quality-of-care assurance programs
are appropriate and sufficient.1
The Arizona audit involved a review of programs within the Department of Health Services
(DHS) and the Arizona Health Care Cost Containment System (AHCCCS). The review of
DHS’ responsibilities found that DHS needs to improve its licensure and complaint
investigation processes for home health agencies. In addition, when DHS identifies licensing
violations during home health agency inspections and complaint investigations, it does not
consistently use its enforcement authority to take progressive action. The review of
AHCCCS’ responsibilities identified some improvements that could be made to controls over
the claims payment process as well as some improvements that could better ensure home
health clients receive quality care.
1 Arizona, Delaware, Illinois, Kansas, Kentucky, Michigan, Missouri, New York, Ohio, Pennsylvania, and
Texas participated in this audit.
March 15, 1999
Page -2-
As outlined in its response, the Department of Health Services agrees with Finding I
and plans to implement all of the recommendations. The Arizona Health Care Cost
Containment System agrees with Findings II and III and plans to implement 10 of the 12
recommendations. In its response, AHCCCS explains the different methods by which it
plans to implement the two other recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on March 16, 1999.
Sincerely,
Douglas R. Norton
Auditor General
Enclosure
i
SUMMARY
The Office of the Auditor General has conducted a performance audit of home health care
regulation and expenditures in conjunction with the National State Auditors’ Association’s
multi-state audit on this topic. This audit was conducted pursuant to the provisions of A.R.S.
§41-1279.03 and in response to a May 27, 1997, resolution of the Joint Legislative Audit
Committee.
In Arizona, home health care includes a number of services, ranging from skilled nursing to
assistance with activities such as bathing and meal preparation that are provided at home
rather than in more expensive settings, such as nursing homes. Increased availability of home
health care, and subsequent increases in governmental expenditures for these services, have
led states to begin reassessing how home health care is provided and monitored. In 1998,
Arizona and nine other states chose to participate in a joint audit of their respective Medi-caid-
supported home health service delivery systems.1 The states agreed to study four objec-tives
relating to the effectiveness and sufficiency of regulation, claims payment processes,
complaint investigations, and quality-of-care assurance. This report presents three audit
findings that address these four objective areas.
This audit focuses on the care provided to elderly and physically disabled persons receiving
services under the Arizona Long-Term Care System (ALTCS). ALTCS is one of two pro-grams
administered by the Arizona Health Care Cost Containment System (AHCCCS),
which is the state agency designated by the federal government to receive Medicaid monies
and to ensure provision of services to Arizona Medicaid clients. ALTCS is a capitated man-aged
care program in which AHCCCS pays a program contractor an up-front amount per
client, regardless of the number or type of services provided. The program contractor is re-sponsible
for developing and maintaining a network of home health care agencies, ensuring
appropriate services are provided, and paying for provided services. To become part of a
program contractor’s provider network, home health agencies must hold a state license from
the Department of Health Services (DHS), be Medicare certified, and be registered with
AHCCCS. In July 1998, approximately 140 home health agencies were licensed to provide
services in Arizona, and 117 of these were Medicare certified.
1 Arizona, Delaware, Illinois, Kentucky, Michigan, Missouri, New York, Ohio, Pennsylvania, and Texas
participated in the audit.
ii
DHS Needs to Improve
Its Licensure and Complaint
Investigations Processes
(See pages 9 through 14)
DHS’ current licensing process does not provide sufficient oversight of home health care
agencies. In 1998, DHS renewed the state licenses of 43 home health agencies without first
ensuring the agencies were in compliance with state regulations as required by state law.
These 43 agencies comprised approximately 37 percent of Arizona’s Medicare-certified home
health agencies. In addition, as of August 1998, DHS had 70 overdue home health agency
Medicare inspections.
DHS also did not meet its required time frames for investigating approximately two-thirds of
the complaints against home health agencies it received in fiscal years 1997 and 1998. Un-timely
investigations have limited DHS’ ability to substantiate complaints and resulted in a
backlog of 38 complaints as of August 1998. However, DHS has since eliminated this backlog
by making complaint investigation a priority.
Finally, DHS does not consistently use its enforcement authority to take progressively
stronger action when home health agencies do not correct problems identified during in-spections
or complaint investigations. DHS is required to allow home health agencies cited
for state deficiencies to submit plans of correction. However, in some instances, this approach
does not appear to adequately ensure future compliance. Auditors reviewed licensing and
complaint files for a sample of 27 home health agencies and found that 8 were cited for re-peated
violations during a period of 9 to 18 months. However, DHS only required the agen-cies
to submit another written plan of correction. It did not use other tools at its disposal,
such as fines or bans on serving new clients, to ensure that problems were corrected.
AHCCCS Needs to Ensure Procedures
Governing Appropriate and Timely Claims
Payments Are Consistently Followed
(See pages 15 through 18)
Current procedures may not adequately ensure that payments to home health agencies are
appropriate and timely. A review of claims payment procedures at Maricopa County Man-aged
Care Systems (MMCS), the State’s largest program contractor serving the elderly and
physically disabled, found problems with the appropriateness of some payments. The re-view
revealed that MMCS has paid for some home health services that were not included in
an appropriate client care plan. Care plans, which are authorized by the client’s attending
physician, help ensure client needs are met by detailing the type and frequency of services to
be provided. In addition, weaknesses exist that can allow MMCS to make payments for
iii
services that were not provided. A review of 1,236 MMCS claims revealed 15 payments for
services that were not documented as being provided. Finally, there are problems with
MMCS’ untimely claims payments. In April 1998, AHCCCS found that 70 percent of the
claims for home- and community-based services were not paid within the required time
period. AHCCCS has since directed MMCS to take corrective action, and MMCS has made
improvements.
Time constraints precluded a wider review encompassing more of the program contractors.
However, because the same requirements apply to all program contractors, similar attention
to these issues may be needed beyond MMCS. While AHCCCS is not immediately affected if
contractors pay claims that are not appropriately authorized, inappropriate payments can
ultimately affect capitation rates. These rates are determined annually and include consid-eration
of the program contractors’ expenses for services.
AHCCCS Should Improve Efforts
to Further Ensure Quality Care
(See pages 19 through 24)
The various components of Arizona’s managed care system each have a role in ensuring
quality home health services are provided; however, improved implementation of existing
policies and better coordination of efforts is needed. Key components within the system are
home health agencies, program contractors, and AHCCCS.
n Home health agencies are directly responsible for providing services and ensuring that
they are provided appropriately. To help ensure appropriate provision of services, regis-tered
nurses must accompany and supervise home health aides every 62 days. However,
a review of a random sample of services provided to 61 clients identified 8 instances
where registered nurses at 3 home health agencies did not appropriately conduct these
supervisory visits.
n Program contractors also perform a number of monitoring functions, but some processes
could be improved. To ensure client needs are appropriately identified, case managers
conduct quarterly client assessments, which supervisors review, and it appears these ac-tivities
are performed as required. However, some improvements could be made to pro-gram
contractors’ regular reviews of the home health agencies in their networks. Specifi-cally,
by obtaining DHS inspection reports, program contractors could better identify
problem areas. In addition, program contractors could improve client satisfaction surveys
by including questions about case managers’ performance and by having these surveys
administered by persons other than case managers.
iv
n AHCCCS also conducts annual operational and financial reviews of program contractors
and measures client satisfaction, but some additional process improvements may be
needed. Specifically, AHCCCS has not taken progressive enforcement actions when it has
identified repeated problems with quality-of-care issues. In addition, although AHCCCS
conducts client satisfaction surveys, the surveys could be more useful if they were dis-tributed
to a random sample of clients and results were analyzed based on the setting
within which the client resides. However, AHCCCS officials indicate that regularly ana-lyzing
survey results by client groups would be prohibitive with current resources since
the sample size would need to be substantially increased.
In addition, AHCCCS could further ensure quality of care through better use of complaint
data. Specifically, AHCCCS should facilitate increased information sharing. For example,
AHCCCS does not obtain and distribute DHS inspection and complaint investigation results;
and AHCCCS lacks a policy directing AHCCCS staff and program contractors to share in-vestigation
results with outside regulatory entities. Moreover, AHCCCS does not fully utilize
its own investigation results to identify ongoing problems with home health services or
agencies. Finally, improved complaint tracking by program contractors could help to more
quickly identify problem facilities.
v
Table of Contents
Page
Introduction and Background.............................................................. 1
Finding I: DHS Needs to Improve
Its Licensure and Complaint
Investigations Processes................................................................. 9
Licensing Processes Do Not
Provide Sufficient Oversight ............................................................................................... 9
DHS Has Not Performed
Timely Complaint Investigations....................................................................................... 11
DHS Needs to Implement Progressively
Stronger Enforcement Actions............................................................................................ 13
Recommendations................................................................................................................. 14
Finding II: AHCCCS Needs to Ensure
Procedures Governing Appropriate and
Timely Claims Payments Are Consistently
Followed............................................................................................. 15
Program Contractors Responsible
for Ensuring Claims Are Appropriate.............................................................................. 15
Program Contractor Pays
for Services Not Included
in an Appropriate Care Plan............................................................................................... 16
Payment Made for
Services Not Provided........................................................................................................... 17
Payment for Claims
Not Timely.............................................................................................................................. 17
Recommendations................................................................................................................. 18
vi
Table of Contents (concl’d)
Page
Finding III: AHCCCS Should Improve
Efforts to Further Ensure Quality Care........................................... 19
Managed Care Entities Should
Increase Quality Assurance Efforts ................................................................................... 19
Better Use of Complaint Data
Could Further Ensure Quality of Care............................................................................. 22
Recommendations................................................................................................................. 24
Agency Response
Tables and Figure
Table 1 Arizona Department of Health Services
Division of Assurance and Licensure Services,
Medical Facilities Program
Number of Overdue Home Health
Agency Medicare Inspections
As of August 31, 1998.......................................................................... 11
Table 2 Arizona Department of Health Services
Division of Assurance and Licensure Services,
Medical Facilities Program
Number of Fiscal Year 1997 and 1998
Home Health Agency Complaints and
Number of Investigations
Exceeding Standard Investigation Times
As of October 14, 1998......................................................................... 13
Figure 1 Arizona Long-Term Care System
Number of Elderly and Physically Disabled Clients
Enrolled by Program Contractor in Each County
As of September 1, 1998
(Unaudited)............................................................................................ 3
1
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of home health care
regulation and expenditures in conjunction with the National State Auditors’ Association’s
(NSAA) multi-state audit on this topic. This audit was conducted pursuant to the provisions
of A.R.S. §41-1279.03 and in response to a May 27, 1997, resolution of the Joint Legislative
Audit Committee.
Home health services can include such things as nursing services, physical and respiratory
therapies, and home health aide assistance with activities such as bathing and meal prepara-tion
at an individual’s residence. These services allow individuals, such as the elderly and
disabled, to receive professional health care services while living independently at home. To
provide services in Arizona, home health agencies must hold a state license from the De-partment
of Health Services (DHS). To qualify for federal Title XIX Medicaid reimburse-ments
for services to Medicaid-eligible individuals, home health agencies must also be Medi-care
certified and registered with the Arizona Health Care Cost Containment System
(AHCCCS). In July 1998, approximately 140 home health agencies were licensed to provide
services in Arizona, and 117 of these agencies were Medicare certified.
AHCCCS Serves Clients
Through a Managed Care System
AHCCCS is the state agency designated by the federal government to receive Medicaid
monies and to ensure the provision of services to Arizona Medicaid clients. Any state re-ceiving
Medicaid monies is required to provide basic services, such as hospital care, physi-cian
services, and certain home health services, such as physical therapy and skilled nursing.
In addition, federal funding is available for some optional services. Specifically, Arizona has
elected to provide such additional home health services as personal and attendant care, and
case management.
To facilitate provision of Medicaid services, AHCCCS administers a statewide managed care
system. This system consists of two programs, the Acute Care Program and the Arizona
Long-Term Care System (ALTCS). Both programs provide financially and/or medically
eligible clients with necessary medical care, including hospitalization, physician visits, and
home health services. The Acute Care Program was enacted in 1981 and currently serves
approximately 406,000 clients, including families and pregnant women. The second pro-gram,
ALTCS, was enacted in 1987 and provides long-term care to a much smaller popula-tion
consisting of approximately 25,000 clients who are elderly, or who are physically or de-velopmentally
disabled. ALTCS clients may receive services in either institutional facilities or
2
home- and community-based settings such as group homes, adult care homes, or personal
residences. Approximately 14,000 of Arizona’s ALTCS clients reside in home- and commu-nity-
based settings. ALTCS is the focus of this report because ALTCS clients receive a greater
proportion of home- and community-based services than Acute Care program clients.
To ensure home health services are provided to ALTCS clients, AHCCCS contracts with
program contractors. AHCCCS and its program contractors do not directly provide home
health services. Instead, the program contractors are responsible for authorizing and moni-toring
services provided to clients through a network of home health agencies. To accom-plish
this, program contractors employ case managers who work with clients to assess their
needs and authorize services. After performing the needs assessment, the case manager re-fers
clients to a home health agency within the program contractor’s network. The home
health agency considers the case manager’s assessment in developing a physician-approved
care plan that identifies necessary services, such as skilled nursing visits, and then provides
services.
While AHCCCS does not directly provide services, it nonetheless plays an important role in
the provision of ALTCS services, including home health care. It is responsible for procuring
program contractors, monitoring their performance, and administering their funding. Cur-rently,
AHCCCS contracts with eight program contractors.1 The largest program contractor,
the Department of Economic Security’s Division of Developmental Disabilities, serves ap-proximately
9,415 clients with developmental disabilities residing throughout the State. As
shown in Figure 1, page 3, the remaining 7 contractors serve the elderly and physically dis-abled,
and their duties are divided by county.
Financing Home
Health Care
Unlike traditional fee-for-service Medicaid programs, AHCCCS’ system operates under pre-paid,
capitated arrangements with program contractors. Arizona was the first state to begin
operating a fully capitated, long-term care program statewide, but several other states have
since begun operating similar systems. Under Arizona’s system, program contractors are
paid an up-front capitated amount per enrolled member regardless of the number or level of
services provided. In federal fiscal year 1999, the capitated rate for the elderly and physically
disabled population averages $2,235 per member per month. The capitated rate for the de-velopmentally
disabled population averages $2,123 per member per month. From this lump-sum
amount, program contractors pay providers for all of the individual services provided
to clients. Because AHCCCS pays a capitated rate to cover all services, it cannot differentiate
how much is expended on specific types of services, such as home health care. Based on pro-gram
contractors’ records for home- and community-based clients, expenditures for all
1 In addition, Native American contractors serve approximately 975 clients residing on tribal lands.
3
Mohave
482
Navajo
186
Apache
48
Gila
242
La Paz
43
Greenlee
23
Pinal
535
Pima
2,530
Santa Cruz
132
Cochise
488
Coconino
117
Yavapai
712
Maricopa
8,903
Yuma
370
Graham
121
Source: Arizona Long-Term Care System enrollment information obtained from the Arizona Health Care
Cost Containment System.
Figure 1
Arizona Long-Term Care System
Number of Elderly and Physically Disabled Clients
Enrolled by Program Contractor in Each County
As of September 1, 1998
(Unaudited)
Maricopa Managed Care Systems Arizona Physicians IPA
Pima Health Systems Pinal County Long-Term Care Systems
Ventana Health System Cochise County Department of
Health Services
Yavapai County Long-Term Care
4
ALTCS-covered services, including home health care, were approximately $192 million in
fiscal year 1997.
AHCCCS receives government funding for medical services from three main sources. The
primary source of funding is the federal Medicaid program, which provides monies to serve
individuals who meet financial and/or medical eligibility criteria. Second, AHCCCS receives
state monies, which are required to match federal Medicaid dollars and to pay for health care
for persons who do not qualify for Medicaid, but meet state requirements. Finally, Arizona’s
15 counties also contribute monies to fund AHCCCS. Currently, the State and counties to-gether
finance more than one-third of AHCCCS’ total expenditures, which were approxi-mately
$2 billion in fiscal year 1997.
Audit Purpose
and Methodology
Increased home health care availability, and subsequent increases in government expendi-tures
for those services, have led a number of states to begin reassessing how these services
are provided and monitored. In addition, recent federal Medicare audits have shown that the
nature of home health care makes it susceptible to abuse. One of these Medicare audits
noted, for example, that few home health claims are subject to medical review and most
claims are paid without question. To determine whether similar problems existed with
Medicaid-supported home health service delivery, Arizona and 9 other states agreed to par-ticipate
in a National State Auditors’ Association-sponsored joint audit.1 In developing the
audit objectives, states identified some additional questions and concerns that also closely
relate to the provision of home health care services, including home health regulation and
quality of care. The concerns identified are incorporated into the following four objectives:
n Whether the responsible state agency is ensuring that providers are meeting state licen-sure/
certification requirements and if those requirements are sufficient;
n Whether the State’s complaints/monitoring process for service providers is adequate;
n Whether the services providers billed for clients are properly authorized, approved, al-lowable,
and provided; and
n Whether the appropriate state agencies have procedures in place to ensure that quality
care is provided to clients.
1 Arizona, Delaware, Illinois, Kentucky, Michigan, Missouri, New York, Ohio, Pennsylvania, and Texas
participated in the audit.
5
This audit used various methodologies, including file reviews, interviews, and other re-search,
to develop three findings addressing the four objectives and associated issues. Be-cause
all four objective areas were addressed, regardless of whether they were identified as
being problematic in Arizona, not all issues resulted in recommendations for improvement.
In addition, because Arizona operates a managed-care Medicaid system, recommendations
for Arizona may be very different from those identified by states using a fee-for-service ap-proach.
This report’s findings, recommendations, and associated methodologies are as fol-lows:
n The need for DHS to improve home health agency regulation by performing timely licen-sure/
certification inspections and complaint investigations, and using its state enforce-ment
authority when warranted.
DHS is the state agency responsible for ensuring that home health providers meet state li-censure
and Medicare certification requirements, and for investigating complaints it re-ceives
against these providers. To determine whether DHS conducts timely state and
Medicare inspections, computerized data for 70 facilities with inspection due dates be-tween
January 1, 1996, and August 31, 1998, was reviewed. In addition, auditors re-viewed
a sample of 27 home health agency licensing files to determine whether licenses
were issued in accordance with federal and state requirements. The agencies reviewed
were registered with AHCCCS and held one-year licenses during 1998.
To determine whether DHS is meeting its responsibility to investigate complaints, audi-tors
reviewed data related to 183 complaints received between fiscal year 1993 and 1998.
Audit work included a file review of the 38 complaints that had not been investigated as
of August 1998.
n The need for AHCCCS to monitor program contractors’ compliance with policies that
ensure home health agency claims payments are appropriate and authorized, and to es-tablish
some additional procedures.
To determine whether policies and procedures are sufficient to ensure only appropriate
home health agency claims are paid, auditors reviewed documentation for a stratified
random sample of 100 home health visits paid for by one program contractor and per-formed
between July 1 and October 30, 1997. Due to time constraints, the review focused
on the procedures used by Maricopa Managed Care Systems, the State’s largest program
contractor serving the elderly and physically disabled population. The sample included
50 visits for 12 of the 14 clients who comprised the top 25th-percentile of services re-ceived,
and 50 visits for 49 of the 763 clients who comprised the bottom 25th-percentile of
services received. Documentation for a total of 61 clients was reviewed.
6
In addition, for this same program contractor, auditors reviewed case manager files, as
well as home health agency medical and billing files, licensing records, and employee
time accounting records to determine whether all services paid were appropriately
authorized.
Finally, some additional claims payment issues were assessed but are not reported be-cause
of time limitations and because no serious concerns were identified. Specifically,
auditors reviewed policies, procedures, and files to ensure that home health claims were
not paid for clients who were deceased or hospitalized, and to ensure that clients were
not listed multiple times on the AHCCCS member rolls.
n The need for AHCCCS to monitor implementation of existing policies and to increase
communication with other responsible parties to better ensure quality care is provided to
clients.
Auditors reviewed AHCCCS policies and procedures relating to quality of care. As part
of the file review to determine compliance with financial controls, auditors also deter-mined
whether program contractors and providers comply with quality-of-care policies
and procedures. In addition, other documentation relating to quality of care, including
case manager assessments and notes, and client service authorizations, was also re-viewed.
To identify other possible concerns relating to quality of care, auditors reviewed
AHCCCS evaluations of program contractors and client surveys. Specifically, auditors
examined AHCCCS’ operational and financial reviews of two large program contractors
to determine whether AHCCCS had identified quality-of-care issues. Program contrac-tors’
evaluations of home health agencies were also reviewed. These evaluations included
those conducted on 19 providers in 1997 and 1998. In addition, auditors reviewed
AHCCCS’ and 2 program contractors’ client satisfaction survey instruments and proce-dures.
Available survey results were also reviewed from AHCCCS and 1 program con-tractor.
Finally, auditors reviewed complaints AHCCCS and program contractors received in-volving
home health services. The complaints reviewed included 12 complaints
AHCCCS received, and 55 complaints 2 program contractors received. In addition, be-cause
case managers are encouraged to resolve client concerns informally, auditors inter-viewed
4 experienced case managers at one program contractor.
This audit was conducted in accordance with government auditing standards.
7
The Auditor General and his staff express appreciation to the Directors and staffs of the Ari-zona
Health Care Cost Containment System; the Department of Health Services; and the
management, staff, and home health agencies affiliated with Maricopa Managed Care Sys-tems
and Pima Health Systems for their cooperation and assistance throughout this audit.
8
(This Page Is Intentionally Left Blank)
9
FINDING I
DHS NEEDS TO IMPROVE ITS LICENSURE
AND COMPLAINT INVESTIGATIONS PROCESSES
To better protect the health and welfare of home health agency clients, the Arizona Depart-ment
of Health Services (DHS) needs to improve its licensing, complaint investigation, and
enforcement activities. DHS has renewed many home health agencies’ licenses without en-suring
that these agencies met state licensing requirements, and DHS has not met federal and
state requirements for conducting inspections. In addition, DHS has not investigated com-plaints
in a timely manner. Finally, when inspections or complaint investigations show that
home health agencies remain in violation, DHS does not take progressively stronger en-forcement
actions to ensure compliance.
DHS is charged with ensuring home health agency compliance with state and federal regu-lations.
It inspects agencies and issues state licenses to those meeting state licensing stan-dards.
On behalf of the federal Health Care Financing Administration (HCFA), it also in-spects
agencies to determine whether those that receive Medicare payments comply with
Medicare certification regulations. To provide services to ALTCS clients, home health agen-cies
must meet both sets of standards. The two inspections are substantially similar, involv-ing,
for example, reviews of qualifications and training, personnel supervision, conformance
to physician plans of care, and quality management programs. However, there are additional
state regulations that agencies must also meet, such as more stringent administrator qualifi-cations,
employee background checks, and employee pulmonary tuberculosis testing. As of
July 1998, there were 140 state-licensed home health agencies, 117 of which were also Medi-care-
certified.
Licensing Processes Do Not
Provide Sufficient Oversight
DHS’ current licensing process does not provide sufficient oversight of home health care
agencies. DHS has renewed the licenses of a number of home health agencies without first
ensuring that the agencies comply with state regulations. In addition, DHS does not inspect
agencies as frequently as federal and state guidelines require.
DHS renewed licenses without ensuring compliance with state regulations—In 1998, DHS
issued state licenses to 43 Medicare-certified home health agencies without first ensuring
that these agencies met state licensing requirements. These agencies comprised approxi-
10
mately 37 percent of Arizona’s Medicare-certified home health agencies. In issuing these
renewal licenses, DHS did not make efforts to determine compliance with state licensing
requirements even though some of the agencies had failed to comply with these require-ments
in the past.
A.R.S. §36-425.01(B) requires DHS to issue state licenses to Medicare-certified home health
agencies in lieu of conducting a state inspection, as long as DHS first determines that the
agencies comply with all state licensure regulations. At the time the statute was enacted,
Medicare inspections were conducted annually and state licensing inspections were con-ducted
every one to two years, depending on the results of prior inspections. The statutory
change eliminated separate state licensure inspections, but Medicare inspections were still
being done annually. However, in 1996, HCFA began allowing as long as three years be-tween
Medicare inspections for agencies that met certain criteria. Arizona’s statutes did not
change accordingly. DHS is still required to renew licenses every one to two years but has
not developed a mechanism to ensure compliance with state regulations before issuing
these renewal licenses. To ensure that Medicare-certified home health agencies also are in
compliance with state regulations, DHS should seek statutory changes to either allow it to
conduct inspections prior to renewing licenses, or conform license renewal frequency with
Medicare certification frequency.
DHS does not conduct timely inspections—In addition, DHS does not inspect home health
agencies as frequently as federal and state guidelines require. Federal directive indicates that
inspections of Medicare-certified agencies should occur every one, two, or three years, de-pending
on a number of criteria, including prior inspection results. DHS’ failure to conduct
timely inspections has resulted in a backlog of Medicare inspections, as shown in Table 1 (see
page 11). As of August 1998, DHS had 70 overdue home health agency Medicare inspections,
which is 60 percent of all Medicare-certified agencies in Arizona.
DHS is also overdue in inspecting agencies that hold state licenses only and are not Medicare
certified. Pursuant to state statute, DHS’ policy is to inspect state-only licensed home health
agencies prior to license renewal, which occurs every one or two years. As of August 1998, 9
of 23, or 39 percent, state-only licensed agencies held state licenses that were outdated be-cause
DHS had not conducted a timely state inspection. In fact, one of these agencies was last
inspected in April 1995. This agency held a one-year license and thus should have been in-spected
again in 1996. According to DHS management, one reason for the overdue inspec-tions
is that the number of home health agencies operating in Arizona increased substantially
between 1996 and 1998; however, the number of surveyors available to perform inspections
remained constant.
11
Table 1
Arizona Department of Health Services
Division of Assurance and Licensure Services, Medical Facilities Program
Number of Overdue Home Health Agency Medicare Inspections
As of August 31, 1998
Year Due Number
1998 a 36
1997 33
1996 1
a Through August 31, 1998.
Source: Auditor General staff analysis of information obtained from the Arizona Department of Health Services.
DHS Has Not Performed
Timely Complaint Investigations
As previously reported in an audit released by the Auditor General’s Office in September
1998, DHS has not investigated complaints in a timely manner.1 DHS policy outlines com-plaint
investigation time frames based on the seriousness of allegations, but the Department
has not consistently met these time frames when investigating complaints against home
health agencies. DHS’ failure to investigate complaints within required time frames has
diminished its ability to substantiate complaints. However, after DHS became aware of the
concerns noted in the previous audit, management placed a greater priority on complaint
investigations and the backlog has been eliminated.
According to DHS policy, complaints are prioritized and investigated based on the serious-ness
of allegations, as outlined below:
n Priority 1—Complaints involve situations of extreme emergency and must be investi-gated
within 48 working hours;
1 Office of the Auditor General Performance Audit of the Arizona Department of Health Services, Division of
Assurance and Licensure Services (Report No. 98-17).
12
n Priority 2—Complaints involve situations where hazards to health and safety may exist,
but there is no indication of immediate danger. These complaints must be investigated
within 10 working days;
n Priority 3—Complaints relate to situations where health and safety concerns are not ma-jor
issues and must be investigated within 30 working days;
n Priority 4—Complaints relate to infrequent situations that may be resolved based on
communication with the complainant, and an on-site visit to the facility is unnecessary.
There is no required investigation time frame associated with priority 4 complaints;
n Priority 5—Complaints may be investigated at the next on-site visit to the facility. There
is no required investigation time frame set for priority 5 investigations.
Complaint investigations are not timely—DHS has not investigated home health agency
complaints within required time frames. As shown in Table 2 (see page 13), DHS failed to
investigate 17 of 25, or 68 percent, priority 3 complaints received in fiscal years 1997 and 1998
within the established time frame. These complaints were open between 45 and 436 days. In
addition, the priority 2 complaint that exceeded the investigation time frame was not investi-gated
until 105 days after it was received.
Untimely complaint investigation diminishes ability to substantiate complaints—Not in-vestigating
complaints in a timely manner has weakened DHS’ ability to substantiate com-plaints
and ensure compliance with regulations. In July and August 1998, DHS closed two
priority 3 complaints because untimely investigation resulted in complaint allegations that
could not be substantiated due to unavailable evidence, such as medical records. Both of
these complaints were received in fiscal year 1996. In addition, DHS recently closed two pri-ority
3 complaints received in fiscal year 1998 without investigation because the agencies
were no longer in business by the time DHS began the investigation. Timely investigation is
important because A.R.S. §36-425(F) gives DHS the authority to deny potential home health
agency owners a state license based on their prior history. This law will help ensure that an
owner with a history of violations does not close one agency in order to open a new agency
that has a clean record.
DHS has recently eliminated complaint investigation backlog—DHS management has re-cently
made complaint investigation a priority by investigating many backlogged complaints
and scheduling others for investigation. Prior to August 1998, DHS had accumulated a
backlog of 38 home health agency complaints, which is approximately the number of home
health agency complaints received in one year. However, DHS management recently began
assigning these complaints for investigation and, as of December 17, 1998, had completed
these 38 investigations.
13
Table 2
Arizona Department of Health Services
Division of Assurance and Licensure Services, Medical Facilities Program
Number of Fiscal Year 1997 and 1998 Home Health
Agency Complaints and Number of Investigations Exceeding
Standard Investigation Times
As of October 14, 1998
Priority Number Received Number Investigated
Investigations
Exceeding Standard
Times
1 1 1 0
2 2 2 1
3 33 25 17
4 2 0 Not applicable
5 19 17 Not applicable
Source: Auditor General staff analysis of the Division of Assurance and Licensure Services complaint investiga-tion
policy and analysis of information contained on the Medical Facilities Program’s complaint data-base.
DHS Needs to Implement Progressively
Stronger Enforcement Actions
When DHS identifies recurring state licensing violations during home health agency inspec-tions
and complaint investigations, it does not consistently take progressively stronger en-forcement
action to correct the situation. In most instances, when DHS initially identifies state
and federal deficiencies, state and federal regulations require DHS to allow agencies to re-spond
with a plan to correct the problems. However, DHS also has other options. For exam-ple,
if an agency is not in compliance with state regulations, DHS can also take stronger ac-tion,
such as levying civil fines based on deficiencies, restricting new admissions, and limit-ing
the services a home health agency can offer. DHS also has the authority to issue provi-sional
licenses and revoke licenses. Finally, if DHS determines that a Medicare-certified
agency is deficient in any of 12 conditions necessary to maintain Medicare certification, such
as the requirement that specifies procedures for providing skilled nursing services, HCFA
can begin the process to terminate the agency’s certification. In addition, DHS still has
authority to take state enforcement action against the agency.
14
DHS requires that home health agencies cited for state or federal deficiencies submit an ac-ceptable
written plan of correction but does not take additional, more progressive enforce-ment
action. It appears that these plans of correction alone do not adequately ensure future
compliance. Auditors reviewed inspection and complaint investigation results for a sample
of 27 home health agencies and found that, despite submitting written plans of correction, 8
agencies were subsequently cited again for similar state deficiencies within an 18-month
period.
To help ensure future compliance by home health agencies that continually violate regula-tions,
DHS should use its state licensing authority to impose stronger actions. Other states
support progressively stronger enforcement actions as effective tools in improving compli-ance,
particularly because the potential for losing income provides a strong incentive to attain
compliance. For example, Washington’s Department of Health Enforcement Unit has out-lined
criteria for imposing civil fines instead of simply issuing a notice of correction. Two of
these criteria are repeat deficiencies or if a deficiency has a probability of placing a patient in
danger of death or bodily harm. Further, the Minnesota Health Department assesses fines
against home health agencies when it finds that agencies have failed to correct deficiencies
upon followup. From May 1996 to April 1998, the Minnesota Health Department collected
$11,400 from 18 home health agencies and hospices that continued to violate regulations after
being cited and ordered to make corrections.
Recommendations
1. DHS should seek statutory changes to either allow it to conduct inspections prior to li-censes
of Medicare-certified home health agencies, or conform licensing renewing fre-quency
with Medicare certification frequency.
2. DHS should conduct timely home health agency inspections in accordance with federal
HCFA and state requirements.
3. DHS should ensure that home health agency complaints are investigated in a timely
manner. To do so, DHS needs to ensure that complaints are monitored and assigned for
investigation.
4. DHS should use its current progressive enforcement authority, including assessing civil
fines, against home health agencies that repeatedly violate state licensure regulations.
15
FINDING II
AHCCCS NEEDS TO ENSURE PROCEDURES
GOVERNING APPROPRIATE AND TIMELY CLAIMS
PAYMENTS ARE CONSISTENTLY FOLLOWED
Current procedures do not adequately ensure compliance with AHCCCS policies requiring
program contractors’ payments for home health services to be appropriate and timely.
AHCCCS has made program contractors largely responsible for ensuring that payments for
services are appropriate. Auditors reviewed procedures at the State’s largest program con-tractor
serving the elderly and physically disabled population, Maricopa County Managed
Care Systems (MMCS) and found that MMCS made payments to home health agencies for
some services that were not included in an appropriate care plan. Within the sample of
claims reviewed, MMCS also made a small number of payments for services that were not
provided. Finally, MMCS has not always paid claims timely.
Program Contractors Responsible
for Ensuring Claims Are Appropriate
The Arizona managed care system relies heavily on program contractors to help ensure
payments to home health agencies are appropriate. Under this system, AHCCCS uses fed-eral,
state, and county dollars to pay its program contractors a set amount per eligible client,
regardless of the amount of services provided. Program contractors use these capitation
payments to pay providers for services provided to clients. AHCCCS is not immediately
impacted if program contractors pay claims that are not properly authorized. However,
AHCCCS develops the capitation rates annually and considers program contractor expen-ditures
in the development of these rates. Therefore, inappropriate payments could result in
AHCCCS paying a higher rate per client in the future.
To ensure that payments are appropriate and that services are necessary for the client, pro-gram
contractors rely on authorization of services by case managers and client care plans.
The program contractor case manager authorizes the type and frequency of services a client
is to receive based on an assessment of the client’s needs. Client care plans are then devel-oped
by the home health agency. The care plan, which is authorized by the attending physi-cian,
details the type and frequency of physician-ordered services, such as skilled nursing
assessments and administration of treatments and medications.
16
Program Contractor Pays
for Services Not Included
in an Appropriate Care Plan
A review of a sample of MMCS clients showed that MMCS has paid some home health
agencies for services that were not included in an appropriate client care plan. In some in-stances,
home health agencies did not develop care plans before providing services. In other
cases, home health agencies did not ensure care plans were appropriately authorized. For
these and other problems identified, the extent to which they may exist at other program
contractors besides MMCS is unknown. However, because the requirements apply to all
contractors, similar attention to these issues may be needed beyond MMCS.
Care plans do not always exist—Federal and state regulations require that care plans be
developed to help ensure necessary services are provided; however, MMCS providers have
not always developed care plans supporting the home health aide services rendered. Audi-tors
reviewed services 61 MMCS clients received between July 1, 1997, and October 30, 1997.
The review revealed that home health agencies did not develop care plans supporting the
services for 9 of 61 clients. For these clients MMCS paid a total of $36,661 for services, which
were not included in a care plan.
One reason for the lack of care plans is confusion about whether the plans are required for
personal care-type services, such as bathing, provided by a home health aide. Home health
agencies indicated that they have received conflicting advice regarding the necessity of care
plans for such services. However, according to the Health Care Financing Administration,
federal Medicaid regulations require care plans for all home health aide services. In addition,
home health agencies in MMCS’ provider network are contractually obligated to ensure
home health aide services are ordered by a primary care provider and authorized by a case
manager.
Because care plans are required, increased efforts are necessary to help ensure that home
health aide services are included in a physician-authorized care plan prior to claim payment.
Such efforts should include educating providers about this requirement. AHCCCS should
consider taking further action, such as requiring program contractors to randomly check for
care plans to support claims and to track instances of noncompliance by home health agen-cies
and monitor the program contractors’ efforts.
Care plans are not always appropriately authorized—Although care plans were in place for
the remaining clients included in the sample, some of these care plans were not appropriately
authorized by the attending physician. Home health agencies prepare the care plans and
may begin providing services after receiving verbal approval from the client’s physician.
However, the care plan must be signed by the attending physician responsible for the client’s
care within 30 days of the verbal order. In 46 of 142 care plans reviewed, care plans were not
signed within 30 days. In 11 instances care plans were not signed by the client’s attending
17
physician. According to home health agencies, it is often difficult to obtain the attending
physician’s signature within the required time period. However, in such instances, the home
health agencies should obtain a second verbal order to continue care and follow up the ver-bal
order with the physician’s written authorization.
Payment Made for
Services Not Provided
Weaknesses also exist that can allow payments to be made for services that are not provided.
A review of MMCS claims identified a few payments for services that were not provided.
State administrative rule requires home health agencies to maintain visit notes to document
that services were actually provided. However, for 15 of 1,236 services reviewed, home
health agencies were unable to document that services were provided.
One reason for the discrepancy is that some home health agencies bill based on their staffing
schedules rather than actual visit notes. Therefore, merely scheduling a person to provide
services to a client results in a bill. To avoid this problem, at least one home health agency has
begun to bill based on visit notes, thereby ensuring the billed service was provided. To help
ensure that services are not paid for unless actually provided, AHCCCS should encourage
the use of this approach.
Payment for Claims
Not Timely
Finally, MMCS did not always pay claims timely. Program contractors are contractually
obligated to comply with state administrative rule R9-28-705(B) requiring payment of home-and
community-based service claims, which include home health services, within 30 days of
receiving a complete claim. However, MMCS has not complied with this rule.
During the audit, home health agencies raised concerns about MMCS’ untimely claims pay-ments
and rejection of or partial payment of claims. These home health agencies indicate
MMCS’ failure to pay claims timely has resulted in a financial burden. AHCCCS confirmed
that MMCS claims payments were untimely when it performed its annual ALTCS Opera-tional
and Financial Review in April 1998. AHCCCS found that 70 percent of the claims for
home- and community-based services were not paid within the required time period. In
addition, the Office of the Auditor General’s Financial Audit Division cited the Maricopa
County ALTCS Plan administered by MMCS for untimely claims payments in October 1998.
These reviews called for MMCS to resolve untimely claims payments. AHCCCS issued a
directive in May 1998 allowing MMCS 90 days to correct claim payment problems. The
Auditor General financial report also called for corrective action, and MMCS responded that
18
in October 1998 it had added 8 staff positions to resolve the issue. To determine whether
MMCS has corrected problems, in November 1998 AHCCCS began reviewing claims proc-essed
by MMCS in September 1998. The review revealed that 15 percent of claims were still
not being paid timely. However, because MMCS had made improvements, AHCCCS did
not impose a financial sanction but will continue to monitor MMCS payments. In addition to
its current review and monitoring efforts, AHCCCS should also consider assessing provid-ers’
satisfaction with the claims payment process to address potential related issues, such as
claims rejection or partial payment.
Recommendations
1. AHCCCS should require program contractors to develop policies and procedures to help
ensure payment for only those home health services claims supported by an appropri-ately
authorized care plan. Such procedures may include educating home health agencies
about the care plan requirements, developing a claims audit process by program con-tractors,
and monitoring results of the claims auditing process.
2. AHCCCS should monitor the implementation and ongoing evaluation of program con-tractor
policies and procedures to help ensure payment for only those home health serv-ices
claims that are supported by an appropriately authorized care plan and visit notes.
3. AHCCCS should encourage program contractors to require home health agencies to bill
based on visit notes.
4. AHCCCS should consider surveying home health agencies to determine their satisfaction
with program contractors’ timely payment of claims, rejections, and partial payments.
19
FINDING III
AHCCCS SHOULD IMPROVE EFFORTS TO
FURTHER ENSURE QUALITY CARE
Arizona’s mechanisms for ensuring quality home health care would be strengthened by
better implementation of existing policies and better coordination of oversight effort. All
three major entities in the managed care system (AHCCCS, program contractors, and home
health agencies) need to make stronger efforts to ensure quality care is provided, ranging
from ensuring that home health agencies meet quality assurance requirements to improving
client satisfaction surveys. In addition, better sharing of complaint information among
AHCCCS, DHS, program contractors, and other agencies can help resolve client concerns
and address quality-of-care problems.
Managed Care Entities Should
Increase Quality Assurance Efforts
Home health agencies, program contractors, and AHCCCS each have a role in ensuring
quality of care. Each role can be strengthened. Home health agencies need to more consis-tently
comply with state and federal regulations. Program contractors, through their various
functions for monitoring home health agencies’ performance, could take additional steps to
better ensure quality care is provided. AHCCCS could improve the use and design of annual
operational and financial reviews to better evaluate program contractor performance in
managing quality care.
Home health agencies do not meet all quality assurance requirements—Home health agen-cies
do not consistently comply with the federal and state regulations that contain quality-of-care
standards. For example, to confirm that home health aides provide services correctly
and as needed, federal and state regulations require registered nurses to accompany and
supervise home health aides during the provision of services every 62 days. Review of 61
client files administered by Maricopa County Managed Care Systems showed that for 8 of
these clients, the registered nurse did not conduct supervisory visits while home health aides
delivered services. Another example is the lack of written, approved care plans for some
clients. To ensure clients receive all necessary services, home health agencies are required to
develop a care plan based on a physician’s orders and in agreement with the case manager
client assessments. However, care plans are not consistently developed as required (see
Finding II, pages 15 through 18, for additional information).
20
Program contractors should further improve monitoring—At the program contractor level,
some monitoring functions are working better than others. Program contractors’ efforts in-clude
identifying client needs, reviewing service authorizations, evaluating provider efforts,
and measuring client satisfaction. The first of these efforts appears to be working well, the
second has problems that AHCCCS is addressing, and the final two have problems that re-quire
additional attention.
n Case Manager Assessments—To ensure that client needs are appropriately identified,
case managers must assess clients quarterly and identify their medical and social needs.
During annual operational and financial reviews of 2 program contractors, AHCCCS
determined that case managers met this requirement approximately 98 percent of the
time. Auditors reviewed 61 clients’ case management files from 1 of these program con-tractors
and found a similar compliance rate.
n Supervisory Reviews—AHCCCS requires program contractors to perform internal
monitoring of their case management programs to ensure case managers have appropri-ately
determined and documented client needs. However, AHCCCS has found problems
related to unmet needs, such as failure to ensure all services are provided and failure to
respond to client requests for additional services. As a result, in October 1998 AHCCCS
began requiring program contractors to compile and summarize supervisory review re-sults.
In addition, program contractors must identify areas where improvements are
needed and take steps to resolve deficiencies.
n Provider Reviews—AHCCCS requires program contractors to conduct regular moni-toring
reviews of home health agencies within their provider network, but those reviews
are not done with the benefit of all information available about the home health agency’s
performance. This additional information is available in the inspections conducted by the
Department of Health Services (DHS), which reviews home health agency compliance
with all state and federal regulations. Although DHS inspections involve more detailed
evaluations than those some program contractors conduct, AHCCCS does not require
that program contractors obtain copies of those inspection results. AHCCCS has verbally
encouraged program contractors to obtain copies of DHS inspection results in the past;
however, some program contractors have not made this a part of their policies. To im-prove
program contractor evaluations of home health agencies and help identify problem
areas, AHCCCS should consider requiring program contractors to obtain copies of the
most recent DHS inspection results prior to conducting annual monitoring reviews.
n Satisfaction Surveys—Program contractors are responsible for assessing client satisfac-tion
through annual surveys, but AHCCCS does not specify the content of, or method for,
administering the survey. Consequently, in one case, the survey does not include ques-tions
related to client satisfaction with their case manager’s performance. In addition,
some case managers verbally administer the surveys to clients during the quarterly reas-
21
sessment. Because the case manager is the person authorizing services, clients may be
hesitant to express dissatisfaction with services and care. To encourage more complete re-sponses,
AHCCCS should consider requiring that the surveys include questions about
case managers’ performance and be administered by someone other than the case man-ager.
AHCCCS could improve use of annual operational and financial reviews—Improvements
can also be made in the annual operational and financial reviews that AHCCCS conducts to
ensure that quality services are provided and to measure client satisfaction. AHCCCS annu-ally
evaluates program contractor performance in a number of areas including provider net-work
management, quality management, and case management. When problems are identi-fied,
AHCCCS requires the program contractor to submit a corrective action plan that de-scribes
how it will resolve the problem. AHCCCS can also take progressive enforcement
actions against program contractors, including issuing a Notice to Cure, which requires
problems to be corrected within a specified time frame; imposing fines; or terminating its
contract. However, during the 1997 and 1998 annual reviews of 2 program contractors,
AHCCCS identified repeated quality-of-care issues, but did not take stronger action. In these
cases, both program contractors failed to adequately document the reasons services were not
provided to clients. AHCCCS’ response was to require another corrective action plan. In the
future, AHCCCS should use stronger enforcement actions when it identifies quality-of-care
problems.
Opportunities also exist to improve interpretation and use of client survey data compiled as
part of this annual review. The survey measures clients’ satisfaction with case managers,
home health providers, and the type and amount of services received. Currently, AHCCCS
determines whether corrective action is necessary based on survey responses from all Ari-zona
Long-Term Care System clients enrolled with the program contractor. In 1998, one pro-gram
contractor’s clients in home- and community-based settings expressed low satisfaction
levels. However, because more of the same program contractor’s clients receiving services
outside of home- and community-based settings, such as nursing homes, reported higher
degrees of satisfaction, AHCCCS did not require corrective action. To better ensure client
satisfaction, AHCCCS should analyze the results of its client satisfaction surveys based on
client setting and require corrective actions if particular groups of clients are dissatisfied.
AHCCCS officials agree that such analysis could be useful; however, they indicated that
regularly analyzing survey results by client groups would be prohibitive with current re-sources
since the sample size would need to be substantially increased.
22
Better Use of Complaint
Data Could Further Ensure
Quality of Care
Improvements are needed in the processes that AHCCCS, program contractors, and other
state agencies use to resolve client complaints relating to the level and quality of home health
services. Specifically, AHCCCS should facilitate improved sharing of complaint information,
begin analyzing the results of complaint investigations, and require program contractors to
maintain better data on complaints resolved informally.
Increased sharing of complaint information is needed—AHCCCS should increase efforts to
improve communication with program contractors and other state regulatory agencies that
monitor home health agencies and their employees. Other state regulatory agencies include
DHS, the Board of Nursing, and the Board of Physical Therapy Examiners. Currently,
AHCCCS receives and distributes to program contractors DHS inspection and complaint
investigation results relating to skilled nursing facilities, but does not obtain and distribute
the same type of information about home health agencies. In addition, AHCCCS lacks poli-cies
directing AHCCCS staff and program contractors to share the results of investigations
with other state regulatory agencies. Because substantiated complaints may be the first indi-cator
of decreasing quality of care, shared information between AHCCCS, program contrac-tors,
and other agencies could be used to improve monitoring capabilities and further im-prove
the quality of care clients receive. For example:
n One program contractor substantiated 3 complaints against a home health agency and
reduced referrals to the agency, but did not inform DHS of the problems they had found.
DHS did not identify any problems with this agency until 6 months later, when it re-ceived
a separate complaint regarding neglect and insufficient care. DHS cited the home
health agency for violation of 35 federal and 26 state rules.
AHCCCS does not fully use complaint data—In addition, AHCCCS investigates complaints
received from clients, program contractors, or other sources, but does not regularly analyze
investigation results by provider or provider type. The quality-of-care concerns database
contains over 300 concerns related to members in home- and community-based settings.
These concerns may be against home health agencies, physicians, nurses, and other caregiv-ers.
However, AHCCCS does not routinely use its quality-of-care concerns database to gen-erate
reports by provider and provider type to analyze specific problems discovered during
complaint investigations. Doing so could enable AHCCCS to better identify problem agen-cies.
In addition, AHCCCS could identify problems with home health services in general and
develop additional procedures to address those problems.
23
Improved complaint tracking could help to more quickly identify problem facilities—Fi-nally,
improved tracking of complaints that program contractor case managers resolve in-formally
could better ensure quality of care. As monitors of client care, case managers have
the most direct contact with clients and informally resolve a variety of complaints, including
allegations involving impolite caregivers, missed visits, and home health agencies’ failure to
provide all necessary services. This informal process can encourage prompt resolution of
many client complaints. If allegations involve fraud or abuse, case managers are required to
refer them to AHCCCS for further action. For less-serious complaints, case managers are
required to document communications regarding the resolution in the client’s case file. How-ever,
these complaints and their resolutions are not noted in an easily accessible central loca-tion.
Noting the complaint and the resolution in a centralized database or log could enable
program contractors to more quickly identify problem home health agencies. Therefore,
AHCCCS should consider requiring program contractors to develop a mechanism to track
case manager-resolved complaints regarding more serious issues, such as home health agen-cies’
failure to provide services.
24
Recommendations
1. AHCCCS should require that program contractors, during the annual monitoring re-views,
ensure home health agencies comply with quality assurance requirements (such as
supervisory visits conducted by a registered nurse while the home health aide is provid-ing
services).
2. AHCCCS should encourage program contractors to include questions related to case
manager performance on the client satisfaction survey and to use personnel other than
the case manager to administer the client satisfaction survey.
3. AHCCCS should consider taking consistent progressive enforcement action when annual
operational and financial reviews, client satisfaction surveys, or complaint investigations
identify repeated quality-of-care problems.
4. If resources permit, AHCCCS should analyze the results of its client satisfaction surveys
based on client setting and require corrective actions if particular groups of clients are
dissatisfied.
5. AHCCCS should either obtain copies of the results of inspections and complaint investi-gations
conducted by other state regulatory agencies, including DHS, and compile and
distribute a report to program contractors; or require program contractors to obtain the
results of inspections and complaint investigations conducted by other state agencies, in-cluding
DHS.
6. AHCCCS should develop policies directing AHCCCS staff and program contractors to
provide copies of the results of complaint investigations to other state agencies that regu-late
home health agencies and their employees.
7. AHCCCS should use its quality-of-care concerns database to generate reports that iden-tify
problem home health agencies and problems with home health services in general.
8. AHCCCS should consider requiring program contractors to develop a mechanism to
track case manager-resolved complaints regarding more serious issues, such as home
health agencies’ failure to provide services.
Agency Response
(This Page Is Intentionally Left Blank)
Leadership for a Healthy Arizona
Office of the Director
1740 W. Adams Street JANE DEE HULL, GOVERNOR
Phoenix, Arizona 85007-2670 JAMES R. ALLEN, MD, MPH, DIRECTOR
(602) 542-1025
(602) 542-1062 FAX
March 8, 1999
Mr. Douglas R. Norton, CPA
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85004
Dear Mr. Norton:
Thank you for the opportunity to review the revised preliminary report draft of the portions of the
performance audit of home health care regulation and expenditures that pertain to the Arizona
Department of Health Services.
The finding and recommendations contained in your report have been carefully reviewed by the staff
of the Arizona Department of Health Services, and in accordance with the instructions contained in
your letter of February 25, 1999, the attached response is provided.
The Arizona Department of Health Services greatly appreciates the hard work and professionalism
shown by your staff during the conduct of their audit.
Sincerely,
James R. Allen, M.D., M.P.H.
Director
JRA:mw
Attachment
Arizona Department of Health Services
Response to Recommendations Contained in the
Office of the Auditor General’s Revised Preliminary Report Draft of
the Performance Audit of Home Health Care Regulations and Expenditures that
Pertain to this Agency
Finding I Recommendations and Responses
1. DHS should seek statutory changes to either allow it to conduct inspections prior to renewing
licenses of Medicare-certified home health agencies, or conform licensing frequency with
Medicare certification frequency.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
2. DHS should conduct timely home health agency inspections in accordance with federal
HCFA and state requirements.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
3. DHS should ensure that home health agency complaints are investigated in a timely manner.
To do so, DHS needs to ensure that complaints are monitored and assigned for investigation.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
4. DHS should use its current progressive enforcement authority, including assessing civil fines,
against home health agencies that repeatedly violate state licensing regulations.
Response: The finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
JRA:mw
3/8/99
ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
Committed to Excellence in Health Care
Jane Dee Hull
Governor
John H. Kelly
Director
801 East Jefferson • Phoenix, Arizona 85034 • P.O. Box 25520 • Phoenix, Arizona 85002 • (602) 417-4000
Internet: www.ahcccs.state.az.us
March 9, 1999
Mr. Douglas R. Norton
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85018
Dear Mr. Norton,
The AHCCCS response to the Auditor General’s performance audit of home health care
regulation and expenditures is presented below. We appreciate the opportunity your office has
afforded us in participating and meeting with you to review the findings.
Findings II
1. AHCCCS should require program contractors to develop policies and procedures to help
ensure payment for only those home health service claims supported by an appropriately
authorized care plan. Such procedures may include educating home health agencies about
the care plan requirements, developing a claims audit process by program contractors, and
monitoring results of the claims auditing process.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
AHCCCS will require program contractors to develop procedures for post payment claims
review (for all provider types). In addition, AHCCCS will require contractors to base claim
payments on supporting documentation of services provided rather than relying on
authorization only.
2. AHCCCS should monitor the implementation and ongoing evaluation of program
contractor policies and procedures to help ensure payment for only those home health
service claims that are supported by an appropriately authorized care plan and visit notes.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
Mr. Douglas R. Norton
March 9, 1999
Page 2
AHCCCS will review the policies and procedures related to post payment claims review during
the operational and financial review. (See previous response) In addition, AHCCCS Office of
Program Integrity also has plans to focus on post payment claims review.
3. AHCCCS should encourage program contractors to require home health agencies to bill
based on visit notes.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
See responses to recommendations 2. and 3.
4. AHCCCS should consider surveying home health agencies to determine their satisfaction
with program contractors’ timely payment of claims, rejections, and partial payments.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
In Rule and in the AHCCCS contract with the program contractors, there are requirements
related to the timeliness of claims payments. The timeliness of the claim payments for all
provider types is reviewed during the operational/financial reviews. Recently, the acute care
program completed a provider survey. The ALTCS program intends to conduct a similar
survey in the future. Due to the differences in the programs and the types of services provided,
the ALTCS survey could consider home health agencies as one of the providers surveyed and
include questions related to claims payment.
Findings III
1. AHCCCS should require that program contractors, during the annual monitoring reviews,
ensure home health agencies comply with quality assurance requirements (such as
supervisory visits conducted by a registered nurse while the home health aide is providing
services).
The finding of the Auditor General is agreed to and will be implemented.
Mr. Douglas R. Norton
March 9, 1999
Page 3
AHCCCS will send a letter to the Arizona Department of Health Services requesting they send
a letter to all licensed home health agencies reminding them of the supervisory visit
requirement. The AHCCCS letter will be copied to the program contractors. In addition,
AHCCCS will discuss this requirement at an upcoming program contractor meeting and add
the requirement to the contract at the time of renewal.
2. AHCCCS should encourage program contractors to include questions related to case
manager performance on the client satisfaction survey and to use personnel other than the
case manager to administer the client satisfaction survey.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
As part of the ALTCS case management services annual review, AHCCCS Office of the
Medical Director case management staff asks questions related to member satisfaction with the
performance of the case manager. Therefore, an independent review is conducted for all
program contractors in addition to any survey the program contractor may also administer.
Maricopa Managed Care Systems, the program contractor reviewed for this report has utilized
a separate county entity, the Maricopa County Division of Research and Reporting, to conduct
their member surveys. AHCCCS will encourage other program contractors to do the same
where such resources are available.
3. AHCCCS should consider taking consistent progressive enforcement action when annual
operational and financial reviews, client satisfaction surveys, or complaint investigations
identify repeated quality-of-care problems.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
AHCCCS does follow a progressive action process where all steps have been followed, up to
the imposition of a sanction. AHCCCS examines all deficiencies in the operational, financial
and case management services reviews. In the past year, AHCCCS has issued three Notices to
Cure as part of the progressive action process following ALTCS operational and financial
reviews. The first step in the process is the submission of a corrective action plan. If the
corrective action plan is not adequate, AHCCCS issues a directed plan of correction; the next
step is a cure notice and then a possible sanction.
Mr. Douglas R. Norton
March 9, 1999
Page 4
Similar steps are taken when repeated quality of care concerns are identified in all areas. For
example, admissions to a nursing facility have been suspended until the concerns are
adequately addressed as assessed by the quality management staff. Just recently, a program
contractor was required to take corrective action steps to address issues related to their
attendant care program when concerns were identified.
4. If resources permit, AHCCCS should analyze the results of its client satisfaction surveys
based on client setting and require corrective actions if particular groups of clients are
dissatisfied.
The finding of the Auditor General is agreed to and a different method of dealing with the
finding will be implemented.
By following this recommendation, AHCCCS would have to significantly increase the sample
size of the survey conducted during the case management services review to ensure a stratified
sample by placement. This would be prohibitive with the current resources.
The AHCCCS strategic plan includes a furture member survey specific to ALTCS. Perhaps the
survey could be specific to placement since the entire state would be included in the survey
sample.
5. AHCCCS should either obtain copies of the results of inspections and complaint
investigations conducted by other state regulatory agencies, including DHS, and compile
and distribute a report to program contractors; or require program contractors to obtain
the results of inspections and complaint investigations conducted by other state agencies,
including DHS.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
As part of the subcontracting process, AHCCCS will require the program contractors to require
any ADHS licensed or certified provider to submit to the program contractors their most recent
ADHS licensure review, copies of substantiated complaints and other pertinent information
that is available and considered to be public information from oversight agencies. Some
contractors already have this requirement in their subcontracts.
Mr. Douglas R. Norton
March 9, 1999
Page 5
6. AHCCCS should develop policies directing AHCCCS staff and program contractors to
provide copies of the complaint investigations to other state agencies that regulate home
health agencies and their employees.
The finding of the Auditor General is agreed to and a different method of dealing with the
finding will be implemented.
AHCCCS will share information while remaining in compliance with ARS 36-2401 (Quality
Assurance process) and ARS 36-445.01 and ARS 8-546.11(CPS) and ARS 41.1959 (APS) and
other rules and statutes referring to the necessity of maintaining member-patient
confidentiality.
AHCCCS refers concerns to the following agencies as appropriate: Arizona Department of
Health Services, Child Protective Services, Adult Protective Services, Arizona State Board of
Nursing, Police Departments, Board of Medical Examiners, Board of Osteopathic Medical
Examiners, Pharmacy Board, Office of Program Integrity (AHCCCS-Fraud and Abuse unit
which is responsible for coordination with the Attorney General’s office for civil prosecution)
and Health Services Advisory Group (Arizona’s Medicare Professional Review Organization).
Quality Management reviews by the program contractors are protected under the confidentiality
statute. Like AHCCCS, program contractors do make appropriate referrals to other state
agencies mentioned above. AHCCCS will amend policies that direct program contractors to
make referrals to the appropriate agencies when it is identified through our quality management
processes that referrals have not been made.
7. AHCCCS should use its quality-of-care concerns database to generate reports that identify
problem home health agencies and problems with home health services in general.
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented.
AHCCCS is in the process of identifying and compiling quality of care concerns by program
contractor and provider type in their database in order to track and trend the information.
Program contractor specific information will be shared with each program contractor on an
annual basis and as needed to address quality of care concerns.
Mr. Douglas R. Norton
March 9, 1999
Page 6
8. AHCCCS should consider requiring program contractors to develop a mechanism to track
case management resolved complaints regarding more serious issues, such as home health
agencies’ failure to provide services.
The finding of the Auditor General is agreed to and will be implemented.
Currently contractors have a variety of methodologies in dealing with complaints regarding
providers where they identify and track trends. Case management may not always be the
appropriate area for resolution. At the next quarterly Case Management/Quality Management
meeting, AHCCCS will share this concern with the program contractors and the need to
develop a mechanism to ensure service provision complaints received from various
departments are compiled in a central report so they can be tracked and trended. The more
serious issues would be required to be reported to Quality Management for resolution and
follow up. In addition, during regularly scheduled operational and financial reviews, AHCCCS
will review program contractor policies, procedures and performance related to the tracking,
trending and resolution of complaints.
In closing, once this report is finalized, AHCCCS will share the Auditor General findings with
the program contractors as an opportunity to enhance performance in this area.
If you have any questions regarding our response, please direct them to Jan Hart at 417-4301.
Sincerely,
John H. Kelly
Director
JHK/jh
Enclosure
C. Melanie Chesney, Office of the Auditor General Jan Hart
Diane Ross Alan Schafer
Lynn Dunton Suzanne Stearns
Branch McNeal John Black
Dr. Jasinski