Medicaid ‘home health’ spending needs a closer look

North Carolina’s governor and General Assembly are actively debating what final budget numbers should be for the next two years in the state. Should it spend $35.44 billion per year as Gov. Josh Stein, a Democrat, suggests in his budget? Or should it maybe a bit less, maybe about $33 billion, as the Republican majorities have recommended?

While $35 billion seems like a large number, consider that spending on North Carolina’s Medicaid program ALONE spends that much, if not more.

According to Joseph Harris, fiscal analyst at the John Locke Foundation, “From FY 2021 to FY 2025, total Medicaid expenditures in North Carolina increased from $18.14 billion to $35.77 billion, or an incredible 97.2 percent.”

Because the federal government pledged to foot most of this bill, North Carolina agreed to expand this already-massive program to hundreds of thousands of working-age, able-bodied people. More than 3 million North Carolinians are now covered by Medicaid in a state of around 11 million.

In recent days, a massive $319 million “Medicaid rebase,” which is an adjustment to cover unforeseen cost increases, was signed into law. To give you an idea of the scale of this “adjustment,” consider how controversial the state spending $500 million on NC Innovation has been and how much debate has surrounded where to send this huge sum of money when it’s reclaimed.

Thankfully, this rebase money was not “no-strings attached.” The Republican legislators insisted on additional reforms and fraud-prevention measures, including limits on non-citizen coverage and work requirements. Hopefully these reforms will bring down unnecessary spending in the program so it doesn’t continue to barrel towards insolvency.

Home health under the microscope

But one area that may need special attention is “home visitation” by various “home health” companies.

In a recent House Select Committee on Oversight and Reform meeting, committee members questioned state Attorney General Jeff Jackson and NC Department of Health and Human Services Secretary Dev Sangvai about Medicaid fraud in the state. Chair of the committee, state Rep. Grant Campbell, R-Cabarrus, brought up some specific examples of concerning providers.

As an example, Campbell asked Jackson and Sangvai if they had heard of Wilson Home Care, who has billed Medicaid “$12 million over a six-year period for home care services” and showed their two locations in Wilson, which both looked derelict and abandoned.

“I’m a big advocate for patient privacy, but boarding up windows is a strategy I really haven’t seen before,” Campbell said. “I want to repeat, none of these three examples have official charges of waste or fraud.”

Campbell said, “two staffers with Google and an Excel sheet in less than two hours came up with these figures.”

In Ohio, it appears that scratching a bit further under the surface uncovered a lot more. A report from the Daily Wire released this week on Medicaid fraud in the state, showed a very similar pattern related to “home health” providers.

In just one row of seven office buildings in Columbus, Ohio, all owned by Cordoba Real Estate, there were 288 “home health care” businesses that collectively billed Medicaid “a quarter of a billion dollars between 2018 and 2024.” A waiver that allowed Ohio’s Medicaid program to be billed for at-home care has led to the creation of 3,700 such businesses.

They bill by the hour for things like cooking meals and grocery shopping, but also less-urgent chores like conversation, “working on a hairdo,” making a bed, and other basic tasks for those whom a doctor has certified as unable to perform the tasks themselves. When the Daily Wire visited these seven buildings, there were no employees at virtually any of the almost 300 companies. Many had the same “out for lunch” signs on the windows and looked like they hadn’t been visited in months, or longer.

The largely Somali-run businesses actively recruited families, having younger members of the families certified as home health aides while older members of the families worked to receive doctor approval for the services. The employees the Daily Wire interviewed said it often came down to people being paid to visit their aging parents, to grocery shop for them, even to just have a conversation with them.

Daily Wire interviewed the son of one of the only businesses with an employee present, who told the reporter, “We’re taking a small cut because [Medicaid] pay us and we pay them their hours,” and that “employees and patients come as a package: in 70% of cases, the employees are being paid to spend time with their own family members.”

Many of the businesses had identical graphic design work.

In short, it’s a hustle. Even if what they are doing is technically legal — since a doctor has signed off on their aging parent needing help and the child has gone through the process to be a home health aide — taxpayers do not expect to have to pay family members to fulfill basic roles that people have done for free for all of human history.

Is this a problem in North Carolina? Tough to say. But there are certainly hints. Remember that when Campbell had his staffers look for red flags, the first things that popped up were home health providers that looked just as abandoned as the ones in Ohio.

A local in the Rocky Mount Concerned Citizens Group on Facebook noticed the same thing, posting in March that they had seen a troubling pattern of sketchy “home health” businesses in the area. He said he took 45 minutes to look into 20 of them, and said:

“Only about 3 seemed truly legitimate: professional websites, verifiable physical offices, genuine reviews, signs of real staffing/activity, and transparent operations. The rest? Minimal online presence, sketchy setups, or no evidence of actually providing care… One company is registered as operating out of a Chili’s parking lot (hardly a place you’d expect for home care services!). 6 companies appear linked to one completely empty building. 2 more are tied to an empty office space. A big common thread: Many limit themselves to just 2 non-medical services—companion care and home health aides (help with daily tasks like bathing, dressing, meals, light housekeeping—no skilled nursing, therapy, or medical treatments).”

Also, poking around on websites that provide Medicaid billing data by state, what billing code do you think is used most often, accounting for about 10% of all Medicaid spending in North Carolina and almost double the spending of the next highest billing code? It’s 99509 for “Home visit for assistance with activities of daily living and personal care,” which bills Medicaid for $3.35 billion out of the total $35 billion spent in our state. Some of the other major codes having to do with “habilitation” also deal with home visits for personal care.

Of course, there are legitimate uses of this code, maybe the vast majority of them. Like Campbell, I don’t have the clear evidence to the contrary, or proof of outright fraud. But much of it could at least be “waste,” if people are recruited to bill Medicaid for visiting family members and performing basic tasks for them.

When the Daily Wire asked why the “home health aides” don’t just take care of their families for free without billing Medicaid, the employee said, “Well if the government will pay you to do it … it’s an incentive. I think most people nowadays, they don’t really care as much.”

Well, many taxpayers would certainly care, if they knew about it. The potential for fraud and waste in this home aide program at least deserves a closer look in North Carolina, as it is getting in Ohio.

“Medicaid ‘home health’ spending needs a closer look” was originally published on www.carolinajournal.com.