By Salvador Rizzo and Mary Jo Layton

The U.S. Department of Health and Human Services said New Jersey should repay the federal government $32.2 million after a federal audit found medical records and other documents missing when state officials submitted claims for Medicaid reimbursement.

The findings, detailed in a report obtained by The Record to be released today, mark the second time in four years that federal officials have raised concerns about questionable claims for care provided to homebound elderly or low-income residents. After the earlier audit, they called for $145 million to be returned.

The claims involved non-medical home care services such as bathing, getting dressed, preparing meals and managing medications for disabled residents and seniors so they can continue living at home.

In a sample of records, federal officials found several irregularities, including cases in which there was no proof that a nurse supervised an aide, as required, or that the aide received proper training. Doctor certifications or nursing assessments were missing. Personalized care plans were not found. In most cases, the audit does not determine if the issue was sloppy record keeping, compromised care or fraud.

There is growing concern across the country over fraud in home care services. Experts note that the industry has grown rapidly over the last decade as policy changes have shifted more resources toward keeping elderly or disabled residents in their homes.

In June, federal authorities announced the largest-ever home health care fraud case -- at least 800 agencies in North Texas were accused of various schemes that netted suspects $712 million in billings for non-existent Medicare treatment, U.S. Attorney General Loretta Lynch announced.

In New Jersey, a former aide with a Hackensack firm was sentenced in March to a three-year state prison term for bills that were submitted to Medicaid when services weren't provided, according to acting Attorney General John J. Hoffman. The aide was one of six charged in a case that alleged thousands of false claims had been filed.

Home health experts say state and federal regulations are clear about the importance of documenting all care provided, and employees at all levels are trained to properly record their activities. "Every person involved has the responsibility to document care directly related to the patient," said Karen McCoy, a registered nurse and director of professional development for the Home Care and Hospice Association of New Jersey. "The old adage is if you didn't document it, you didn't do it."

Medicaid paid $787 million for home care services in New Jersey during the audit period from August 2008 through December 2011. The federal government covered $393 million, or half, of that cost, according to Daniel R. Levinson, inspector general for the U.S. Department of Health and Human Services.

Funding for personal care services is a relatively minor program in a state budget of $33.8 billion. But the auditors' findings are significant because they show a pattern of missing records extended over at least seven years and raise concerns over whether the state's neediest residents are getting the proper care.

More than 18 million claims for personal care services were filed to state health officials by 266 agencies that meet Medicaid eligibility requirements during the audited period. Federal regulators reviewed 100 random claims that 48 of those agencies filed for reimbursement and said 17 were flawed. The $32.2 million proposed penalty -- 8 percent of what the federal government had given the state -- is extrapolated from that sample.

The audit was conducted by the Office of the Inspector General for the U.S. Department of Health and Human Services.

State regulations require agencies to maintain a patient's clinical records, including documentation of the aide's daily activities. A doctor must authorize the care. A registered nurse must conduct an assessment, prepare a plan of care and reassess the patient every six months. A nurse must also provide direct supervision of the patient's aide at least every 60 days. Aides must receive 12 hours per year of in-service education.

In some cases in the audit, there were no records that a registered nurse had properly supervised a personal care provider on site. There were also cases in which there was no physician certification on file. Two patients' files were missing, although they must be stored for five years. In one case, the patient did not receive any service, the inspector general reported.

The New Jersey Department of Human Services has challenged several findings. State officials also believe the sample size should have been larger than 100 claims out of 18 million, "particularly given the large number of agencies delivering personal care services and the enormous variability in error estimates over time and across agencies," Valerie Harr, director of the state Division of Medical Assistance and Health Services, added in a letter to the inspector general that is included in the report.

Meanwhile, the state still has not yet repaid the $145 million federal auditors cited for improperly documented claims between 2004 to 2007. At that time, an even higher percentage of records were considered questionable -- 36 out of 100. Enforcement of the penalty was put off while regulators considered additional information New Jersey submitted. That audit motivated the Office of the Inspector General to follow up with the new study released today, according to the report.

Another arm of the U.S. Health Department, the Centers for Medicare and Medicaid Services, must decide whether to accept the inspector general's findings and require the reimbursement. It may proceed to dock the $32.2 million from quarterly Medicaid payments to New Jersey. For both penalties, New Jersey officials could decide to appeal.

New Jersey licenses nearly 1,000 home health care agencies, and the Division of Consumer Affairs has brought action against 34 agencies for a variety of violations, including failure to maintain records and failure to employ a licensed supervisor, said Paul Loriquet, a spokesman for the Office of the Attorney General.

Industry experts say the home health care business lags behind hospitals and nursing homes and even physicians in several areas: Most aides still track their activities on paper rather than through electronic medical records; there are few "report cards" on agencies to help consumers rate companies. By the nature of the service, it's much harder to monitor an individual's performance, since they are typically alone hours each day with a patient, experts say.

"It's time to catch up because a lot of our care is given outside the hospital setting, and it's also the kind of care that keeps people out of the hospital," said Patricia Kelmar, senior policy adviser with the New Jersey Health Care Quality Institute. "If we're talking about a better quality of life at better cost, the quality of home care is going to be key."

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