Citing Miami’s ignominious status as a national Medicare fraud “hot spot,’’ federal health officials Friday said they will temporarily ban new home health agencies in Miami-Dade and Monroe counties from enrolling in Medicare and Medicaid, in an effort to stem scams and abuse.
The six-month moratorium, invoked under the Affordable Care Act for the first time, begins Tuesday. It will freeze new and pending applications for home health agencies in the two South Florida counties and Chicago, and for ambulance providers in Houston.
During the moratorium, officials with the federal Centers for Medicare & Medicaid Services will continue to monitor home health billing from enrolled providers to root out fraud, according to the agency’s announcement.
“We are putting would-be fraudsters on notice that we will find and stop them before they can attempt to bill Medicare, Medicaid’’ and other programs, CMS Administrator Marilyn Tavenner said in a statement.
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The unprecedented action was welcomed by elected officials and industry groups.
Three Republican U.S. senators issued statements applauding the move but criticizing federal health officials for taking so long to act on their new powers, granted in 2010.
Calling the moratorium “better late than never,’’ Sen. Orrin Hatch, R-Utah, the ranking member of the Senate Finance Committee — which oversees the Medicare program — issued a statement saying: “It’s unfortunate that it took CMS three years to use the tools it’s had to protect seniors, who rely on Medicare, from fraud and abuse.”
Val J. Halamandaris, president of the National Association for Home Care & Hospice, which helped lobby to ensure moratorium power was included under the Affordable Care Act, said in a statement that “we fully support the action taken by CMS.”
Home health agencies provide nursing, physical therapy and other services to Medicare and Medicaid beneficiaries who are confined to their homes because of a disability or illness. The new moratorium also will apply to providers seeking reimbursement from the Children’s Health Insurance Program, known as CHIP.
It is unclear how many new providers will be excluded from the taxpayer-funded insurance programs for the poor and elderly, but The Associated Press reported that 662 home health agencies operated in Miami-Dade in 2012. The moratorium does not apply to existing home health providers.
CMS found that there were a disproportionate number of home health agencies relative to beneficiaries in Miami and Chicago. The ratio ranged from 327 percent higher in Chicago, to 1,960 percent higher in Miami.
The Miami area, where schemes involving home health care, diabetic care, mental health and physical therapy fraud have flourished for years, has stood out as the nation’s epicenter of Medicare corruption.
The U.S. Attorney’s Office routinely prosecutes high-profile cases of Medicare fraud.
In May, federal prosecutors announced the arrest of Roberto F. Marrero, an actor who played bit parts in shows such as Miami Vice and who more recently launched a cable station featuring Cuban cultural programs. Authorities allege he also led a con man’s life as the owner of a Medicare-licensed home health agency that fleeced $15 million from the government program.
In May, a patient recruiter for a Miami home health agency was sentenced to 37 months in prison for his role in a $20 million Medicare fraud scheme. And in February, the owners and operators of two Miami home health agencies were sentenced to prison and ordered to pay millions in restitution for perpetrating a $48 million fraud on Medicare by billing for unnecessary services.
Given the large number of elderly Medicare beneficiaries who live in South Florida, it’s not a surprise that the region is home to a large number of home health agencies. But because homebound patients are dispersed across a wide geographic area, the healthcare providers who serve them can be difficult to monitor, said Steven Ullmann, a professor and director of health policies at the University of Miami School of Business Administration.
Ullmann described a market in South Florida whereby fraudulent healthcare providers buy Medicare numbers from beneficiaries in exchange for a financial or in-kind bribe, such as a new television.
“When you have a Medicare number,’’ Ullmann said, “then you can start billing.’’
Because federal law requires Medicare to deliver prompt payment for services without verification, fraudulent claims often are not discovered until well after the fact. Fly-by-night operators open up a storefront, bill Medicare for fraudulent services, then disappear by the time federal investigators come looking for them.
“That seems to be something that occurs here with greater prevalence than you would find in other parts of the country,’’ Ullmann said.
In 2009, the Justice and Health and Human Services departments expanded criminal “strike forces’’ targeting the fraud from Miami, Los Angeles and Houston to include Detroit, Brooklyn, Baton Rouge and Tampa. They also committed about half a billion dollars to fraud-prevention efforts.
Still, the fight to stamp it out is a constant struggle, despite convictions of more than 1,000 defendants in South Florida alone. The region accounts for one-third of all healthcare fraud prosecutions in the nation.
In 2008, Medicare paid $520 million to Miami-Dade home healthcare agencies for treating diabetic patients — more than what the agency spent on diabetics in the rest of the country combined, according to federal authorities.
Federal officials identified Miami, Chicago and Houston as fraud “hot spots’’ by mining data that showed these cities as significant outliers compared to other areas of the country when it comes to home health providers and ground ambulance services.