Home Health Improper Payments: 7.7%, $1.2 Billion, and What an OIG Audit Actually Finds
Key Takeaways
Medicare paid home health agencies approximately $16 billion in CY 2023 for about 2.8 million fee-for-service beneficiaries, across roughly 10,000 participating agencies.
The CERT improper payment rate for home health is 7.7%, or about $1.2 billion.
In OIG report A-05-24-00007 (issued August 6, 2026), 37 of 100 sampled claims did not comply with Medicare requirements — a $8,332 net overpayment on the sample, extrapolated to an estimated $43,074 net overpayment against $15,301,644 in audited payments.
Extrapolation is the mechanism that matters: a four-figure sample error becomes a five-figure demand, and on a larger universe the multiplier scales with it.
The enforcement posture around home-based care tightened in September 2026 — CMS barred 11 DMEPOS suppliers tied to $3.4 billion in suspected fraudulent billing, and DOJ's new National Fraud Enforcement Division obtained a 76-month sentence in a $64 million Medicaid scheme involving a home health fiscal intermediary.
Separately from audit exposure, failing HH QRP submission costs 2 percentage points of the annual payment update on every 30-day period for a full year.
The controls that survive an audit are documentation controls, and every one of them is cheaper than the extrapolation.
What "Improper Payment" Actually Means
The CERT program — Comprehensive Error Rate Testing — measures how often Medicare fee-for-service claims are paid when they should not have been. It is a measurement program, not an enforcement program, and the distinction gets lost constantly.
Metric | Value | Data year | Source |
|---|---|---|---|
Medicare payments to home health agencies | about $16 billion | CY 2023 | OIG A-05-24-00007 |
Medicare FFS beneficiaries receiving home health | about 2.8 million | CY 2023 | OIG A-05-24-00007 |
Participating home health agencies | about 10,000 | CY 2023 | OIG A-05-24-00007 |
CERT improper payment rate, home health | 7.7% | CY 2023 reporting | OIG A-05-24-00007 |
Estimated improper payments, home health | about $1.2 billion | CY 2023 reporting | OIG A-05-24-00007 |
An improper payment is a payment that did not meet statutory, regulatory, or coverage requirements. It includes payments that were too high, payments that were too low, and — most often in home health — payments where the documentation in the record does not support what was billed. It does not mean the care was not delivered. It means the file cannot prove it was.
That is why 7.7% is the wrong number to be complacent about. A rate built mostly on documentation failure is a rate an individual agency can be far above or far below, entirely on the strength of its own record-keeping.
Anatomy of a Home Health OIG Audit
OIG's provider compliance audits follow a consistent shape. The most recent published home health example, A-05-24-00007, issued August 6, 2026, is a useful template because the arithmetic is fully disclosed.
The sequence
Stage | What happens | What it produces |
|---|---|---|
1. Universe definition | OIG identifies the population of paid claims and the audit period | $15,301,644 in audited payments |
2. Statistical sample | A random sample is drawn from the universe | 100 claims |
3. Medical review | Each sampled claim is tested against Medicare requirements | 37 claims non-compliant |
4. Sample error | Overpayments on the sampled claims are totaled | $8,332 net overpayment |
5. Extrapolation | The sample error rate is projected across the universe | $43,074 estimated net overpayment |
6. Recommendation | OIG recommends refund and corrective action | Refund plus policy and procedure changes |
The lesson is in stage 5, not stage 3
A 37% claim error rate sounds catastrophic and a $8,332 sample overpayment sounds trivial. Both are true at once, and neither is the operative number. The operative number is the extrapolation — and the extrapolation is a function of the universe size, not the sample size.
Run the same 37% error rate against a larger audited universe and the arithmetic moves accordingly:
Audited universe | Illustrative extrapolation at the same error proportion |
|---|---|
$15.3 million | about $43,000 |
$30 million | about $86,000 |
$60 million | about $172,000 |
Illustrative scaling of the published A-05-24-00007 result to larger universes at a constant error proportion. Actual extrapolations depend on the specific sample design, precision, and the mix of errors found.
That is the exposure an agency should be budgeting against — not the sample. And unlike a payment cut, it arrives as a demand with a deadline and an appeal clock.
The Enforcement Backdrop Got Louder in September 2026
Three items inside ten days, none of them home health specific, all of them signal.
Date | Action | Figure | Source |
|---|---|---|---|
Sept 8, 2026 | CMS barred 11 DMEPOS companies from future Medicare Advantage Part C/D payments | over $3.4 billion suspected fraudulent billing, 2025-2026 | CMS newsroom |
Sept 9, 2026 | OIG report: MA organizations and CMS can do more to prevent DME fraud in Medicare Advantage | — | OIG OEI-02-24-00310 |
Sept 11, 2026 | Brooklyn adult daycare owner sentenced to 76 months; also owned a home health fiscal intermediary | about $64 million billed, about $56 million paid by Medicaid | DOJ |
The DOJ case is the one home-based care operators should read closely. It was prosecuted by the National Fraud Enforcement Division, a unit DOJ created on April 7, 2026 — an organizational commitment, not a one-off task force. The defendant's business mix (adult day services plus a home health fiscal intermediary) is exactly the kind of multi-entity structure that makes related-party accounting and intercompany documentation an enforcement issue rather than a bookkeeping preference.
The Controls That Survive an Audit
Every finding in a home health compliance audit traces back to one of a small number of documentation failures. They are all preventable, and none of them require software.
Documentation controls
Face-to-face encounter documentation tied to the certifying physician and to the primary reason for home health, dated inside the required window. This is the single most common technical denial in home health and the easiest to fix prospectively.
Homebound status stated in clinical terms, not restated as a checkbox. The record must describe why leaving home requires a considerable and taxing effort, in the clinician's own observation.
Medical necessity for each discipline and each visit frequency on the plan of care, with the skilled service actually described in the visit note rather than implied by the discipline code.
Physician orders signed and dated before the claim is billed — not before the audit.
Plan of care changes documented as orders, with the verbal order, the date, and the authenticating signature all present.
OASIS assessment consistent with the claim. When the assessed functional level and the billed case mix disagree, the auditor reads the assessment.
Operational controls
Control | Frequency | Why it works |
|---|---|---|
Pre-bill review on a random claim sample | Weekly | Finds the error before the money arrives |
Face-to-face documentation checklist at admission | Every admission | Eliminates the most common technical denial |
Reconcile OASIS functional level against billed HIPPS | Monthly | Catches case-mix divergence early |
Track denial reasons by category, not by dollar | Monthly | One repeated reason is a process defect, not bad luck |
Maintain an ADR response calendar with named owners | Continuous | Missed deadlines convert winnable claims into losses |
Reserve for extrapolated exposure in the financials | Quarterly | Turns a surprise into a provision |
That last one is the accounting item most agencies skip. An estimated overpayment is a contingent liability, and an agency that has never modeled one discovers its size and its cash impact in the same week. Building the exposure into the books — and tying it to the same cost and utilization data that drives your Medicare cost report — converts an emergency into a line item.
What This Costs Beyond the Refund
An audit finding is rarely a single event. It carries a tail.
Consequence | Mechanism |
|---|---|
Refund of the extrapolated overpayment | Demand letter with an appeal clock |
Interest on the overpayment | Accrues from the demand date |
Targeted review or prepayment review | Cash flow shifts from 30 days to months |
Corrective action plan | Staff time, retraining, external review |
Referral for further investigation | Where a documentation finding becomes something else |
The cash flow item is the one that closes agencies. A prepayment review does not reduce revenue — it delays it, which for a business already financing 30-day periods against payroll is functionally the same thing. Agencies that go into a review with clean, current books and a cash runway survive it. Agencies that go in without either do not get the chance to win the appeal.
The Bottom Line
A 7.7% national improper payment rate is an average built mostly from documentation failure, which means it is a number your agency controls rather than inherits. The OIG template is public: define a universe, sample 100 claims, test them, extrapolate. Every one of those stages is survivable with documentation you were already supposed to have. If you want help sizing your extrapolation exposure and building it into your financials before someone else builds it for you, schedule a free consultation.
Sources
HHS Office of Inspector General, Medicare Home Health Agency Provider Compliance Audit: Deistic Home Health Care, Inc. (A-05-24-00007), issued August 6, 2026 — https://oig.hhs.gov/reports/all/2026/medicare-home-health-agency-provider-compliance-audit-deistic-home-health-care-inc/
HHS Office of Inspector General, Medicare Advantage Organizations and CMS Can Do More To Prevent Durable Medical Equipment Fraud in Medicare Advantage (OEI-02-24-00310), September 9, 2026 — https://oig.hhs.gov/reports/all/2026/medicare-advantage-organizations-and-cms-can-do-more-to-prevent-durable-medical-equipment-fraud-in-medicare-advantage
CMS, "CMS Cracks Down on Massive $3.4 Billion Medical Equipment Supplier Fraud Scheme," September 8, 2026 — https://www.cms.gov/newsroom/press-releases/cms-cracks-down-massive-3-4-billion-medical-equipment-supplier-fraud-scheme
U.S. Department of Justice, "Brooklyn Adult Daycare Owner Sentenced to Prison for Leadership Role in $64M Medicaid Fraud Scheme," September 11, 2026 — https://www.justice.gov/opa/pr/brooklyn-adult-daycare-owner-sentenced-prison-leadership-role-64m-medicaid-fraud-scheme
CMS, HH QRP Quick Reference Guide — 30-day OASIS submission requirement and 2-percentage-point APU reduction — https://www.cms.gov/files/document/pac-hh-quickreferenceguide-20250401.pdf
Last updated: September 2026.
Soriaga & Associates, LLC is a CPA firm with 25+ years of home health and hospice accounting experience. Ask about our bookkeeping services for Medicare-certified agencies.
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