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Mid-Delta Home Health is one of the largest home health care providers in Mississippi, employing more than 600 people who deliver home health care through 16 offices throughout the state. Medicare reimbursement to Mid-Delta for home health care and rural health clinic services from 1993 through 1996 totaled nearly $78 million. During this period, Medicare reimbursed Mid-Delta for payroll costs that, in GAO's opinion, were improperly claimed because they did not represent actual costs to the provider. The company's owner regularly asked employees to return to the company the cash value of unused leave and 20 percent or more of bonuses received. The owner also maintained a list of "special employees" to whom she gave larger bonuses if they agreed in advance to return a portion of them to the company. Mid-Delta then billed Medicare for these costs. GAO also questions other costs submitted by Mid-Delta Home Health for Medicare reimbursement. For example, the owner's daughter was paid a salary as an executive even though she was attending school full-time. GAO also questions the reasonableness of the daughter's $65,000 bonus in 1996. Medicare also reimbursed Mid-Delta for the payroll costs of some employees whose jobs involved marketing activities--a nonreimbursable expense under Medicare rules. In addition, nurses working for Mid-Delta Home Health have alleged that staff visited Medicare beneficiaries whose eligibility or need for visits was doubtful. GAO's review of 41 patient files found that 34 percent of the individuals' eligibility for Medicare-reimbursed services was questionable.