Pre-Claim Review Coming Back for Home Health

CMS has introduced a new round of pre-claim reviews for home health agencies and the likelihood of it becoming a reality is getting closer than ever.  This next round adds a new twist to the program which was rolled out in late 2016 and ended by the Trump administration last year.

Under the authority of Congress, CMS has the ability to take steps to curtail fraud.  As home health has come under the spotlight for higher rates of fraud than other provider types, CMS believes a pre-claim and a post-payment review model is necessary to be demonstrated.  From this demonstration period, CMS extracts the data to determine if the model really works or if it hinders patient access to care.

The last time this demonstration was rolled out, providers quickly realized that the program was a hindrance to patient care. Besides possibly preventing patients from receiving the care they needed, the demonstration restricted agency’s cash flow to the point where some agencies began refusing Medicare patients.  That sounds almost ludicrous for a Medicare Certified Agency, but it happened and if the demonstration happens again, you can expect more agencies to do the same.

We’ve seen a sharp increase in patients turning to private insurance and Medicare Advantage policies.  Agencies are continually undergoing census shifts from predominately traditional Medicare to splitting their census between per-visit, authorization-based insurance payers, and Medicare Advantage payer sources.

This time around, providers are being offered a choice between bad and worse. Agencies will have one of two options – undergo complete, 100% pre-claim review or don’t go under pre-claim review and accept an automatic 25% cut in reimbursement.  Those who chose the 25% ,which many won’t because their agencies will likely not be open for long, will undergo regular RAC (Recovery Audit Contractors) audits and reviews. As many agencies know, the RACs are horrible, have no idea what is going on, and work on a commission basis which means you lose, they win, and the appeals process basically doesn’t exist.

In this demonstration agencies will not be permanently stuck in a pre-claim or post-claim review cycle.  According to the CMS release, the intermediary will determine an acceptable rate in which it finds the agency has met compliance.  This positive affirmation threshold, once reached, will release the agency from the demonstration.  The agency will now be subject to only random spot checks on claims.

The process for the pre-claim review will follow the prior demonstration. That didn’t work at all. Paperwork was “lost”, “missing”, or “incomplete” according to intermediaries. However, most of the time, the intermediaries were so overwhelmed they couldn’t meet the demand of agencies.  In this model, agencies are required to submit the justification for services and the patient information requested before billing.  The intermediary reviews the information and, if it determines that the agency has met all of the typical requirements, issues a tracking number to be included with the RAP and then final/EOE claim.

States selected for this new iteration will be Florida, Illinois, North Carolina, Ohio and Texas. Of the initial five states, Illinois was the only state to actually get hit by the pre-claim review demonstration.  CMS paused the rollout just before Florida was set to become the second state to undergo the poorly constructed demonstration.

North Carolina and Ohio are both new states to be added to this demonstration.  These two states replace Massachusetts and Michigan who were part of the original demonstration. All of the states selected for this new rollout demonstration belong to the intermediary, Palmetto.  For agencies who have to deal with Palmetto regularly, you know that the level of skill and knowledge applied to the massive volume of reviews they’re faced with is lacking some of the basics. This is the same group that was responsible for the disaster that almost put agencies out of business, forcing some agencies to stop accepting Medicare patients in Illinois.

October 1st is the go live date of the new demonstration. The full demonstration, once in effect and full force, will last for 5 years. This is a very long time and a serious burden for providers especially when CMS takes the attitude that it isn’t going to be a big deal as providers should already be in compliance.

One key component of this demonstration is the affirmation level that no one knows about yet.  We don’t have any idea as to how that is going to be calculated and if it will be based on individual agencies or a flat percentage for all agencies to meet.  There are still a lot of unknown components and ‘what-if’ scenarios that could occur.

CMS is also reserving its right to roll the program out to additional states beyond the five selected.  While the first demonstration didn’t get past the first state, Florida was closing in on being included just before the suspension occurred.  The suspension of the demonstration or pause as CMS likes to say, was due to Florida Senators and the Trump Administration’s desire to cut back on regulation.

The current proposed restart of the program is receiving a lot of bad press.  The National Association for Home Care (NAHC) has come out against the demonstration.  The public companies can’t afford any negative press and as we know, NAHC is largely dominated and controlled by public agencies and large VNAs who like to push around the smaller agencies.

Besides NAHC, The Partnership for Quality Home Healthcare (PQHH) has urged CMS to not go forward with the proposed demonstration. Instead, the educational group has offered its own resources to Medicare to develop additional safeguards and new methods to educate agencies.  This is a noble cause and would be the ideal route. The PQHH has long been at the forefront of providing agencies with credible and very solid plans and programs to assist quality assurance for both small and large agencies.

Agencies in states other than the five selected should be proactive in making sure that their patient’s charts are in very good order and in full compliance with all regulations.  You can expect that the current demonstration, Probe and Educate to continue as many agencies have not yet began the second round which is expected shortly.

If you are in one of the five selected states, we urge you to express your concerns with your elected officials – members of Congress and Senators.  You can also leave a comment on the proposed demonstration as published in the Federal Register.  We will keep you informed of any new updates in the coming editions of Home Health Today.

Make sure to checkout Tortolano & Company LLC for more resources and information as well!

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