[ TOP ]ISSUE: The Balanced Budget Act of 1997 included the implementation of a prospective payment system (PPS) for Medicare home health services for cost reporting periods beginning on or after October 1, 1999. Under the fiscal year 1999 Omnibus Appropriations Bill, HCFA was instructed to implement home health PPS on October 1, 2000, a one-year's delay. A case-mix adjuster is needed to avoid penalizing agencies that serve patients who require more care than the average and to avoid rewarding agencies that seek to serve only low cost patients. Case-mix considerations include such variables as health status, age, and socio-economic factors of the patients served.
On October 28, 1999, HCFA published its proposed rule to implement home health PPS. This proposed rule includes a case-mix adjuster with 80 case-mix groupings. The reliability of the case-mix adjuster in explaining the variations in resource use by patients just exceeds 30%. In the development of the case-mix adjuster, HCFA made certain policy decisions such as excluding any consideration of informal caregiver services.
RECOMMENDATION:
- HCFA should modify the case-mix adjuster to consider the impact of rehabilitation services of home care personnel in additional to care provided by professional therapists.
- HCFA should initiate a program of continued quality improvement for the case-mix adjuster to implement refinements that would extend or increase its reliability.
- HCFA should engage in a targeted analysis of the impact of including the provision of services by informal caregivers in the utilization of home care resources and refine the case-mix adjuster appropriately.
RATIONALE: The case-mix adjuster proposed by HCFA has been subjected to limited evaluation as to its effect on access to home health services. The case-mix adjuster should be continually refined to increase its explanatory power capabilities.
[ TOP ]ISSUE: Under the new prospective payment system, the low utilization payment adjustment (LUPA) is destined to create inefficiencies in patient care and cause serious financial hardships for agencies. Problems with the LUPA are that it is not case-mix adjusted and is based on the average visit amount for full 60-day episodes. Without case-mix adjustment, LUPAs are a greater financial risk for agencies than episode-based payments. They also discourage agencies from reducing unnecessary visits. For example, an agency that could hire a specialist to provide in three visits what it takes a less-well trained staff to do in five visits would have a financial incentive to avoid the LUPA by maintaining an inefficient practice pattern.
Agencies are reporting LUPAs will account for 20 percent or more of total episodes, far above the 12 percent of episodes that HCFA estimates and then adjusted downward to 5 percent in the payment formula. HCFA has no data to support its assumptions regarding the LUPA as this element of the proposed PPS was not part of the HCFA per-episode demonstration.
RECOMMENDATION: LUPAs should be eliminated from the system, particularly for first episodes. HCFA's reasoning that LUPAs will reduce the number of unnecessary episodes fails to account for the equally likely result that home health agencies will seek to avoid very short-stay patients with high care needs because the reimbursement is inadequate. At a minimum, the LUPA payment amounts should be increased to reflect the true costs of episodes with less than five visits. Alternatively, HCFA should consider using LUPAs only for second or subsequent episodes to reduce the incentive to stretch a single episode into a second.
RATIONALE: HCFA should base payments on the average cost of low volume episodes because these amounts will more accurately affect the cost of providing these visits and the increased administrative overhead costs associated with them. Such costs include, but are not limited to, conducting both an OASIS admission assessment at the beginning of the episode and discharge assessment at the conclusion of the episode. Calculating the average per visit amounts of low-volume episodes is particularly important for LUPAs because there is no case-mix adjustment built into the payment. If HCFA's goal is to encourage agencies to make fewer visits without sacrificing quality, then the PPS must not interfere with this goal. LUPAs as they are currently designed will create disincentives to provide low-volume episodes because agencies will want to avoid falling into the LUPA payment category. We suggest HCFA could accomplish the task of reducing unnecessary episodes through oversight and review of low-volume episodes.
[ TOP ]ISSUE: The proposed rule for PPS includes the use of an outlier payment that is statutorily authorized, but not required. Under the Balanced Budget Act of 1997, if HCFA proceeds with an outlier payment, the total estimated expenditures must not exceed 5 percent of total home health services payments. To meet this expenditure limitation, HCFA proposes to establish an outlier eligibility threshold using a fixed-dollar loss and to calculate the outlier payment using a loss-sharing ratio. Among its options for outlier policy, HCFA chose a fixed-dollar loss of 1.07 and loss-sharing ratio of .60 which together are estimated to affect 7.5 percent of total episodes with an average outlier payment per episode at 62 percent of the standard episode payment amount.
RECOMMENDATION: The outlier payment methodology should be modified to provide a full standardized cost payment for patients within the two classes referenced below. In addition, the methodology should be modified to raise the eligibility threshold and reduce the loss-sharing ratio in order to provide a level of payment proximate to the cost of caring for patients with extraordinary needs.
RATIONALE: The purpose behind an outlier payment is to provide additional reimbursement for episodes that incur unusually large costs due to the patient's health care needs. The additional payment is necessary because the case-mix adjustment system is not capable of accurately accounting for the level of resources needed by these patients. While it is understood that HCFA proposes an outlier payment that merely supplements the standard episode payment rate rather than covers the true cost of serving patients with extraordinarily high resource needs, the result from the proposed outlier payment methodology falls far short of mitigating the disincentives to serve high-cost patients.
Two particular classes of patients stand out as candidates for outlier payments. First, the insulin-dependent diabetic who cannot self-inject insulin and has no alternative caregivers available has been a patient served by the Medicare home health benefit for many years. These individuals do not require institutional care as their health care needs may be addressed with a simple daily or twice-daily injection. However, the cost for caring for such patients ranges from $15,000 to $70,000 per year for nursing care alone. Second, patients with intense wound care needs over a finite period of time often require daily and twice daily nursing services combined with high supply costs. Many of these patients' care needs are met in one to three episodes with the cost of care between $10,000 and $40,000 over that period. An outlier policy should be designed to assist in removing barriers to care for the high-cost patients. Alternative care sites for these two classes of patients require a dislocation of the patient from home at a higher cost for service.
[ TOP ]ISSUE: The proposed rule establishes a split payment approach to reimbursement under PPS. An initial percentage payment equal to 50 percent of the estimated case-mix adjusted episode payment would be made with the initial claim. The second, final payment, would be equal to 50 percent of the actual case-mix adjusted episode payment with the initial percentage payment adjusted to reflect LUPA, PEP, SCIC, or medical review determination as applicable.
The split payment approach is a significant concern within the home health industry. It is believed that the split payment methodology will result in serious cash flow problems for home health agencies nationwide. These cash flow problems are due to the fact that most health care utilization occurs in the early stages of a 60-day episode. In addition, the time frames for completion of a Medicare claim and the payment processing by the intermediary result in extended delays in receipt of payment relative to the time when service costs are incurred.
RECOMMENDATION: Refine the split payment approach to assist providers in meeting their cash flow obligations while providing adequate, programmatic protection for Medicare:
- Modify split payment to 90 percent on the initial claim and 10 percent on the final claim. There will only be a few instances where the final payment is not based upon the original HHRG adjusted episode payment rate. In some cases, payment will be higher because the patient will require a higher rate through the case-mix adjustment system due to a significant change in condition or if the plan of care ultimately results in more than 10 hours of therapy services. A 90/10 split allows Medicare to recognize delays inherent in payment while balancing those cases where additional payment is due with claims where the home health agency has been overpaid. With 73 percent of visits provided in the first 30 days of an episode and the front-loaded administrative costs, a 90 percent initial payment is necessary to meet the cash flow needs of a home health agency.
- Allow for billing upon receipt of verbal orders and certification from the physician. While existing regulatory requirements mandate signed and dated orders and physician certifications prior to billing, the Medicare statute does not impose any such constraint. In fact, § 1814(a) of the Social Security Act (42 U.S.C. § 1395f(a)) authorizes the Secretary to develop regulations which can deem the certification and recertification requirements satisfied at a later date where such certification is accompanied by such medical and other evidence as may be required by such regulations. Modifying the regulations to require signed and dated orders and certification prior to the final billing provides protection to the Medicare billing, while recognizing that securing signed and dated orders and certifications is outside of the control of the home health agency.
- Establish a maximum standard for processing of claims under medical review. Currently, any claim subjected to medical review is designated outside of the "clean" standard, which requires payment of interest on claims unpaid more than 30 days. In many instances, claims under medical review can take between 60 and 90 days for full processing. HCFA should establish a maximum standard for claims review that requires that claims determinations be issued within 30 days of receipt of necessary documentation. Where the intermediary requires additional documentation, the request must be received by the provider within 15 days of the original claim submission. Presently, many providers of services have over 10 percent of their claims subject to medical review, thereby compounding cash flow problems. The institution of time processing standards for claims under medical review is one of the easiest ways of addressing these cash flow problems.
- Allow submission of final bill prior to close of 60-day episode period. It should be unnecessary for a provider to wait for the close of the 60-day episode period to submit all claims. Claim submission should be allowed earlier when home health services cease as a result of the death of the claimant.
RATIONALE: Home health agencies do not have sufficient reserves or access to capital that can provide the means to bridge the period between when costs are incurred, obligations honored, and payment received from the Medicare program. The provision of the vast majority of services to home health patients within a 60-day episode occurs early in that episode. It is NAHC's information that 73 percent of all visits are rendered within the first 30 days. By day 20, 59 percent of the visits from the 60-day episode are rendered. Since most home health services costs are payroll-related, a 50 percent initial payment level will fall far short of the costs accrued prior to the receipt of payment.
Claims development and claims processing add to the delay. Under the current proposed rule, an initial claim can be submitted only after a home health agency has received signed and dated physician's orders for care, a signed and dated physician's certification that the patient meets the Medicare conditions for payment, and a physician's certification of the HHRG. It is not unusual for it to take 10 to 30 days for home health agencies to secure this documentation. In many circumstances, home health agencies must travel to physicians' offices with documentation in hand in order to secure a physician's signature and date.
The delays attendant to securing appropriate documentation prior to submission of a claim are combined with the statutory and operational delays of claims processing. An intermediary may not pay on a Medicare claim any earlier than 14 days after receipt. If a claim is subjected to medical review, delays can easily extend an additional 60 to 90 days.
With the timelines discussed above, it is likely that claims would be paid no earlier than 25 days after admission and more likely paid between 45 and 50 days out. Payment of 50 percent of the expected case-mix adjusted reimbursement rate fails to account for these extended time delays and the normal circumstance where most visits are provided to patients within the first 30 days. Further, most of the administrative costs of patient care are incurred in the early stages following admission or recertification.
[ TOP ]ISSUE: The proposed PPS rule is devoid of any reference to the cost reporting methodology and the application of the interim payment system (IPS) for those partial cost reporting years that will exist for providers of services which transition to PPS on October 1, 2000.
RECOMMENDATIONS:
- HCFA should publish a notice of proposed rulemaking relating to home health agency cost reporting responsibilities in the transition to PPS, along with its position relative to the application of IPS, by January 31, 2000. There should be a 60-day opportunity to comment.
- HCFA should allow home health agencies with a fiscal year end other than September 30, 2000, to submit a full year cost report, including those months where reimbursement is based upon PPS, in order to allow for an appropriate recognition of costs incurred by the home health agency within the fiscal year. While cost-based reimbursement is expected to end on October 1, 2000, a full year cost reporting approach provides the best mechanism for an accurate recognition of costs incurred during the partial cost reimbursement years.
- The annual per beneficiary limit should not be prorated based upon the portion of time within the HHA's fiscal year that has expired prior to the implementation of PPS. In most instances, the total amount of care that will be provided to patients for the portion of the fiscal year under IPS will have been completed. The majority of patients complete their home health care services within a period of less than 60 days. As such, a full annual per beneficiary limit should be applied within the partial IPS year rather than a prorated portion of that limit.
- HCFA must explain the application of the OASIS cost adjustment as set out in its previous notice and the recent Congressional addition of a $10 per patient adjustment.
RATIONALE: These issues must be addressed quickly and publicly as the direction that HCFA takes will have significant impact on the administrative and financial operation of each affected home health agency.
[ TOP ]ISSUE: The Balanced Budget Act of 1997 imposed an addition to the cost limits called the per beneficiary limit. HCFA has taken the position that there is no statutory authorization for exceptions to the per-beneficiary annual limit. The per-beneficiary limit is calculated from the reasonable cost per patient in the base year of federal fiscal year 1994. The per-beneficiary limit is applied in the aggregate for an agency's unduplicated Medicare census in each cost reporting year.
Using 1993 data for establishing per beneficiary limits poses several problems. First, an agency's mix of patients may have changed to a higher or lower intensity. Second, an agency's mix of service may have changed from the base year significantly changing the cost per patient served. For example, in the base year an agency may not have provided medical supplies or therapy services. Therefore, its per patient limit will be inadequate for that agency to provide those services under the new payment system.
The amendments set out in the Balanced Budget Act of 1997 do not establish a specific exception process for the per-beneficiary annual limitation. Instead, authorization for exceptions is found in existing law at section 1861v(L)(ii) of the Social Security Act; 42 U.S.C. § 1395x(v)(L)(ii). The amendment establishing the interim system of limits is an amendment to section 1861(v)(1)(L). The amendment does not establish a wholly new provision; instead, it establishes a new clause, which modifies the general provision that Medicare reimbursement is subject to reasonable cost limits. The per-beneficiary annual limitation sets forth a limit to be applied in addition to the existing per visit cost limits. Accordingly, clause (ii) should be read as a reference to limitations, which make up the reasonable cost limitation under section 1861(v)(1)(L).
RECOMMENDATION: The Secretary should extend authorizations for exemptions and exceptions to the new interim payment system per beneficiary limits as well.
RATIONALE: HCFA has the authority to provide for exemptions and exceptions to the limitations. It is recognized that clause (ii) does not mandate exemptions and exceptions, but rather provides authorization for the Secretary to offer such "as he deems appropriate." Such action would be appropriate given the use of base year data that will include case mix experiences primarily from 1993. The validity of the assumption that an agency's case mix does not vary significantly from one year to the next is severely tested when utilizing base year data that is 4-5 years old. Continued access to care and the survival of the home health agency may be dependent on the availability of an exemption or exceptions process.
[ TOP ]ISSUE: The home health interim payment system (IPS), enacted under the Balanced Budget Act of 1997 (BBA), was intended to reduce growth in the Medicare home health benefit by $16 billion over five years. The actual amount cut from home health in the same time period will come closer to $50 billion, due to an unprecedented two-thirds behavioral offset that the Congressional Budget Office wrongly predicted would occur. Other than elimination of venipuncture as a qualifying service for home health, coverage under the home health benefit remains the same.
On average, agencies are receiving 31% less in reimbursement under IPS than they did previously. The Health Care Financing Administration (HCFA) has projected that nearly all home health agencies under IPS will receive reimbursements that are lower than their actual costs of providing care. Despite these dramatic reductions, home health agencies across the nation have made every effort to continue to provide high quality, appropriate services to the millions of beneficiaries who are eligible and in need.
HCFA was not required to publish information on calculating the per visit limits until January 1, 1998, even though the limits went into effect beginning October 1, 1997. Likewise, HCFA was not required to publish information related to calculation of agencies' annual aggregate per-beneficiary limit until April 1, 1998, despite an October 1, 1997, start date. More than a year after IPS began, many agencies had not yet received notice from their fiscal intermediaries (FIs) providing the visit and per beneficiary limits under which they were expected to operate. Some agencies were operating for more than a year under IPS before they received information regarding their limits.
In other cases, where agency limits were provided, the intermediaries' calculations of agencies' limits were wrong due to the use of faulty data. Additionally, most of the intermediaries never modified agencies' payments to reflect the IPS reductions; rather, they continued to pay agencies according to the previous year's levels, resulting in significant overpayments to many home health agencies across the country.
The BBA home health reductions were so deep and occurred so quickly that many agencies were not aware of the full impact the cuts would have on their reimbursements, particularly since most agencies did not even know their reimbursement limits until months after care was delivered. More importantly, most agencies continued full access to care within the scope of the Medicare benefit rather than terminate care to patients.
Intermediaries have issued notices of overpayments to agencies and demanded repayment. This process can be expected to continue until 2001. While HCFA has directed the intermediaries to allow up to 36 months for agencies with overpayments resulting from IPS to repay them, the IPS cuts make it near impossible for agencies to provide high quality, appropriate care to Medicare beneficiaries; comply with repayment requests and remain financially solvent. In most cases, the payments have already been used to provide legitimate, needed care to eligible beneficiaries.
RECOMMENDATIONS: HCFA should protect home health agencies against financial ruin because of outstanding repayments resulting from the Medicare IPS. Agencies should be granted overpayment forgiveness for payments in excess of their IPS limits, provided that the care was necessary and appropriate, and that the costs are deemed reasonable by the Medicare program.
- HCFA should waive interest obligations for the full term of a repayment plan.
- HCFA should establish uniform, reasonable and objective criteria for the eligibility for repayment plans in excess of 36 months.
RATIONALE: Home health agencies across the nation have continued to provide high quality, needed care to eligible Medicare beneficiaries despite precipitous cuts in their allowable reimbursements. Many agencies have taken great financial risks to do so. Over 2,500 agencies have closed, and it is anticipated that more will close over the next twelve months. Placing additional financial strains on home health agencies will only hasten and increase the severity of the impending home health access crisis. In cases where appropriate care has already been provided to eligible beneficiaries and the intermediaries have provided payment, and the costs of such care are within reason according to Medicare program standards, agencies should not be penalized.
Historically, home health agencies have frequently experienced difficulty in securing reasonable repayment arrangements with HCFA's contractors. HCFA should ensure that all home health agencies are afforded equal repayment protection rights based on objective, reasonable criteria.
[ TOP ]ISSUE: The Balanced Budget Act of 1997 stipulates that the per-beneficiary limit will be prorated among agencies when a patient receives services from more than one agency. This provision is unnecessary and too complicated for routine administration of the payment system.
The per beneficiary limit is calculated from a base year ending in federal fiscal year 1994 where patients were also served by more than one agency. Therefore, the per-beneficiary limits already account for patients being served by more than one agency. However, it is recognized that one method of circumventing the per beneficiary limits would be to transfer patients to another agency and HCFA should have a mechanism to deal with these situations if they arise.
The tracking required by this provision would be problematic for both providers and HCFA. HHAs do not have access to the information that would allow them to sufficiently track beneficiaries' use of other home health services, and do not have control over where patients receive services before and after the home care they provide. Prorating becomes even more complicated given that agencies have different limits and fiscal years over which those limits are applied.
HCFA has indicated that it will not implement proration until the institution of the home health prospective payment system. In addition, HCFA has indicated that it will not retroactively prorate the payment limits under IPS.
RECOMMENDATION: NAHC should monitor intermediary actions to ensure that no IPS-related proration occurs.
RATIONALE: The per beneficiary limits are based on historical data where agencies' cost per patient takes into account the fact that patients were served by more than one agency in the base year. HHAs are incapable of managing their Medicare budgets with proration since it is not possible to predict when and how often other HHAs may serve the patient.
[ TOP ]ISSUE: The Balanced Budget Act of 1997, Section 4601, is intended to recapture the savings resulting from the temporary freeze on payment increases for home health services from July 1, 1994, to June 30, 1996. HCFA has calculated the per-beneficiary annual limitation with an application of section 4601. This results in the exclusion of 2 years from the home health market basket index update required under the per-beneficiary annual limitation.
The market basket update for the period in question represents approximately a 6% increase. This provision on top of using a fiscal year 1994 base year is especially onerous and threatens home health providers' ability to deliver the services needed by Medicare beneficiaries.
Section 4601 adds clause (iv) to section 1861(v)(1)(L). It is entitled "basing updates to per visit cost limits on limits for fiscal year 1993." While the title is not conclusive as to the statutory mandate, it represents an element of legislative history that is a consideration in determining the appropriate interpretation of an ambiguous provision. The ambiguity is apparent here given the specific reference to full home health market basket index update contained in subclause (I) of clause (v) which sets out the per beneficiary annual limitation.
It is notable that the legislative intent was to recapture savings resulting from the temporary freeze on per visit cost limits. The per-beneficiary limits did not exist at the time of the freeze. It is also important to recognize that the per-visit cost limits are based upon data from freestanding home health agencies only, while the per beneficiary annual limitation is derived from a database which includes freestanding and institution-based entities.
RECOMMENDATION: Allow the full market basket increase in calculating the per-beneficiary limits.
RATIONALE: A full market basket update to the per-beneficiary annual limitation calculation does not interfere with the recapture provision. Even with a fully updated per beneficiary annual limitation, the unit visit cost cannot exceed the cost limit calculated with an application of the recapture provision. The full recapture comes through the per-visit cost limits, any additional expenditure reductions through the per-beneficiary annual limitation would extend the budgetary reach beyond its intention and need.
[ TOP ]ISSUE: Interest in the concept of delivering home health services via telehealth (also known as telemedicine) has grown over the last few years. Home health providers foresee application of telehealth as a means to deliver services in the home, provide greater access to specialists, and produce cost savings for specific types of patients.
Presently there is no payment mechanism for telehealth services under the Medicare home health and hospice benefits. The Health Care Financing Administration (HCFA) has no plans to extend the Medicare home health benefit to include telehealth services. However, when the Medicare prospective payment system is implemented, home health providers will look to telehealth as a possible mechanism to deliver services. It is unknown whether telehealth expenses will be allowable expenses on the hospice cost report, once instituted. At this time, limited reimbursement is available from Medicaid, managed care plans and private insurance for telehealth services. A few demonstrations are under way in rural areas.
Currently, the cost of telehealth equipment and transmission of information can be prohibitive. Other obstacles to the growth of telehealth services in home health include geographic practice limitations imposed by state professional licensure laws and liability laws. However, research into the effectiveness of telehealth as a cost-efficient means to deliver quality services is growing.
RECOMMENDATION:
- Expand telehealth demonstration projects to include home health services to Medicare beneficiaries to identify potential cost-savings to the Medicare program; appropriate patients; and the quality and effectiveness of telehealth services.
- Develop payment mechanisms to reimburse home health and hospice agencies for equipment costs and telehealth visits.
- Provide guidelines under the current Conditions of Participation (CoP) to allow for telehealth services delivered by home health and hospice providers to non-Medicare patients.
RATIONALE: The home health industry and HCFA need information to support the expansion of telehealth services for home health patients. This information must be both qualitative and quantitative in order to justify expenditures and ensure appropriate quality of care.
Establishment of standards of care for telehealth and research results that demand to success or telehealth in cost-savings, patient outcomes and satisfaction point to the need for payment mechanisms.
Current Medicare home health and hospice regulations are limited to services provided as "visits." Home health regulations, which apply to all persons served by Medicare home health agencies and hospices, regardless of payer source, must be flexible and applicable to non-Medicare patients receiving telehealth services and to Medicare beneficiaries under any future prospective pay system.
[ TOP ]ISSUE: Since July 1992, the Health Care Financing Administration (HCFA) has considered incorporating a revised sampling procedure for post-payment and audit reviews of Medicare claims. In 1999, HCFA introduced a revised sampling procedure. The use of sampling procedures would involve the intermediary identifying a specific type of claim submitted for a specified period of time. The denial rate in the sample would be extrapolated to all similar claim types for the period, resulting in "denial" of claims that were never reviewed individually. NAHC opposes the use of sampling, but until a legislative remedy is achieved, specific provisions must be included.
The sampling procedure has been challenged by a HCFA Region V administrator and by experts whose opinions were secured by Region V. However, HCFA has proceeded with its sampling plans.
RECOMMENDATION: HCFA should include the following provisions as it moves forward with sampling:
- Ensure statistically valid sampling procedures and overpayment methodology.
- Improve educational programs for providers and establish guidelines for minimum training for all intermediary reviewers.
- Expand RHHI provider relations and services.
- A time-limited prepayment review should occur if the provider has evidence of non-covered claims before application of a sampling denial rate to all claims.
- Develop a set of standards which guides fiscal intermediaries and carriers on appropriate follow-up action for providers that submit claims for non-covered services.
- Develop criteria and standards for the exclusion of providers from the program that have a history or pattern of submitting claims for non-covered services.
- Repayment should be required only after all appeal rights are exhausted.
RATIONALE: Sampling imposes significant risks to agencies and reduces the protection available in an appeal. Even if HCFA can develop a valid sampling methodology, extrapolation of denial rates to a large percentage of claims and recoupment of funds before appeals have been exhausted is unfair to agencies and patients. If sampling is used by HCFA, safeguards as recommended are essential.
[ TOP ]ISSUE: The Balanced Budget Act of 1997 gave the Secretary authority to develop normative standards for payment denial. Utilization of the home health benefit has increased both in visits per patient and percent of Medicare beneficiaries that receive services. HCFA also reports that the Medicare home health benefit is used for increasing numbers of long term patients. There is significant variation in utilization rates across the country, but a preliminary study conducted by Mathematica (1994) indicates that patients in high use areas have poorer health status and less access to other services. Some argue for visit limitation or that home health was intended only as a post-hospital service.
Without outcomes linked to utilization data, it is impossible to determine what is the correct utilization. It should be recognized that there is probably some under- and over-utilization of services. HCFA has initiated a study on the relationship between volume of services and outcomes and the case-mix study to link utilization and patient characteristics. Currently, the physician's authorization for services is given the presumption of indicating services are medically reasonable and necessary. With managed care, capitation, the interim payment system, and prospective pay, there will be more incentives for under-utilization than over-utilization.
RECOMMENDATION:
- Do not implement visit restrictions and payment denials based on normative standards until variation is better understood.
- Institute a HCFA/NAHC project to identify problem areas and study utilization data. For those problem areas, develop uniform protocols of care based on outcomes (not averages, or just a clinical panel) against which utilization can be measured. These should not be used for automatic denials but indicate the need for justifying the additional services.
- Identify acute and long-term care based on HIM-11 coverage rules that do not meet coverage criteria.
- Direct equal attention toward under-utilization as well as toward over-utilization.
- Require intermediaries to offer provider training on coverage guidelines at least twice a year open to all providers who wish to attend.
- Utilization notices to patients and physicians should be easily understood by the respective parties (e.g., Patients and physicians typically do not understand the difference between charges and costs).
RATIONALE: The data required to establish equitable normative standards does not exist. In addition, the interim payment system will repress utilization and a mandated PPS will make normative standards obsolete. HCFA should not divert resources to developing normative standards for the IPS.
Variation in utilization is poorly understood. No significant changes in the benefit or the manner of medical review should occur until the source of the variation is better defined.
[ TOP ]ISSUE: Federally-qualified health maintenance organizations (HMOs) have restricted the home care benefit for non-Medicare subscribers by using a "part-time or intermittent" care limitation to non-Medicare patients. Some federally-qualified HMOs have taken the position that home care services are limited to nursing care, thereby excluding home care aide services, therapy, and medical social services and supplies. Others have used the "custodial care" exclusion to limit payment.
HMOs and managed care providers that are not Federally-qualified are also providing coverage in a restrictive manner. No Federal laws govern these providers, and the state laws that do exist are inadequate in their definition of home care and coverage of services.
HMOs enrolling Medicare beneficiaries sometimes engage in questionable marketing practices resulting in patients being unaware of their enrollment or quickly disenrolling. Timely information is often not available in the Common Working File (CWF) and home care providers have difficulty obtaining reimbursement for patients served when the patient did not inform them of their HMO enrollment. HMOs are also known to authorize fewer services than beneficiaries would receive under fee-for-service. However, Medicare-certified providers are still accountable for meeting quality standards as outlined in the Medicare Conditions of Participation (CoP).
RECOMMENDATION:
- HCFA should enforce laws that mandate that Federally-qualified HMOs provide home care services to the non-Medicare subscriber without limit as to frequency or duration (up to 24 hours a day, 7 days a week), where delivery of home care services represents a cost-effective and reimbursable service meeting the client's needs.
- Require HMOs serving Medicare beneficiaries to provide home care services consistent with the coverage guidelines.
- Improve notification procedures to patients and the CWF regarding HMO enrollment and disenrollment.
- Clarify the state laws regulating HMOs and managed care.
- HCFA should establish an appropriate policy to encompass all disciplines of care, supplies, and DME within a definition of "home health services", and develop a reasonable definition of "custodial care".
RATIONALE: HMOs that choose to become Federally-qualified HMOs under 42 USC §300(e) are required to provide home care services to all subscribers. HCFA has stated that home care must be available from a Federally-qualified HMO without limit as to time or cost. Medicare beneficiaries enrolled in HMO's should not be denied home health services to which they are entitled.
[ TOP ]ISSUE: Significant problems of consistency and equity continue among intermediary audit and reimbursement officials regarding cost-finding. These problems include home office cost-reporting, discrete costing, equitable allocations and reimbursable and non-reimbursable costs. There are significant problems of inconsistency in the application of policies among the intermediaries.
Determination of costs for Medicare is based on the average of the cost of all like-kind services delivered for each discipline by an HHA, regardless of the payer of the services. In August 1997 HCFA revised its "like-kind services" definition to exclude any services that would not meet Medicare's coverage and eligibility rules. As a result, home health aide visits to non-Medicare patients are not considered "like-kind" unless the patient is both homebound and in need of additional skilled services. These coverage and eligibility rules do not effect the cost of services.
Additionally, the lack of clarity in the cost-finding standards has led to inconsistent and inflexible interpretations of the requirements. As a result, the allocation of costs imposed by the intermediaries fails to properly apportion Medicare-related expenses to the Medicare patient. There are a number of related problems, such as retroactivity of cost disallowances, that will require legislative action.
RECOMMENDATION: HCFA should revise the Provider Reimbursement Manual Pub-15 regarding cost-finding to ensure consistent fair allocation of costs and the development of proper methodologies that allow providers to rely upon previous intermediary approvals.
The definition of "like-kind services" should be based on the function of the caregiver rather than payer, time, or Medicare eligibility.
RATIONALE: The application of the current cost-finding rules is often a matter of guess-work for providers and their fiscal consultants. Cost-finding methodologies previously approved by intermediaries are subject to both retroactive and prospective rejection, leading to fiscal chaos for the provider. Allowable costs, accounting requirements for home office cost-reporting, the development of unique cost centers, and optional methods for direct costing have not been approved in a consistent manner among the home health intermediaries.
[ TOP ]ISSUE: Medicaid is the safety net to protect the poor. Generally, Medicaid home care need is increasing while available funding is decreasing. In many states, Medicaid rates for home health service and supplies are so poor that agencies cannot cover their costs even after substantial subsidization from other payers. The result is that access to home care is limited by the rates and by the limitations of the benefit. While this is happening, compliance demands are increasing on Medicaid providers with the imposition of Medicare Conditions of Participation (CoP). Furthermore, states have responded to budgetary problems by reducing the scope of home care coverage and imposing beneficiary copayments. Another cost-saving action taken by states is contracting with managed care organizations (MCO) to manage all care provided to Medicaid clients, often resulting in even more limitations on home care services and payment rates. This action has led to creating a care dilemma for home care providers that are increasingly faced with patients who have continuing needs when their limit on benefits has been reached.
NAHC has surveyed state associations which indicate that multiple, state specific reasons exist for problems that patients have in accessing home care services. NAHC investigation has revealed that the states rarely use any objective and rational approach to rate setting where the design achieves the intended purpose of access to care comparable to the non-Medicare patients. It was further revealed in the investigation that some Medicaid programs operate with unwritten or incomplete coverage standards thereby subjecting agencies and their patients to arbitrary coverage denials.
NAHC has intervened in numerous state battles with Medicaid to improve rate setting methodologies and the scope of home care benefits. To date, these efforts have been successful, but problems continue to arise in many other states. In addition, Congress has talked of block granting all Medicaid funds to states.
RECOMMENDATION: Develop appropriate rate setting structures for use within the individual state Medicaid programs. Enforce Federal Medicaid law which requires that states set rates in a manner which secures access to necessary care and ensures quality. Curtail cuts in the scope of benefits and oppose copayments. Ensure that home health is included in every state Medicaid benefit package if block grants are established. Address service and payment rate requirements that must be followed by managed care organizations serving Medicaid clients.
RATIONALE: Medicaid, in many instances, is the payer of last resort. The multiple barriers to access, due to low reimbursement rates, increased cost due to compliance demands, and a poorly designed benefit, inhibit home health agencies in providing care to the needy. Copayments create increased administrative costs, bad debts, and often no offsetting reimbursement increase.
[ TOP ]ISSUE: The Health Care Financing Administration (HCFA) requires home health agencies to submit patient data using the Outcomes Assessment and Information Set (OASIS) in anticipation of and to assist in the shift to a prospective payment system (PPS) for home health.
Initially, when HCFA was scheduled to implement home health PPS beginning October 1, 1999, OASIS data collection was expected to begin October 1, 1998, with reporting of the data expected to begin in January 1999. Under the fiscal year 1999 omnibus appropriations bill, HCFA was instructed to implement home health PPS on October 1, 2000, a one-year's delay.
As part of the regulatory issuance implementing the interim payment system (IPS) per-visit and per-beneficiary payment limits, HCFA indicated that certain costs associated with the implementation of OASIS will be reimbursed. However, many additional costs which agencies incur with OASIS are not currently included among the Medicare reimbursable costs.
Home health agencies are under severe financial burdens due to the IPS payment cuts; virtually all agencies are being reimbursed less than the actual costs they incur in providing care to Medicare beneficiaries. Agencies are also under increasing new demands associated with administrative requirements, including increased claims reviews, expanded compliance surveys, sequential billing, surety bonds, and Operation Restore Trust efforts.
RECOMMENDATION: HCFA should reimburse the full costs agencies incur with respect to OASIS. OASIS data collection and submission requirements should be limited to Medicare patients.
RATIONALE: OASIS is a valuable tool that, over time, will greatly enhance the delivery of home health services. However, requiring OASIS data collection and submission for non-Medicare patients constitutes an unfunded mandate. OASIS requirements should impose as few administrative and financial burdens as possible upon already severely strained home health agencies.
[ TOP ]ISSUE: Providers are subject to vague standards for Periodic Interim Payment (PIP) eligibility and termination, intermediary recoupment of overpayments and payment of underpayments and application of salary equivalency guidelines and service cost. Also, methods for establishment of interim payment rates vary among the intermediaries. Often rate projections are based on intermediary guesses rather than hard facts arrived at through analysis of agency costs. Moreover, cost-report settlements may be issued years after the close of the fiscal year. Finally, the intermediaries have been using cost disallowances that are inconsistent with past standards. For example, clear guidelines do not exist for allowing costs for staff recruitment, cell phones, or 800/888 numbers. While cost-based reimbursement is scheduled to end October 2000, cost report settlements will not be finalized for several years.
RECOMMENDATION: The Health Care Financing Administration (HCFA) should develop equitable and uniform application of the Medicare reasonable cost standards; salary equivalency guidelines; PIP; overpayment recoupment; cost-report settlements; audit adjustment factors (both regional and provider specific); retroactive audit adjustments; and Contractor Performance Evaluation Procedures (CPEP). Specifically:
- Interim payment rates should be based on a formula developed using objective criteria. The manual should include guidelines to assist providers in recognizing when to request revisions to interim rates.
- A policy is needed which allows cell phones for activities directly or indirectly related to patient care. Documentation should be required for "non-business" use only.
- Updated salary equivalency guidelines are needed for reasonable cost of contract therapy services and appropriate speech therapy (ST) and occupational therapy (OT) guidelines must be established.
- A national policy should be developed for allowing 800/888 number costs when such numbers are needed to provide access to patients, families, staff, physicians, and others involved in patient care coordination activities.
RATIONALE: Agencies have encountered numerous problems with Medicare payment criteria. Providers are subjected to varying intermediary interpretations relative to eligibility, adjustment of rates, reporting requirements and determination of PIP status. Overpayment recoupment is an unstructured and arbitrary method permitting recoupment actions ranging from direct offset within 30 days to multi-year repayment plans. While standards are imposed for filing of cost reports by home health agencies, no appropriate time-limit standards exist for action by the intermediaries. This results in the potential of an agency multiplying its liability to the Medicare program by continuing a practice that would be rejected after the audit of the first cost report.
[ TOP ]ISSUE: A continuing problem for home health agencies is the disallowance of salary costs for owners, officers and executives by the Medicare intermediaries. The primary basis for the disallowance is the use of compensation screens by the intermediaries. The current use of compensation screens may not be valid due to questionable data-gathering techniques and the compliance with manual instructions. Further, the screens are out-of-date and rely upon data that is not fully relevant. Finally, HCFA has failed to monitor the screening system in use or develop a uniform model that conforms with regulatory standards. Industry salary surveys, while an accurate reporting of data provided, are not a substitute for the requirements of Section 900, et seq., of HIM-15 (Provider Reimbursement Manual).
NAHC has challenged some screening systems. However, there remains a pressing need to develop comprehensive data in a reliable and usable format before a wholesale revision of the intermediaries' methodologies can occur.
RECOMMENDATION: Eliminate the current compensation screens in use by Medicare Fiscal Intermediaries. HCFA should develop comprehensive reliable compensation data with input from NAHC's Financial Managers Forum.
RATIONALE: Medicare home health agencies are one of the few providers with salary caps. Several years ago, intermediaries developed compensation screens that are partially based on factors of agency size, location and experience of the personnel involved. However, these compensation screens have led to irrational and inequitable reductions in allowable costs for salaries. If HCFA is to allow the intermediaries to continue use of compensation screens, these screens must be updated to more reasonably relate to fair compensation.
[ TOP ]ISSUE: HCFA plans to issue a proposed rule affecting the rights of home health agencies, hospices, and other health care providers to seek review of reimbursement determinations by intermediaries. In this proposed rule, HCFA intends to clarify the standards governing the administrative appeals process for payment disputes, including rules distinguishing the amending of cost reports and the re-opening of Medicare intermediary payment determinations and administrative review decisions.
RECOMMENDATION: Any changes to reimbursement appeals rules must ensure that providers have full access to the systems for review of improper reimbursement determinations.
RATIONALE: Home health agencies and hospices have regularly faced improper reimbursement determinations by fiscal intermediaries. The right to seek a re-opening of a payment determination and the right to appeals before the PRRB are important mechanisms designed to protect providers and the clients from improper reimbursement determinations by intermediaries. Any weakening of this system will reduce the likelihood that home health/hospice agencies receive adequate reimbursement from Medicare.
[ TOP ]ISSUE: Some patients are dually eligible for Medicare and Medicaid benefits. Their coverage may alternate between Medicare and Medicaid due to a change in their condition and the need for skilled services. Medicare is considered primary to Medicaid, so some Medicaid programs require a Medicare denial before making payment. Medicaid programs across the nation have initiated projects designed to recover payments made for services to patients who are dually enrolled in both the Medicare and Medicaid programs. It is the belief of the state Medicaid programs that Medicaid has incorrectly made payment on behalf of patients who were eligible for Medicare coverage. Significant costs to providers, Medicare, and Medicaid are incurred because these projects require retrospective claims review, submission of claims to Medicare, and administrative appeals.
RECOMMENDATION: HCFA should modify its third-party liability regulations to require that states utilize the most cost effective method for recovering payment for dually eligible patients. HCFA should consider the development of a system of claims review that does not require individual claims submissions and appeals. Medicare and Medicaid claims submission should be combined with initial billing to Medicare and a transfer billing of remaining non-covered care to the respective state Medicaid program. States should be required to recoup incorrect payments from the Medicare program rather than the provider. No recovery should take place against a provider until after third party (Medicare's) liability is established.
RATIONALE: While home health agencies make the best effort to determine whether a patient is covered under Medicare prior to a claim submission to Medicaid, incorrect Medicaid payments have occurred. However, the use of an individual appeals system represents a costly, burdensome process for all parties concerned including the provider of care, the Medicaid program, as well as Medicare. Current HCFA regulations require that third-party liability recovery programs demonstrate cost effectiveness and that liability be established to the third party prior to recovery from the provider. But HCFA has just begun to enforce these regulations. Strengthened rules and better enforcement would allow HCFA to maintain improved oversight over state programs and to minimize the overall cost experienced by all parties. Several states are prohibited from recouping money from the provider.
[ TOP ]ISSUE: The lesser-of-costs-or-charges (LCC) provision was enacted in 1972 as P.L. 92-603, §233. It provided that the aggregate of Medicare payments to a home health agency or other provider would be limited to the total of its charges for the covered services. In explaining the LCC provision, the Senate Finance Committee reported it would be inequitable for the government to pay for more services than the provider charges to the general public. The Committee noted, however, that "a provider's charges might be set lower than its costs in a given period as a result of miscalculation or special circumstances of limited duration, and it is not intended that providers should be penalized for such short-range discrepancies between costs and charges." Nor did the Committee "want to introduce any incentive for providers to set charges for the general public at a level substantially higher than estimated costs merely to avoid being penalized by the provision." Therefore, it recommended that Medicare make provision for a loss carry-forward feature so providers that are penalized under the LCC provision in one year could recoup the loss in subsequent years.
The suggested carry-over feature was incorporated in the LCC regulations but was subsequently eliminated by the Health Care Financing administration (HCFA) in 1986 (Federal Register, September 18, 1986, p. 33074). The rationale for the repeal was that providers had "sufficient experience and adequate time to make necessary adjustments and establish a proper relationship between their costs and charges." It was also noted that only a minority of providers would be affected. The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 authorized HCFA to make the LCC provision inapplicable to any class of providers, if this would not add to the cost of the Medicare program.
RECOMMENDATION: The LCC provision should be eliminated because it fails to achieve significant benefits for the government, it is inequitable to an agency's lower-cost patients, it prevents certified agencies from competing on an equal footing with noncertified agencies, and it is inflationary.
RATIONALE: Any Medicare "savings" attributable to the LCC provision is miniscule. A few providers - the small, less sophisticated agencies - may make pricing errors that lead to LCC reductions. The actions that agencies must take to avoid LCC reductions introduce inequities and inefficiencies that both agencies and Medicare should seek to avoid. It results in overcharging certain private-pay patients, the very result the Congress sought to avoid, and is counterproductive.
[ TOP ]ISSUE: Fraudulent and abusive activity by a few home health/hospice providers taint the reputation of the industry as a whole. Current programs available to monitor fraud and abuse in home health/hospice are fragmented and often ineffective. These include HCFA's program integrity and survey and certification activities, and enforcement activities of the Office of Inspector General (OIG).
HCFA has supported the concept that all parties involved in the home health benefit work together to protect both the beneficiary and program from fraud and abuse. Although HCFA recognizes that fraud and abuse is limited, it "must improve its ability to deter fraud and abuse and to detect it where it does exist." HCFA has pursued the following as means to control these problems: facilitate suspension of payment, ensure agencies have adequate financial reserves and business plan, require bonding, tighten certification requirements for abusive agencies, and establish joint consumer/provider workgroups.
RECOMMENDATION: The Office of Inspector General should establish minimum training requirements for OIG and Department of Justice investigators, as well as work with the industry to address concerns regarding fraud and abuse.
Enforcement entities should streamline their procedures to minimize the investigative impact on non-fraudulent providers. They should seek assistance from NAHC/HHA in drafting "Fraud Alerts" and investigative procedures.
RATIONALE: NAHC/HAA believes that direct and ongoing involvement of the home care industry in support of government fraud enforcement activities is necessary. This position is set out in NAHC's principles regarding provider fraud. At the same time, enforcement efforts must be balanced with adequate safeguards to ensure that innocent providers of care do not fall victim to inappropriate administrative actions. High utilization may result from a number of variables, such as poor beneficiary health status or less access to other services, rather than fraud or abuse on the part of the provider.
[ TOP ]ISSUE: Under current Medicare Secondary Payer (MSP) rules, a home health agency is improperly denied fair and reasonable reimbursement for home health services that may be subject to coverage from an alternative primary health insurer. Under these rules, a home health agency is limited in reimbursement to the aggregate amount that would have been received under Medicare for the full plan of treatment even where the primary insurer limits coverage to certain disciplines of care. In addition, Medicare calculates this limit based upon interim rates without recognition of variations in reimbursement levels that may occur upon cost report settlement.
RECOMMENDATION: Medicare providers should receive full payment from Medicare for discipline specific services that are not covered by the primary insurance. The LUPA per visit rates should be paid once home health moves to PPS.
RATIONALE: Where a home health agency provides a combination of services, yet receives reimbursement from an insurance company for some of the services, the amount payable for the care by the primary payer should not be considered by Medicare in determining the Medicare payment due. Under Medicare, discipline specific visits are separately reimbursable and any excess of payment over cost should not be assigned to services not covered by the primary insurer.
[ TOP ]ISSUE: Reports about the poor quality of auditing performed by home health intermediaries under the Medicare and Medicaid benefits are increasing. Of particular concern is the development of a Medicare "desk audit" to replace the required field audit. Auditing standards are not met when the audit is performed offsite without the ability of the auditors to discuss issues with home health agency staff and to examine the full range of documents available at the home health agency. While HCFA policy allows for a desk review, these reviews are only intended as precursors to full field audits. HCFA issued a new policy in 1993 that was intended to improve the quality of audits. NAHC held workshops on the auditing standards during the 1993 regional conferences.
RECOMMENDATION: HCFA's auditing standards should comply with "Generally Accepted Accounting Principles" (GAAP) and HCFA's published auditing standards. HCFA should bear the burden of proving compliance with standards in the event of a dispute regarding the audit process. They should ensure that appropriate field audits are performed and that desk reviews are limited to pre-audit screening actions.
RATIONALE: Poor quality audits lead to erroneous cost disallowances, premature or unnecessary recoupment, and delays in proper settlement. Shortcuts to auditing such as the "desk audit" create undue risks of error. In this context these are field audits done at the desk, not the traditional FI desk audit per se.
[ TOP ]ISSUE: The Health Care Financing Administration (HCFA) has reported it is ready to process home health and hospice claims in the Year 2000. However, even though HCFA has committed all available resources to ensure Y2K readiness, it is nonetheless predictable that some failures could still occur, either with claims processing or with other computer programs. HCFA is taking steps to ensure the smooth transition of home health and hospice into the year 2000, and has instructed RHHIs on specific claims processing steps that could affect cash flow during the transition period.
RECOMMENDATION: HCFA should exercise its authority to issue emergency, interest-free payments to health care providers where Medicare claims processing, payment, and payment rate updates are delayed as a result of incomplete or erroneous Y2K computer changes. HCFA should also adjust reimbursement limits and payments for home health agencies and hospices to allow the respective organization to fully comply with Y2K requirements.
RATIONALE: Establishing a system for emergency payment is a prudent action that would provide HCFA with flexibility if Y2K compliance efforts prove to be unsuccessful or incomplete. Emergency payment will provide a reasonable protection for Medicare beneficiaries and providers who require an adequate schedule of payment to meet the ongoing costs of health care operations.
[ TOP ]ISSUE: HCFA issued a memorandum to the intermediaries in August 1996 (Transmittal No. A-96-7) to clarify the policy on "provider-based designation." In the policy statement, HCFA outlined eight criteria to be used as screening criteria in determining provider-based status. Many of the criteria relate to quality concerns, geographic location, and sharing of facilities and services rather than cost of services from the provider to the home health agency. Conflicting information has been disseminated by HCFA staff indicating that providers are not required to meet all of the criteria, but no guidelines have been issued for determining which and how many are required. Meanwhile, HCFA published a proposed rule on September 8, 1998, in the Federal Register, defining provider-based agencies.
RECOMMENDATION: Revise "provider-based" designation screening criteria so that they directly relate to control and appropriate step-down cost allocation for services provided to the provider-based agency. Issue specific guidelines to intermediaries on how to apply these criteria to home health agencies. Allow a grace period so providers that do not meet the newly established criteria can take corrective action and adjust their budgets for the next cost reporting period. Monitor the new regulations as proposed for publication as final and inform membership when published.
RATIONALE: "Provider-based" designation is an issue related to financial reimbursement, not quality of care considerations. Criteria established for the purpose of determining whether an HHA is provider-based should focus on whether the costs allocated by the provider to the HHA are in exchange for the provision of "real" services by the provider.