Medicare’s Home-Health Claims Review Back From the Dead

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By James Swann

Medicare has revived a controversial program to review home-health claims before they’re officially submitted for reimbursement as part of an effort to reduce high levels of fraud and abuse in the sector.

Over 32 percent of all Medicare home-health payments were deemed improper in fiscal year 2017.

The program was put on pause in April 2017 following complaints from lawmakers and the home-health industry over the administrative burdens it placed on home-health providers. Reinstating the demonstration program would keep the pre-claims review process in place but would give providers the option to select a post-payment review instead, according to a May 29 Federal Register notice seeking comment on the proposed action.

The pre-claims review process is intended to flag suspicious home-health claims and prevent them from being paid but adds another layer of paperwork for providers. Providers opting for a post-payment review have the advantage of being reimbursed without delay, but are still on the hook to submit their paperwork.

Medicare paid home-health providers roughly $18 billion in 2016, according to the Health and Human Services Office of Inspector General.

Key Date: Oct. 1

The revised demonstration will begin no earlier than Oct. 1, a Centers for Medicare & Medicaid Services spokesman told Bloomberg Law. The demonstration will last for five years and creates no new documentation requirements for providers, the spokesman said. Providers will submit the same information they would for a claims payment, but just earlier in the process. According to the CMS notice, this revised demo will take place in five states: Illinois, Ohio, North Carolina, Florida, and Texas,

The changes that the CMS made to the pre-claims review program are a modest improvement, but the process still includes a heavy paperwork burden for home-health agencies, William Dombi, president of the National Association for Home Care & Hospice, told Bloomberg Law May 30.

The CMS notice indicates that the pre-claims review program will include some standard under which home-health providers can qualify for an exemption once they achieve a high level of claims approvals, but further details haven’t been disclosed, Dombi, a Bloomberg Law advisory board member, said.

“In the original demo discussions, CMS indicated that it might take 12 to 18 months before any provider could achieve an exemption,” which would lower the value of the exemption, Dombi said.

The NAHC will continue evaluating the demonstration program as more details become available, and the organization remains particularly concerned about the chilling effect such a policy could have on patient access to care, he said.

“Part of what we’re doing is digging deep into the Medicare data to determine if Medicare beneficiaries were victims of the original project in Illinois,” Dombi said. The pre-claims review program debuted in Illinois in 2016.

Undue Burden

The demonstration program calls for a 100 percent claims review process, which places an undue burden on home-health agencies, Kirk Ogrosky, a health-care attorney with Arnold & Porter Kay Scholer LLP in Washington, told Bloomberg Law.

“Typically, 100 percent review is instituted when providers are suspected of committing fraud,” Ogrosky, a Bloomberg Law advisory board member and former head of criminal enforcement for the Department of Justice, said.

Mandating a 100 percent review across an entire category of providers is a burdensome process given that the overwhelming majority of home-health providers are honest, Ogrosky said.

“If CMS viewed this as a fraud prevention tool, then they should simply analyze the provider’s prior claims data to identify problem providers and not burden the entire sector,” Ogrosky said.

The CMS seems to be suggesting that 100 percent claims reviews are routine, Danielle Sloane, a health-care attorney with Bass, Berry & Sims in Nashville, Tenn., told Bloomberg Law. “If a Medicare contractor doesn’t have sufficient staff to timely review every single home-health agency claim, any home-health agency selecting pre-claim review would likely experience a significant payment delay,” Sloane said. Sloane has experience in representing home-health agencies facing compliance and regulatory issues.

The demonstration program seems to leave home-health providers with the unappetizing choice of reduced reimbursements for not participating or incurring major new administrative costs to submit records, withstand payment delays, and defend claims, Sloane said.

Third Option

Providers who decline both the pre-claim and post-payment review options will face a 25 percent reduction in reimbursements for claims and the possibility of a Recovery Audit Contractor review, The RACs are tasked with identifying and recovering misspent Medicare funds and are paid on a contingency fee basis.

A 25 percent payment reduction isn’t really an option for providers, as it’s likely to lead to bankruptcy, Dombi said. “If a home-health agency can handle that level of payment reduction, it probably is identifying itself to Medicare as a high-risk provider that should be subject to scrutiny,” Dombi said.

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