Home Health & Hospice Week

4% of home health claims in review lacked valid FIPS code.

Home health access in rural areas is a real problem, as evidenced by recent MedPAC meeting discussions, among other things. But a new OIG report shies away from acknowledging that impact of the home health rural add-on phase-out.

Recap: The Medicare home health rural add-on began at 10 percent, then was reduced to 5 percent in 2004 through 2006, recounts the Home Care Association of New York State on its website. Rural agencies received no add-on from 2007 until March 31, 2010, when Congress reinstated the add-on at a lower level of 3 percent, HCANYS notes.

After criticism from the Medicare Payment Advisory Commission and other quarters, Congress passed the Bipartisan Budget Act of 2018, requiring CMS to implement a new methodology that varied the add-on amount depending on the service utilization and population density of the rural county. And the law required CMS to reduce and phase out the add-on gradually for all categories, ending in December 2022 (see related chart, below). In its recent omnibus budget package, which President Biden signed into law on Dec. 29, Congress did extend the 1 percent add-on for low utilization counties for one more year — until December 2023 (see HHHW, Vol. XXXII, No. 1).

Result: In 2022, about 17 percent of counties that originally received the rural add-on were still receiving it — at the lower 1 percent rate.

At least in part in response to industry concerns over the phase-out, Congress mandated the HHS Office of Inspector General to assess and report on the impact of the add-on change.

HHAs hoping for ammunition to bolster their argument that a rural add-on is needed to prevent access problems will likely be disappointed with the OIG’s conclusions in the report.

But the watchdog agency does list some stats that could indicate potential access impact. From calendar year 2016 to 2021:

• The number of beneficiaries served by home health decreased by more than 13 percent in urban counties, more than 20 percent in the “high utilization” rural category, and more than 10 percent in the “all other” rural category;
• In contrast, the number of beneficiaries served in the “low population density” rural category increased by less than 1 percent; and
• The number of home health episodes decreased by more than 20 percent in urban counties, more than 25 percent in the “high utilization” rural category, and more than 16 percent in the “all other” rural category.
• In contrast, the number of episodes fell by a somewhat smaller 10 percent in the “low population density” rural category.

OIG Cites PDGM, COVID

If you think those falling utilization patterns should indicate the impact of the add-on’s loss, the OIG says you should think again.

“In addition to the rural add-on percentage, there are many variables during the audit period that may have impacted utilization of services,” the OIG contends. The switch to the Patient-Driven Groupings Model and the COVID-19 Public Health Emergency are the biggest two, the OIG says.

Another factor is labor problems. “Insufficient staffing during the pandemic may have impacted the ability of HHAs to accept new patient referrals, which could affect beneficiary utilization of home health care,” the OIG says in the report.

Industry proponents point out that reduced reimburse-ment would contribute to trouble recruiting and retaining staff, but the OIG doesn’t make that connection.

Conclusion: “Because of these variables, we could not determine whether the decrease in utilization of home health services was directly related to the new rural add-on methodology,” the OIG says.

Urban HHAs Are Getting A Pass On FIPS Code Requirements, OIG Criticizes

While the OIG mostly ducks the access issue, it focuses on another area that could make agencies’ lives harder.

Under the audit, “providers submitted an invalid or missing FIPS code on 4 percent or 1,082,171 claims, totaling $2.7 billion,” the OIG notes.

Background: “CMS has instructed providers to use value code 85 to report the Federal Information Processing Standards (FIPS) code for the location where the home health service was provided. The FIPS code is a five-digit code that corresponds to each county in the United States,” the OIG explains. “CMS directed MACs to use the reported FIPS code to determine the rural category and the rural add-on percentage, if any, that applies. CMS instructed MACs to return claims to providers for correction when the FIPS code is missing or invalid.”

The problem: “The decision logic in the HH Pricer [software] is not currently designed to check for missing FIPS codes unless the claim contains a rural CBSA,” the OIG says. “CMS stated that it designed the HH Pricer logic to reject only rural claims with a missing or invalid FIPS code, as those errors would affect payment.”

Specifically, “the HH Pricer logic checks for a FIPS code when the claim contains a rural CBSA code (i.e., beginning with 999XX), and only those claims with a rural CBSA and missing FIPS code are returned to providers for correction,” the OIG explains. “As a result, the FIPS data is incomplete for 4 percent of home health claims,” it says.

The OIG wants CMS to fix that perceived error in the Pricer, and also educate HHAs about their responsibility to include valid FIPS codes on claims.

CMS is happy to do the educating, it says in comments on the report. “CMS will re-educate providers on the requirement for all home health claims to be submitted with the FIPS code for the county where the service was provided,”

CMS Administrator Chiquita Brooks-LaSure says in the agency’s response letter.

HHAs will be responsible for submitting valid FIPS even after the add-on expires, Brooks-LaSure notes in the letter published before Congress extended the add-on expiration date to December 2023.

But CMS isn’t going to change the Pricer, Brooks- LaSure makes clear. “While CMS strives to ensure accurate and complete data, CMS is cognizant of the burden on providers to submit information on claims and therefore limits claims edits to items that directly impact payment,” the letter notes.

Enforcing an enlarged edit “may delay prompt payment for eligible home health services and would not affect the payment amount,” CMS tells the OIG.

The problem is minor anyway, CMS says. The audit found that 96 percent of claims were submitted with a valid FIPS code, and in the report the OIG notes that HHAs improved in their submission of valid codes over the years of the audit period.

The OIG sticks by its guns on the recommendation, however. The BBA law “requires that no payment shall be made for home health services unless the claim contains the code for the county where the service was furnished. There is no exemption to this requirement for services furnished in urban areas,” the report counters.

Bottom line: “We maintain there is a need for more robust claim processing controls to ensure that all claims contain a valid FIPS code,” the OIG insists. “Without complete FIPS data, Congress and other stakeholders may not have accurate information needed to perform analysis of service utilization and make decisions about future rural add-on payments.”

Note: The 25-page report is at https://oig.hhs.gov/oas/reports/region5/52000031.pdf.