Home Health & Hospice Week

Medicare will eliminate advance payments altogether in 2021.

If you aren’t on top of the potential cash flow problems caused by the radical reduction to RAP payments starting in January — including some surprise pitfalls — you may be among the segment of home health agencies forced to close their doors under PDGM.

So warn multiple experts on the heels of the Centers for Medicare & Medicaid Services finalizing its plan to reduce Request for Anticipated Payment levels to 20 percent in 2020, and eliminate them altogether in 2021.

CMS is implementing the drastic change over widespread protest from the industry. In their comment letters on the July proposed rule for 2020, HHAs — particularly those that are nonprofit, small, and in rural areas — pleaded with CMS not to drastically reduce and then eliminate RAPs, warning CMS officials of closures and access risks (see Eli’s HCW, Vol. XXVIII, No. 36).

In its final rule for 2020 home health payment released Oct. 31, CMS dismisses those concerns. Instead, the agency argues that eliminating RAPs will streamline billing for HHAs and prevent consolidated billing problems for other providers.

CMS also claims that “the need for regulatory change to phase-out RAPs for existing providers is well supported by the spike in RAP fraud schemes perpetrated by existing providers.” As in the proposed rule, CMS then includes a list of RAP fraud schemes costing Medicare millions.

CMS repeats its argument that because the average time HHAs take to bill RAPs is 12 days, and billing periods under the new Patient-Driven Groupings Model are 30 days, that the advance cash is no longer necessary. The agency fails to address the many cases in which slowdowns in securing documentation — particularly from referring physicians — will push billing the final claim far past the 30-day mark.

CMS rejects many commenters’ assertion that the agency should focus on bad actors with medical review and audits rather than yanking RAPs for everyone. “CMS’s use of post payment audit and review as a means to address abuse is not an appropriate intervention to prevent fraudulent or improper behavior because these are ‘pay and chase’ solutions to a problem that demands preventive action,” the final rule maintains. “Post payment review and other auditing approaches are not always cost effective and as described in the proposed rule, they, by definition, are susceptible to significant program integrity abuses. We are moving beyond the pay and chase approach to program integrity structural changes wherever possible for all provider settings.”

Furthermore: “To base our approach to home health program integrity on a pay and chase framework simply does not achieve the protections we need to have in place,” CMS insists in the rule. “Post payment audits and other post payment recoupment processes are not an acceptable modern technological solution for ensuring proper payment in the home health environment.”

The elimination of RAPs is hardly surprising, given that CMS has been beating the drum on the topic for a few years, notes attorney Robert Markette Jr. with Hall Render in Indianapolis. But the industry had been hoping for a less “radical reduction” than what was proposed.

Twenty years ago, CMS gave home health agencies a system under which they are dependent on RAP payments, Markette says. Now it would seem only fair to give providers more time to wean off them, he argues.

All signs have been pointing to RAP elimination as inevitable, observes Joe Osentoski with Quality in Real Time in Sterling Heights, Michigan. But combined with the behavioral adjustment cut, the change is going to put vulnerable providers at risk (see related story, this page).

“The cash flow implications of a 20 percent RAP payment are going to be difficult for some agencies to withstand in the first few months of 2020,” forecasts reimbursement expert Melinda Gaboury with Healthcare Provider Solutions in Nashville, Tennessee.

Take These Mitigation Steps

Many HHAs are going to have trouble with the confluence of PDGM and RAP reduction come January, experts warn. When RAP payments not only drop to 20 percent, but drop to 20 percent of a 30-day (rather than 60-day) billing period, cash flow will slow to a trickle.

“I don’t know a lot of agencies sitting on a pile of cash they can use to make their January payroll,” Markette tells Eli. HHAs must utilize advance planning, whether that’s stockpiling cash, securing lines of credit, or other strategies to make up the shortfall.

Don’t forget: HHAs also must have enough cash set aside to pay their payroll taxes, Markette warns. Penalties coming from the Internal Revenue Service will make those from the Department of Labor or Medicare look easy, he stresses. “It can be tempting to skip paying the taxes and think you’ll catch up later,” but don’t do it, he urges.

“With 30-day billing periods, a key way for agencies to address the decrease and then loss of RAPs is pushing to get the final claim billed,” Osentoski advises. That means “getting required items and orders in the record timely.”

Rough road ahead: Speeding up that billing process “may result in some difficult agency choices dealing with physicians who are slow to sign their verbal orders,” Osentoski warns.

Bottom line: “You have seven weeks to get ready,” Markette notes. Don’t waste a second.

Newly enrolled HHAs may be better prepared for the switch. While they get no RAPs in 2020, compared to 20 percent RAPs for existing providers, they already are receiving no RAP payments under Medicare’s “enhanced oversight” policy this year.