Home Health & Hospice Week

HHA will appeal physical therapy compensation in federal court.

Two home health agencies have found themselves on the wrong end of a Provider Reimbursement Review Board reversal, with a federal court case the only way out.
 
The Centers for Medicare & Medicaid Services recently reversed two different PRRB decisions that favored HHAs that paid their therapists per visit. CMS applied contractor payment limits to directly employed physical therapists in a string of PRRB decisions, including the most recent ones involving Wyomissing, PA-based Berks VNA and Stroudsburg, PA-based Pocono Medical Home Care.
 
In both cases, intermediaries imposed contractor salary equivalency guidelines to the agencies' directly employed PTs because the HHAs paid the therapists per visit. The per-visit payments made the PTs' compensation subject to the "under arrangement" guidelines, the HHAs' intermediaries argued.
 
The adjustments cost Berks more than $300,000 (see Eli's HCW, Vol. XIII, No. 31, p. 245) and Pocono $30,000 (see Eli's HCW, Vol. XIII, No. 29, p. 228). But the PRRB overturned those adjustments when the agencies argued their therapists were bona fide employees and not subject to the guidelines meant for outside, contracted therapists.

CMS Trots Out Same Arguments

As expected, however, the agencies' victories have been short lived - CMS Administrator Mark McClellan has reversed the PRRB decisions, according to recently released decisions. As with previous PT compensation decisions, the Administrator said the payment method (per visit) - not the employment relationship - qualifies the compensation for "under arrangement" status, and thus subjects it to the contractor guidelines.
 
And just because an employee meets the Internal Revenue Services' definition of bona fide employment doesn't mean the same standard applies for CMS, the Administrator argues. Directly employed staff paid per visit can still be considered contractors under CMS' own definitions, the agency maintains.
 
These are the same arguments CMS has served up in earlier reversals of PRRB PT compensation decisions, experts note.
 
Both Berks and Pocono were expecting the reversals, their administrators have told Eli. The expectation was well warranted, says consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. "CMS will never stop overturning the PT compensation decisions," Boyd predicts.
 
CMS appears to hope that when it reverses such PRRB decisions, HHAs will give up instead of electing to pursue a costly challenge in federal court, notes reimbursement consultant Rick Ingber with ZA Consulting in Jenkintown, PA.
 
But if enough reimbursement is at stake, an appeal is well worth agencies' while, judges attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, DC. Hamme is representing an agency appealing a similar case.
 
Federal courts have not ruled against providers on this issue, and CMS has settled similar cases instead of going to court, Hamme notes. "It's a pretty sure thing that you're likely to get something out of [an appeal]," he advises.
 
"You have to conduct a cost benefit analysis" to determine whether a legal battle is worth the expense, Ingber advises.
 
Berks has filed an appeal in Philadelphia federal court, says the agency's counsel, E. Thomas Henefer. The amount of Berks' adjustment makes the cost of a federal court battle worth the risk for the agency that served more than 5,300 clients with a $10.5 million budget in 2003, president and CEO Lucille Gough told Eli back when the PRRB issued its decision.
 
Henefer expects the case to move quickly, because the judge likely will review it based on the record already compiled, he says.