Home Health & Hospice Week

Misconceptions over 75-day rule lead to PRRB split decision.

If you want to claim your executive compensation, you'd better cash that check on time.

High Country Home Health Care Inc. recently learned that lesson the hard way in a Provider Reimbursement Review Board decision issued Jan. 13 (2005-D23).

High Country's Administrator held checks for herself and the assistant administrator "in her desk drawer" while waiting on approval of a bank loan, according to the decision. Thus, while the HHA's fiscal year ended June 30, 1998, the checks didn't clear the bank until Sept. 23 - beyond the allowable time limit of liquidation within 75 days after the cost report period ends.

Laramie, WY-based High Country argued it didn't know about the 75-day rule, and that such a substantial change should have gone through formal notice and rulemaking procedures. But the Board sided with intermediary Cahaba GBA, noting the rule was included in a February 1996 revision to the provider manual and maintaining the change was clear.

High Country also argued that the portion of the compensation that was taxes should have been counted as short-term liabilities, which the agency has one year instead of 75 days to liquidate. The Board shot down that argument as well, ruling that the entire gross pay amount counted as compensation.

The Board also upheld Cahaba's disallowance of about $94,000 in legal and accounting fees for High Country in FY 1998. Under Medicare rules, the HHA had one year from the end of the fiscal year to liquidate the costs. High Country filed for an extension 17 months after the period ended, but that was too late, Cahaba said.

The Board agreed: "The Provider's [extension] request was submitted ... long after the one-year limit."

High Country Administrator Marilyn Pedrick says the agency is asking the CMS Administrator to review the PRRB decision. But if the decision doesn't get overturned, High Country won't pursue the matter on appeal in federal court. "The legal fees are just too high to do that," Pedrick tells Eli.

Regular Payroll Checks Work Just Fine

The PRRB looked more favorably on an argument from Family Home Care Inc. in a decision issued Jan. 7 (2000-D19). Metairie, LA-based Family Home Care accrued about $14,000 in owner salaries for the fiscal year ended June 30, 1998.

When intermediary Palmetto GBA tried to disallow the costs due to the 75-day rule, Family Home Care said it liquidated the accrued costs through its regular payroll checks at the beginning of FY 1999, according to the decision.

Palmetto protested that those payments were for 1999 work hours, but the Board sided with Family Home Care: "Although the Intermediary contends that regular payroll checks cannot be used to liquidate owners' accrued compensation, the Board cannot find any Medicare rule, regulation or manual reference that supports the Intermediary's position."

The payroll-for-accrued-costs payment structure "was typical of many HHAs under cost reimbursement," says consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. "It was acceptable to most auditors."

The key was documenting the payment plan ahead of time "so that auditors would not say it was a sudden idea to reverse the proposed adjustment," Boyd notes.

"We are thrilled with the decision," says Elaine Bergeron, director and co-owner of the HHA. Persist-ence has paid off in this case, which has dragged on for years, Bergeron tells Eli.

The Centers for Medicare & Medicaid Services Administrator still has a chance to review - and overturn - the ruling, however, notes Family Home Care's counsel, John Jansak with Harriman, Jansak & Wylie in Silver Spring, MD.