Home Health & Hospice Week

IRS, tax court in error, appeals court rules.

Sta-Home Health Agency has had a big burden lifted from its shoulders--a $70 million burden, in fact.

The U.S. Court of Appeals for the Fifth Circuit has reversed a ruling of the U.S. Tax Court and removed a $69.7 million tax bill on the home health agency and its executives, according to a July 11 decision (No. 02-60192).

The dispute came about when Sta-Home converted from tax-exempt status to for-profit status in 1995. The Internal Revenue Service and HHA owners, the Caracci family, disagreed over whether the family had received any gain in the conversion. In 1999, the IRS issued $250 million in deficiency notices to the family.

Slapped down: "The Tax Court made numerous factual and legal errors in valuing the assets transferred in the conversion from exempt to nonexempt status," the appeals court says in the ruling. Those included letting the IRS fail to prove correct assessment of taxes and valuing the agency's assets and liabilities.

Sta-home experienced net losses for years before the conversion. The Caraccis "did not receive any 'net excess benefit' and therefore are not liable for the excise taxes assessed," the court says.

The decision is online at www.ca5.uscourts.gov/opinions/pub/02/02-60912-CV0.wpd.pdf. • You'd better be ready to stand behind your claims that contain one skilled nursing visit and at least one occupational therapy visit. In an ongoing audit, regional home health intermediary Cahaba GBA denied two-thirds of such claims. From January to March 2006, Cahaba partially or wholly denied 110 of 167 such claims selected by edit.

Reviewers most often found that "the one-time nursing visit was not covered," Cahaba explains in an email message to providers. "To be covered as skilled nursing services, the services must be intermittent, require the skills of a nurse, and must be reasonable and necessary to the treatment of the patient's illness or injury," the intermediary reminds providers.

And if the nursing visit was the only one besides the OT visits, reviewers often disallowed the OT visits as dependent services, Cahaba says.

"Routine nursing evaluations post-hospitalization to check medication management, home safety, etc., or nursing visits to fill out the OASIS are an administrative cost, and are not billable," the intermediary reminds providers. • Medicare Part B premiums will hit almost $100 next year, Centers for Medicare & Medicaid Services head Mark McClellan said July 11, according to the Cleveland Plain Dealer. The increase to $98.40 will be an 11 percent jump. • Durable medical equipment suppliers in Pennsylvania are getting to know competitive bidding. The Pennsylvania Department of Public Welfare is hosting a series of town meetings to discuss "selective contracting" for DME and supplies under the Medical Assistance Program fee-for-service delivery system. The first meeting was held [...]