Home Health & Hospice Week

Tip: Include supplies charges on all claims, including LUPAs.

Nailing down the details of prospective payment system refinements is still a challenge halfway through 2008, but now you have one more piece of the PPS puzzle.

In a recent memo, the Centers for Medicare & Medicaid Services for the first time makes clear that nonroutine supplies (NRS) payments are prorated for episodes that are also prorated by the partial episode payment (PEP) adjustment.

"For episodes beginning on or after January 1, 2008, the non-routine supply payment amount is ... subject to this proration on a basis of days," CMS explains in May 15 Transmittal No. 1505 (CR 6027).

"This is the first time I remember reading that the NRS would be adjusted for PEPs," cheers reimbursement consultant Melinda Gaboury with Healthcare Provider Solutions in Nashville, TN. While it would be nice for providers to receive the entire NRS payment for a PEP'd episode, it's best to know what reimbursement you're really receiving.

Home health agencies shouldn't be surprised to see this clarification, says reimbursement expert M. Aaron Little with BKD in Springfield, MO. It makes sense for the NRS payment to be prorated for a PEP along with the regular episode payment.

Beware: HHAs should be prepared for reimbursement adjustments related to these prorated NRS payments, cautions clinical consultant Judy Adams with LarsonAllen based in Charlotte, NC. This is "yet one more group of payments that will need adjustment," Adams says. HHAs are already in for major adjustments for M0110 early/later episode sequencing problems, among other PPS glitches.

CMS plans to fix those lingering PPS problems in its July system update, then start correcting erroneous payments. "The latter part of this summer and fall will be a real challenge for HHAs as all of the adjustments are made for home health episodes for 2008," Adams predicts. "Agencies will need to carefully monitor those adjustments to be sure the agency has received the correct adjustment and payment."

Those adjustments will also slow down cost reporting for fiscal years ending June 30, Adams adds. And determining true revenue for the cost report year will also be delayed.

The good news: "At least they will finally be able to resolve all of their episode payments--both overpayments and underpayments," Adams allows.

More good news: NRS proration adjustments should be minimal, since the claims system has been prorating the payments since just a few weeks after PPS was implemented, a CMS official tells Eli. The NRS proration mechanism has been in place since late January or early February.

"This transmittal is just making the manual consistent with what is already happening," the CMS staffer explains.

Don't Get Lazy With NRS Charges

HHAs aren't receiving any NRS payment at all for another PPS adjustment--the low utilization payment adjustment (LUPA), Gaboury reminds providers. But agencies still should be sure to include NRS charges on their LUPA claims, she urges.

"We can't change their mind about not paying if we don't give the information to show how much we are spending," Gaboury points out.

Note: The transmittal is at www.cms.hhs.gov/Transmittals/downloads/R1505CP.pdf.