Home Health & Hospice Week

Home health agencies are hopping mad about a payment change set to take effect next month, but the feds are standing strong on the 10 percent outlier cap.

Multiple home health agencies called into the Dec. 2 Open Door Forum for home care providers to complain about the new policy and ask how to deal with it.

Legitimate HHAs are eager to see a crackdown on fraudsters, said a representative from a Miami-area agency. But the new 10 percent cap will be hurting legitimate providers -- and their patients -- as well, he argued.

Background: In the 2010 prospective payment system update final rule, the Centers for Medicare & Medicaid Services finalized a 10 percent cap per HHA on outlier payments (see Eli's HCW,Vol. XVIII, No. 39, p. 298). The cap takes aim at fraudulent and abusive billing practices in certain areas of the country including South Florida.

The cap will disproportionately affect minority patients, the caller insisted. That's one reason that outlier billing is so high in certain areas, because of the concentrations of Hispanic and black patients who are more likely to have diabetes and thus need daily visits for insulin injections.

Another agency asked CMS officials what to do with patients whose care will no longer be paid for with outliers. "Do we send them to the hospital?" the agency rep asked.

CMS maintains that the policy will mainly affect fraudulent and abusive providers. Only areas with "severe program integrity issues" have many agencies with high ratios of insulin-dependent diabetic patients requiring daily visits, according to a new question and answer CMS posted on its home care Web site.

Most agencies nationwide have less than 1 percent outlier payments, CMS notes in the Q&A. "We find it highly suspicious that outlier claims could legitimately be as high of a percentage as we are seeing in certain areas of the country," the agency says. "Suspicious, excessive billing of outlier claims is the reason behind the new outlier policy that includes the 10 percent cap."

Furthermore: Outside of these fraud-andabuse zones, CMS expects only about 2 percent of agencies to be affected by the cap, the Q&A continues. Most of those agencies are in urban areas where beneficiaries can go to another agency for service, CMS maintains.

The 10 percent cap should still help agencies serve these patients. "The outlier policy in the HH PPS was NEVER intended to fully compensate HHAs for episodes that incur unusually high costs due to patient home health care needs," CMS notes. "Rather, the intent of the outlier policy is to mitigate the negative financial impact that unusually high cost patients have on HHAs."

CMS does not expect to see care access issues arising from this policy, CMS's Lori Anderson insisted in the forum. But the agency will be monitoring the new policy just in case.

Abilene, Texas-based financial consultant Bobby Dusek also expects most agencies to be unaffected by the policy. "The majority of agencies will not be adversely affected by the cap," Dusek tells Eli. "Ten percent is large enough for most agencies who only have an occasional episode that qualifies as an outlier."

But of those agencies that are affected,some will be legit, Dusek predicts. "I do not believe that only fraudulent agencies will be affected by the cap," he says. "There are good agencies, who follow all the rules, who still have a large number of diabetics."

It won't just be the high-suspicion areas that are affected either, expects consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, Calif. HHAs in places like Utah will also feel the sting of the new outlier restriction.

HHAs at risk of seeing payment decreased by the cap should start taking steps now to mitigate it, the experts advise (see related story, this page).

Bright side: At least the outlier change has freed up outlier pool money to be spread out amongother services, Boyd notes.

The current 5 percent outlier pool will shift to 2.5 percent in 2010, notes consultant Melinda Gaboury with Healthcare Provider Solutions in Nashville, Tenn. The remaining 2.5 percent went back into the base rate for this year. Without that change, HHAs would be seeing a cut in rates in 2010, Gaboury notes.

HHAs calling into the forum were very confused about when the cap would start taking effect, and CMS didn't do much to clear up the confusion.

The cap will apply to claims paid at the 2010 rate, CMS says in the Q&A. That means episodes that begin in 2009 and end any time after Jan. 1 are affected, Dusek explains.

The new 10 percent cap will apply on an ongoing basis. That means at any time, the system will calculate how much of your reimbursement is due to outliers and then limit that amount if it exceeds 10 percent.

For example: If you see 20 percent of your payments in outliers in January, the system will reduce the outlier portion until it meets 10 percent. Then if you have none of your payments in outliers for February, some of the previous month's 20 percent can be reinstated until you reach the 10 percent limit.

CMS will reconcile claims quarterly to make payments that were initially withheld due to the cap, explained CMS's Wil Gehne in the forum.

In other words, "you could exceed the cap in the first few months of 2010, but as you then reduced your outlier population through attrition and non-acceptance of new outlier patients over the course of the year, you could realize full outlier payments over the course of the year," explains the

National Association for Home Care & Hospice.

Worries that agencies will be unable to identify their cap limitations are unfounded, Gehne said. The claims system will use reason code 45 to show when a claim is limited by the cap. For the quarterly reconciliation, the system will use the reason code and a type of bill 32I or 33I.

"I believe these payments will be very clearly identified and fairly easily posted to accounts receivable," Gehne told forum participants. More details about the process will be in a forthcoming transmittal, Gehne promised.