Home Health & Hospice Week

Rollback to 2005 rates hits agencies.

If you're a little confused about your Medicare payment rates, just wait--it could get worse.

The home health agency rate changes mandated by the eleventh-hour Deficit Reduction Act, coupled with a lack of information issued by the Centers for Medicare & Medicaid Services or the regional home health intermediaries to HHAs, are breeding perplexity among providers.

"Any time the rates change there seems to be a general wave of confusion among providers," observes consultant M. Aaron Little with BKD in Springfield, MO. But this transition is especially problematic because it involves held claims, reprocessed claims, overpayments and underpayments.

While CMS hasn't issued instructions to providers, it has sent a Feb. 10 transmittal to the RHHIs detailing some of the DRA changes.

After President Bush signed the DRA into law Feb. 8, CMS instructed the intermediaries to stop holding home health and other provider claims, RHHI Associated Hospital Services explains in a message to providers. Intermediaries began holding the claims as soon as Congress passed the DRA Feb. 1 (see Eli's HCW, Vol. XV, No. 6).

New rates: Intermediaries are in the process of releasing all held claims and paying them at the new, DRA-mandated payment rates, a CMS official tells Eli. That's 2005 levels for non-rural claims, with a prospective payment system episodic base payment rate of $2,264.28, CMS notes in Transmittal No. 211. For claims for patients in rural areas, that's a 5 percent add-on to 2005 rates for an episodic base payment rate of $2,377.28. (See box, this page, for per-visit rates.)

Bottom line: The rate change means HHAs in rural areas will see a 2 percent increase over the 2006 rate increase they had been receiving prior to Feb. 1, Little notes. Agencies in urban areas will see a 3 percent decrease from the rates they had been receiving.

"All agencies are taking a major hit with the rollback to 2005 rates," laments Bob Wardwell with the Visiting Nurse Associations of America. "Even rural agencies that benefit from temporary relief will be falling behind in the longer term, as the rural add-on is only for one year and does not compound."

"This kind of a freeze and rollback undercuts the real budgets of agencies that were developed months ago," protests Wardwell, a former CMS top official. "Now drastic measures have to be taken to stay out of the red. Real people are getting fired, real services are being cut back, real patients will not be getting services."

Brace For Claims Reprocessing

Intermediaries are taking different amounts of time to release the held claims, the CMS source notes. Cahaba GBA reports that it already has released all held claims, while United Government Services expects to finish releasing all claims by Feb. 22 or so, RHHI representatives say.

Once intermediaries have taken care of held claims, they'll turn their attention to reprocessing claims already paid at the higher 2006 level before Congress repealed the update. Palmetto GBA plans to reprocess more than 66,000 HHA claims and 650 hospice claims, the intermediary says. Palmetto expects an average $50 per claim adjustment across all provider types.

If the transition to the DRA rates has been confusing, just wait until the over- and underpayment assessments start, fears Wardwell. "The adjustment process is going to be messy any way you cut it," he tells Eli. RHHIs will have to cancel the whole claim and then reprocess it under the new rates.

"Remits and revenue recognition are challenging as it is under PPS," Wardwell notes. "These cancellations and reprocessing efforts should challenge the best financial managers out there to figure out what is going on with the money."

Up until now, many agencies haven't really noticed their claims being held, notes Debby Cox with billing company Astrid Medical Services in Corpus Christi, TX.

But that will change, Little predicts. "Many questions will start to flood in once agencies see their claims reprocessing."

The good news is that the system will reprocess the claims automatically, Little cheers. "Agencies don't need to do anything different with their billing."

And many agencies will have only modest overpayments due, since intermediaries will reprocess only January's claims, Cox notes.

Tip: HHAs should verify that the reprocessed claims are paid at the correct rate, Little recommends.

RHHIs have until July to reprocess all the claims, CMS says in the transmittal. But the intermediaries expect to process the overpayments for non-rural claims and the underpayments for rural claims much more quickly than that, RHHI officials tell Eli. 

Note: CMS' transmittal is at www.cms.hhs.gov/Transmittals/Downloads/R211OTN.pdf.