Home Health & Hospice Week

Recoupments not as gradual as promised. 

You could be the next home health agency hit by a problem with partial episode payment takebacks - an error that has cost one agency a half million dollars.

After numerous delays, the Centers for Medicare & Medicaid Services and its intermediaries started recouping money from HHAs in August for missed PEP adjustments. The claims processing system failed to make many PEP adjustments in the first two-and-a-half years of the prospective payment system.

CMS promised agencies their PEP takebacks would be made gradually over a 24-month period (see Eli's HCW, Vol. XII, No. 26, p. 202). But when VNA Care Network in Worcester, MA checked on the progress of its recoupments in the first few months of the process, it was shocked to discover 90 percent of the projected takebacks - $500,000 - were made in just the first two months, says VNA Care Vice President for Finance Pierre Henry.

The Visiting Nurse Association of Boston found itself in a similar situation, with a whopping 60 percent of its projected PEP recoupments - $300,000 - withheld in the first few months of the process, says VNAB Vice President of Finance Ken McNulty. Spread out evenly over two years, the system should have been recouping only a little more than 4 percent of their backlogged PEPs per month.

Both VNAs had to borrow on their lines of credit due to the unexpected slash to their cash flow. "It's costing us 3.5 to 4 percent" on the borrowed funds, Henry tells Eli.

When they first discovered the problems, the VNAs made numerous calls to their regional home health intermediary, Palmetto GBA, to no avail. But once Visiting Nurse Associations of America VP for Regulatory and Public Affairs Bob

Wardwell stepped in, CMS and Palmetto promised to get the situation resolved.

But at press time, neither Henry nor McNulty had heard a definitive answer on how the problem will be rectified, they said. Palmetto and CMS say the affected providers will see partial refunds of the recoupments and suspensions of any further takebacks for a while, says Wardwell, a former CMS official. But exactly how much Palmetto plans to refund and when remains in question. "I'll believe it when I see the check," Henry says.

The problem arose when the "random" selection of claims for recoupment was based on patients' health insurance numbers, which in turn are based on their social security numbers, Wardwell explains. The system began to take back money for patients with SSNs that began with zero - those in the New England area. The VNAs are two of only a handful of Massachusetts agencies served by Palmetto as RHHI, and their patients with low SSNs apparently were first in line for takebacks.

But for some reason, it's been hit or miss so far, with only about 10 providers reporting problems with the mass takebacks, Wardwell says. That doesn't rule out similar problems as the recoupment process continues. It is "hard to tell if it's fixed or still a slow-motion crash," Wardwell notes.

RHHI United Government Services says it was afraid that a truly random process for selecting PEP claims to process might result in some HHAs seeing significant recoupments early on. Thus, it added a requirement to the process that limits each HHA's recouped PEP claims to 10 each week.

UGS and RHHI Cahaba GBA say agencies that are burdened by too many PEP takebacks should contact their customer service reps, who will work with them to resolve the problem.

HHAs served by RHHI Associated Hospital Service of Maine haven't seen such hardships, because AHS accidentally recouped most of the PEP funds at the outset of the process, then refunded them and now is taking them back at a steady rate of about 5 percent a week.

Savvy HHAs should keep an eye on PEP recoupment rates to make sure they don't run into problems with the takebacks being made all at once.

In the meantime, VNA Care with $38 million in annual revenues and VNAB with $40 million in annual revenues are hoping for good news from Palmetto. They would like to see most of the takebacks refunded, followed by the promised gradual recovery, they say.

Palmetto didn't comment for this story.