Home Health & Hospice Week

Board limits directors' compensation.

A South Carolina home health agency struck out on two counts in front of the Provider Reimbursement Review Board, and the failure cost it tens of thousands of dollars.

Myrtle Beach, SC-based Incare Home Health Care and Services Inc. claimed the full costs for supplies it purchased from Medi Home Health Agency Inc. for fiscal year 1995, according to a Feb. 5 PRRB decision, Incare Home Health Inc. v. Palmetto (No. 2004-D11). But Medi was owned by Incare's owner and manager, Medical Services of America Inc. in Lexington, SC.

Because Incare and Medi were related organizations through Medical Services, Palmetto GBA disallowed the full costs of the supplies and adjusted the cost report amount downward to the supplies' acquisition cost.

Similarly, Palmetto disallowed related organization supplies for Medi in another recent PRRB decision (see Eli's HCW, Vol. XIII, No. 3). That HHA, Tri-County Home Health Care and Services Inc., is Incare's sister corporation, says attorney J. Scott McDearman with Grant Konvalinka & Harrison in Chattanooga, TN.

Two more connected group appeals on the related party supplies issue will be coming before the PRRB, says McDearman, who represented Incare and Tri-County before the Board.

Medicare regulations allow an exception to the related organization rules if the related organization meets certain standards, including that a substantial part of its business is conducted with outside parties. Incare argued that was the case with Medi.

But the PRRB rejected the idea, saying Incare didn't furnish documentation proving its assertion. "The related party vendor's sales of routine and non-routine supplies were commingled with its sales of [durable medical equipment] in such a way that it was impossible to determine the amounts of supply sales to unrelated parties," the Board said.

The supplies disallowance was "in the six figures," McDearman reveals.

Incare also was disappointed on a $17,100 disallowance related to its Board of Directors. Palmetto reduced Incare's fee to $100 per hour for actual time spent in board meetings, according to the decision.

Incare argued its board members spent time outside of meetings on their duties. And it produced a compensation study to justify its higher payment rate.

But the Board rejected the study as too vague and said Incare failed to furnish documentation of the directors' outside activities to justify the payments.

Incare won't be taking the appeal any further, since the decision was based on lack of documentation, McDearman says.

It's Not Fair, But It's the Rule

Meanwhile, the PRRB thwarted an Indiana HHA's attempt to secure payment for clerical services to home health patients.

Preferred Home Health Care--Vincennes and Preferred Home Health Care--Lafayette submitted nearly $33,000 in clergy wages and benefits paid at both locations in 1996, according to a Feb. 3 PRRB decision (No. 2004-D10). Palmetto denied the costs, since clerical services are not a covered home care service.

Preferred argued that it wasn't fair for clerical services to be covered in other settings such as hospices, hospitals and nursing homes, but not home care. "To deny the chaplain services is negligent," Preferred CEO Jackie Steuerwald tells Eli.

The Medicare law doesn't say anything about excluding chaplain services from HHA costs, Steuerwald protests. The Board acknowledges that fact, but says "because pastoral care is specifically allowed as a covered service in some provider settings, the silence of the regulations with regard to pastoral care furnished by HHAs is a cognitive omission of that service from Medicare coverage."

That is purely the Board's interpretation, Steuerwald maintains. And even if Medicare doesn't cover it outright as a covered service, it should include it in overhead, like a dietitian's costs, she contends.

In upholding the denial, the Board cited a 1980 letter about the issue from the then-Health Care Financing Administration. "In a home health setting, home visitations by clergy to patients have traditionally been performed by clergy who reside in and serve members of their community. For home health agencies to incur additional costs to provide the services of clergy when these services are available through the normal home setting is not necessary to the provision of home health services," HCFA says in the letter.

Preferred, which has about $5 million a year in revenues, won't take the appeal to the court due to financial limits, Steuerwald says.