Home Health & Hospice Week

The Centers for Medicare & Medicaid Services still plans to reach into your pocket for uncollected PEP funds, but it'll take longer to clean you out.

In a June 5 meeting with national trade associations, CMS proposed extending the recoupment schedule for partial episode payment (PEP) adjustments from the originally proposed six-to-nine months to 24 months, reports the National Association for Home Care & Hospice. The claims processing system failed to make PEP adjustments from the inception of the prospective payment system in October 2000 through April 2003.

The associations urged CMS to give home health agencies a one-month "pause" to learn about PEPs and prepare for the collections, says Bob Wardwell with the Visiting Nurse Associations of America.

About 192,000 claims will undergo PEP adjustments, at a cost of $250 million to HHAs, CMS told the association representatives.

CMS also plans to give agencies a method to find out right at the start how many claims and how much reimbursement it will recoup over the two years, Wardwell says. The process probably will be electronic only, NAHC adds.

CMS has been threatening PEP recoupments for more than a year, but didn't fix the problem until April. It planned to commence PEP takebacks in May, but after NAHC threatened a lawsuit the agency backed down and agreed to work with association reps on the issue.

The massive amount of uncollected PEP funds piled up because the claims processing system failed to make adjustments when a patient transferred from one agency to another within a 60-day episode or the agency readmitted the patient during the episode. CMS erroneously paid both agencies for full episodes in those cases.

The takebacks will affect HHAs differently, says Wardwell. Some agencies will see lots of PEPs while others will see relatively few, he predicts.

Many agencies are likely to disagree with CMS that the episode deserved to be PEP'd. In those situations, CMS has said agencies should go through "normal" dispute resolution procedures.

When HHAs can't agree with another agency on which one should have been able to rightfully bill for the patient in an episode, they should look to the regional home health intermediary to resolve the conflict, CMS told association reps in the June 5 meeting.

When he helped design the prospective payment system as a former CMS official, Wardwell expected agencies to work out their own informal agreements on taking care of PEPs, he tells Eli. But because the claims processing system failed to make the adjustments, agencies didn't know there were problems and didn't develop solutions for them.

Now, two-and-a-half years into the system, the sometimes staggering PEP recoupments are taking agencies by surprise. Because providers didn't have a chance to "evolve" their own PEP processes, it's probably time for CMS to step in with some guidance and rules on PEP disputes, Wardwell says. RHHIs don't appear prepared to handle the expected disagreements.

Meanwhile, association reps haven't given up on their efforts to persuade CMS to simply drop some of the PEP debt. The protracted delay in recouping the funds means "there is an argument to be made for forgiveness" for at least some of the PEP funds, Wardwell maintains.

"Medicare rules allow for reopening of claims for any reason for up to one year," NAHC notes. Any PEPs from before that time period may be off limits because CMS doesn't have the required "good cause" to reopen them, the association argued at the meeting. "'Good cause' does not exist where CMS has the ability to evaluate the claim within the 12 month reopening period but fails to do so," NAHC contends.

CMS is likely to make an official announcement and set an implementation date for PEP takebacks soon, Wardwell expects. "They don't want to sit on all that debt to the government," he says.

In the meantime, a CMS official in the June 4 Open Door Forum told listeners to rely on their trade associations for news of the negotiations.