Home Health & Hospice Week

An attempt to classify employee salaries as bonuses under the previous year fell flat in front of the Provider Reimbursement Review Board.

In 1998, a new owner purchased Lansing, IL-based All Care Home Health Inc. With the interim payment system looming on the horizon, the only way to keep key staff was to maintain their salaries at current levels, All Care said, according to PRRB Decision No. 2003-D28. And the only way to preserve those salaries under harsh IPS limits was to claim payments to staff from the first few months of 1999 as bonuses under the fiscal year 1998 cost report.

Certain All Care employees received these "bonus" payments in lieu of regular salaries, noted regional home health intermediary Palmetto GBA. The bonuses were the same amount as salaries. The RHHI disallowed about $103,000 in bonuses.

"The same dollars cannot be both bonuses and regular salary at the same time," Palmetto argued. The RHHI dismissed the measure as an "accounting contrivance" to "shift normal FY 1999 operating expenses into the 1998 cost report."

But Medicare regulations don't offer guidelines or rules on bonuses, only when they must be liquidated, All Care argued.

The Board sided with Palmetto, maintaining that a bonus must be in addition to a regular or expected salary, and upheld the disallowance.

All Care's attorney didn't respond to a request for comment.