Home Health & Hospice Week

CMS expected to overturn favorable PRRB decision on therapist compensation.

If you've filed an appeal of therapist compensation adjustments, you should prepare for a court battle or perhaps not bother.
 
That's because the Centers for Medicare & Medicaid Services administrator has reversed decisions favorable to home health agencies in 12 of 14 cases dealing with employee therapists' compensation being limited to salary guidelines for contractor therapists, according to attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, DC.
 
Since 1988, the Provider Reimbursement Review Board has ruled in favor of HHAs in all 14 cases, Hamme tells Eli. The PRRB repeatedly rejects CMS' and the intermediaries' arguments that paying employed therapists on a per-visit basis makes them subject to the salary limits for outside, contracted therapists.
 
But in all but the first two cases, the CMS Administrator has overturned the favorable PRRB decisions. At reversal, many providers decide to drop the appeal because they don't have the resources for a court battle or because the reimbursement amount at issue is too small to make litigation feasible.
 
Sure thing: However, agencies that pursue appeals in federal court come out the winner every single time, says Hamme, who currently is handling three separate cases regarding this issue. One appeals court and three federal district courts have ruled in providers' favor on this issue, and CMS settled in one case, Hamme relates. "No court has ruled in favor of the secretary," he stresses.
 
VNA Healthcare Inc. in Centralia, IL, soon is likely to have to make the decision of whether to pursue a federal court appeal. The PRRB decided in favor of the VNA's appeal in a May 13 decision (2005-D37).
 
Regional home health intermediary Cahaba GBA disallowed more than $80,000 in therapist compensation in the VNA's cost report year ending in April 1998 by applying the contractor guidelines to employed therapists' compensation, according to the decision.
 
"The decision will be overturned," predicts cost report consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. "And I assume that the VNA is going on to the courts or why bother with the appeal?" The $80,000 at issue is likely a strong enough incentive to proceed with a further appeal, Hamme agrees.

Why Keep Up the Fight?

If the PRRB and the federal court system so uniformly reject application of contractor therapist guidelines to employed therapists' compensation, why does the government keep up the fight? Cahaba "would have to lose in every court or until [CMS] told them to stop before they would quit making the adjustment," Boyd predicts.
 
CMS is keeping its options open by requiring the intermediaries to continue litigating cases on this topic, Hamme suspects. "One benefit of such an approach for the agency is that cases with relatively low dollar amounts do not get appealed by providers to court when the administrator reverses them," he points out. "There have been a fair number of such cases."
 
But CMS and the RHHIs recognize that they are fighting an uphill battle on these disallowances, and they have thrown in some extra ammunition in this latest case. In addition to the usual argument, Cahaba maintains that the VNA's therapist compensation was unreasonable and substantially out of line under the prudent buyer concept because it exceeded the outside contractor salary limits.
 
That argument "would raise the question of the exception request to the guidelines," Boyd notes. "I think none of the parties want to go there."
 
"They are now essentially arguing that the guidelines are also a proxy for reasonable cost and prudent buyer requirements, which have different statutory underpinnings than the guidelines," Hamme says.

"The PRRB ... has refused to buy this argument, saying in essence that the guidelines are not a reasonable cost analysis."
 
Cahaba also points out that the VNA's therapist compensation exceeded levels reported in the 1998 Hospital & Healthcare Compensation Service salary survey. HCS conducts salary surveys in conjunction with the National Association for Home Care & Hospice.
 
"The Board finds this analysis troubling," the PRRB says in its decision. Among other problems, the HCS survey Cahaba used to support its prudent buyer analysis is "seriously flawed" because it lacks detail, includes responses from only 30 therapists, contains data that didn't come from Medicare cost reports or other auditable documents, and contains data that isn't verifiable, the PRRB blasts.
 
The rejection of HCS surveys might have repercussions for owner and administrator compensation as well, experts note.
 
VNA Healthcare was purchased in 1999 and has become part of Alton, IL-based VNA-TIP. But VNA-TIP is unaffected by the decision because the case addresses a time period before the purchase, VNA-TIP CEO and president Gary Liebscher tells Eli.