Home Health & Hospice Week

Victory is a sure thing, experts say.

Home health agencies are planning to fight a Centers for Medicare & Medicaid Services' decision that takes away hundreds of thousands of dollars from past years' Medicare reimbursement.

Potomac Home Health Care in Rockville, MD is the latest in a string of HHAs to win a favorable ruling from the Provider Reimbursement Review Board over physical therapist compensation.

Regional home health intermediary Cahaba GBA denied about $45,000 and $71,000 in PT compensation costs in Potomac's 1995 and 1996 cost reports, respectively, according to the Sept. 27 decision (Nos. 98-1725; 99-2325 and 02-1682).

The Board cited "the decisions of numerous courts that have heard this legal dispute" in overturning the disallowances, which the RHHI made by applying Salary Equivalency Guidelines for outside contractors' pay to compensation for bona fide PT employees.

The Board also shot down Cahaba's argument that the compensation violated prudent buyer guidelines. "SEGs should not be used in place of a prudent buyer analysis," the PRRB stated.

"The PT case is business as usual," notes James Plonsey with Medicare Training & Consulting, referring to the many similar decisions the Board has handed down before.

"The RHHIs have been uniformly consistent in the treatment of staff therapists paid on a per visit basis," says consultant Mark Tsiames with Simione Consultants in Hamden, CT. "The PT issue has been addressed at the federal district court level," he notes.

CMS Reverses Favorable Decisions

But the string of favorable PRRB and federal court decisions on this topic hasn't kept CMS from enforcing its SEG policy. The CMS Administrator recently reversed a similar PRRB decision restoring $80,000 for VNA Healthcare Inc. in Centralia, IL (see Eli's HCW, Vol. XIV, No. 22).

The "Administrator finds that the fee-for-service compensation of the Provider's therapists was the controlling factor in the application of the limits in the case," not the fact that the therapists were directly employed bona fide employees, the reversal decision says. CMS also refutes the Board's conclusions about the prudent buyer concept.

Another agency with a similar PT compensation case, Erwine's Home Health Care Inc. in Kingston, PA, also recently received a CMS Administrator reversal of its favorable Board decision (see Eli's HCW, Vol. XIV, No. 35), reports Erwine's and Potomac attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, DC.

Potomac fully expects to see a reversal of its PRRB decision as well, Hamme tells Eli. Then Potomac and Erwine's plan to combine their appeals to federal court to save on court costs. Another HHA with a similar decision may join them as well, Hamme says.

Sure thing: A provider filing an appeal in federal district court on this issue "will win the case," Plonsey predicts.

But VNA Healthcare won't be appealing the reversal of its Board decision. VNA's parent in the year at issue, ServiceMaster Co., sold the agency to Alton, IL-based VNA-TIP in 1999. A source familiar with the case says because ServiceMaster got out of the home care business and the reimbursement amount at issue was relatively low, the company decided not to file an appeal in federal court.

ServiceMaster representatives did not respond to inquiries for this story by press time.

Paying Bills On Time Wards Off Interest Disallowance

Potomac also won at the PRRB level on another issue--interest expense shared with a non-Medicare related entity, Potomac Home Support. For the fiscal year ending in 1999, the agency claimed interest expense of $17,637 related to a $200,000 line of credit from NationsBank where PHS was the loan guarantor.

Cahaba treated the interest expense as shared costs between Potomac and PHS, allocating a portion of the expense to PHS and making it non-reimbursable. At the PRRB, the RHHI went further by claiming that the entire interest expense should have been non-reimbursable because it wasn't incurred solely for Potomac.

PHS was billed and paid its share of operating expenses to Potomac, the provider countered. Thus it shouldn't have been allocated any interest expense.

The Board agreed that PHS paid its share of operating expenses and that PHS "derived no benefit from having the Provider pay the shared expenses and subsequently reimbursing the Provider for the payments," according to the decision. Accordingly, the PRRB reversed the disallowance.