Home Health & Hospice Week

PT salaries, IV drugs also addressed in cost report decision.

If you think an hour commute is too long, you may get an argument from Medicare.

Oklahoma-based Professional Home Care Inc. learned that lesson the hard way when the Provider Reimbursement Review Board handed down a decision costing the home health agency more than $84,000 for cost report years 1995 to 1998.

The HHA claimed mileage and overnight hotel costs for its owner and CEO to travel from Profession-al's home office outside Oklahoma City to its location in Pauls Valley, 45 miles away, according to the decision issued last Nov. 18. The CEO claimed travel costs for 45 weeks in 1995 and 23 weeks in 1996, the Board notes.

Regional home health intermediary Cahaba GBA disallowed the travel and hotel costs, saying the mileage was a non-reimbursable commuting cost and "it was not prudent for the CEO to incur hotel expenses when staying in a town within a reasonable driving distance from his residence."

Professional argued that it wasn't reasonable or necessary for the CEO to return home each night, but the intermediary countered that the CEO often drove back and forth between the Pauls Valley location and home office multiple times per day.

Daily commute: The Board upheld the disallowances, agreeing that the 45-mile distance between the two locations was normal commuting distance. Plus the Board didn't "find adequate justification for the CEO to visit the Pauls Valley facility on an almost daily basis, almost every week, when his purported work site is in the corporate home office," it says.

Cahaba's argument for the travel costs disallowance is somewhat contradictory, notes attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, DC.

On one hand, Cahaba "insisted that the CEO was supposed to be working in the home office rather than at the facility and that the CEO was spending too much time at the facility," Hamme points out. On the other hand, "if the CEO was not based at the facility, then at least some of the mileage for whatever trips were reasonable should have been an allowable travel cost because this was not a commute-to-work situation."

"The travel decision is flawed," maintains consultant Jim Hamilton with David-James in Baltimore. "The mileage is allowable if the trips emanated from the home office," since the personal travel is from home to the first site. "If the CEO went from home to the central office and then to the other agency, then the mileage from the home office to the agency is allowable."

Pick Your Poison--Or Your RHHI Will

Professional also struck out in its argument against a $66,000 disallowance related to home infusion drugs. The HHA billed Medicare patients directly for home infusion drugs while billing the program for the IV visits, but set up a separate corporation called ACCESS to bill other insurers for home infusion drugs and services, the decision explains. ACCESS would bill insurers, then pay pharmacies for the IV drugs and the agency locations for home infusion visits.

Professional didn't claim any costs related to ACCESS on its home office cost statement, instead claiming related costs on the provider cost reports. At audit, Cahaba placed all the costs associated with ACCESS home infusion visits in a non-reimbursable cost center on the home office cost statement.

The HHA and Cahaba agreed to an administrative resolution reversing the salary and benefit portion of the adjustment, but the IV drug costs remained in the non-reimbursable cost center, which was assigned overhead costs.

ACCESS didn't handle the IV drugs, which often went directly from the pharmacy to the patient, and counting the cost of the drugs in the cost center was out of proportion, Professional argued. The agency claimed "ACCESS is basically a shell company without employees and that the providers merely write a small number of checks," the decision says.

Cahaba contended that the home office supported ACCESS. "The Intermediary claims that ACCESS was organized as a separate corporation legally and functionally and that there had to be costs to establish the corporation, set up contracts, bill insurers and to pay pharmacies and the Providers."

Sympathy doesn't help: The Board upheld Cahaba's disallowances. "The Board is sympathetic to the Providers' argument that the high cost of these drugs may not reflect the actual amount of time and effort spent by the home office in paying for the drugs, billing third parties for the cost of the drugs and paying the Providers for delivery of the IV visits," the decision says. "However, the Board agreed with the Intermediary that it is impossible that no employee time or expense is associated with operating ACCESS."

Because Professional offered no other methodology for apportioning costs, the PRRB approved using the IV drugs' costs.

It was up to the provider to identify and document the extent of the ACCESS costs so that an over-allocation didn't occur, Hamme observes. "Because the provider did not do so, it is essentially forced to accept an allocation that may be inequitable."

PT Salary Guidelines Apply To Contractors

Finally, Professional fought Cahaba's often-contended practice of applying salary guidelines for outside therapist contractors to both the agency's direct employees and its contracted therapists. Cahaba disallowed about $75,000 over the issue, the decision notes.

The Board ruled in favor of Professional for the direct employees' salaries, but upheld applying the guidelines to contracted therapists' compensation.

"The agency should definitely assume that the favorable part of the PT decision will be overturned," Hamme predicts. The HHS Administrator has overturned many similar decisions already, forcing providers to head to federal court to secure their PT salary costs.

Professional and its attorney didn't return phone calls seeking comment for this story.