Home Health & Hospice Week

PRRB upholds $40,000 disallowance in medical director compensation.

Would your medical director documentation pass muster under close scrutiny? If not, you could land in hot water.

That's what a Louisiana home health agency owned by LHC Group Inc. found out when Palmetto GBA disallowed more than $42,000 in medical director compensation for fiscal year 1999, according to a Provider Reimbursement Review Board decision issued Feb. 3 (No. 2006-D15).

Acadian HomeCare in Lafayette, LA claimed more than $72,000 on its 1999 cost report for fees for 13 medical directors covering seven branches, the decision says. "The Intermediary's disallowance was based upon a collective lack of documentation, duplication of services, undocumented on-call services and non-allowable lobbying activities," the PRRB notes.

Acadian concurred with the $1,700 disallowance of lobbying activities, but disputed the remaining $40,470.

The HHA needed that many medical directors because it served a large rural area with several culturally diverse populations. And Acadian paid its main medical director $18,000 and alternate medical director $12,400 because they were on call 24 hours per day on a rotating schedule, as supported by contracts and documentation, the HHA maintained.

Palmetto argued that the on-call directors' duties duplicated those of the nursing director and that the alternate medical director's compensation wasn't supported by a contract or by sufficiently specific invoices.

The Board upheld the more-than-$40,000 disallowance, saying it wasn't persuaded "of the need for 24 hour on-call service by multiple medical directors who were paid a flat monthly fee for the service." The patient's attending physician is responsible for emergency medical services for the patient, not the medical director, the PRRB argued.

The flipside: However, the Board did offer a rare dissenting opinion in the case. While the Board majority upheld the disallowance, two Board members expressed their view that the disallowance should have been reversed.

Having a medical director for each branch was justified by Acadian's remote and rural service area, they said. And in reality, HHA staff can't always contact a patient's attending physician for consultation around the clock. "There is nothing in the Medicare regulations or manual instructions that precludes home health agencies from compensating their Medical Directors as Acadian has done," the members said. Medical Director Kickbacks Widespread Problem Gene Tischer of the trade group Associated Home Health Industries of Florida cheers the decision as cracking down on a significant industry problem--sham medical director arrangements that are actually ways to pay physicians for referrals. "It's a great opinion," Tischer tells Eli.

Palmetto and the Board allowed the medical director costs for administrative duties such as reviewing patient charts and attending meetings. The Board "allowed costs for services actually rendered that provided a tangible benefit to the HHA," Tischer notes. "It disallowed costs for services that were not necessary."

Experts agree that [...]