Home Health & Hospice Week

Faulty accounting, competition cost HHA more than $100,000.

It turns out bad advice from accountants and competition from a hospital-based home health agency aren't so extraordinary.
 
That's what Terrebonne Home Care Inc. in Houma, LA found out when it tried to obtain an exception to its per-visit cost limits in its 2000 cost reporting year - the last year under cost-based reimbursement.
 
Terrebonne found out in 2000 that its accountants had given the agency improper accounting advice when filing its 1996 and 1997 cost reports. Terrebonne disclosed the problem to the HHS Office of Inspector General and incurred "substantial legal and other professional expenses in FY 2000 to rectify the problem," according to a Provider Reimbursement Review Board decision issued Dec. 17 (2005-D13).
 
And Terrebonne faced "a substantial reduction in the number of patients served ... due to competition from another HHA," the decision says. The agency "charged that the only local hospital in the area was improperly referring all of its patients to its affiliated HHA."
 
In claiming 2000 costs, Terrebonne argued that both situations qualified as "extraordinary circumstances" - a situation in which Medicare will grant exceptions to per-visit cost limits. Alternately, the agency argued that the reduction in its patient census qualified for an exception under the "fluctuating population" exception - another allowance provided for under regulations.
 
But intermediary Palmetto GBA shot down both arguments and the exceptions on which Terrebonne had more than $100,000 in reimbursement riding. And the PRRB upheld the intermediary's disallowances in its recent decision.
 
"It is common for providers to hire and use accounting consultants and, unfortunately, problems may arise due to performance," the Board allowed. But "it would be inappropriate for the Medicare program to permit exceptions to the cost limits based on these ordinary circumstances."
 
Besides, the HHA took its accounting firm to court and "successfully availed itself of civil remedies," the PRRB noted. Likewise, the HHA succeeded in a civil action against the hospital it accused, although it is "unclear whether the Provider recovered any damages" from the move, the Board acknowledges.
 
In any case, "competition does not constitute an extraordinary circumstance," the Board pronounced.

No Double Dipping on Legal Costs

The PRRB implies that "the economic injury that the provider incurred from these events ... could be compensated by those at fault" - the accountants and the hospital, points out attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, DC. "Thus, Medicare should not have to pay for such injury," Hamme concludes.
 
If an HHA recovered damages from civil lawsuits, then "also recognizing its damages through a cost exception would result in the provider being paid twice for the same costs," Hamme adds.
 
But Terrebonne owner Ronald Eschete says the agency didn't recover anywhere near its legal and administrative costs for the problems. The Board shouldn't have considered the meager compensation the HHA received, especially because the agency recovered it in a separate cost reporting year, Eschete tells Eli.
 
"We are obviously disappointed in the decision," Eschete says.
 
Eschete takes the Medicare program to task for failing to give providers any guidance or advice on how to choose qualified, legitimate accounting consultants. (For tips on weeding out shady consultants, see Eli's HCW, Vol. XIV, No. 2, p. 13-15.)
 
The reimbursement system's complexity "practically forces you to hire an accounting firm," Eschete rails. "But there's no help" on choosing the right firm or checking to see if your consultants are following the rules, he laments.
 
The Board also rejected Terrebonne's argument that its reduced patient population qualified for a fluctuating population exception. "The population in the area had not fluctuated; instead, the population served by the Provider fluctuated due to competition," the decision says. That's not what the regulation, which is aimed at resort areas, means to cover, the Board decided.
 
The next step: Eschete still feels the agency's costs fall into the cost limit exception criteria. Terre-bonne is considering appealing the case in federal court, he says. However, the steep cost of further appeal efforts may keep the agency from pursuing the case.