Home Health & Hospice Week

You’d better take your cost reporting duties seriously under the newly released home health cost report form, or face likely reduced reimbursement rates in the future.

Learn from the hospice cost report example, urges cost report expert Dave Macke with VonLeh-man & Co. in Fort Wright, Kentucky. For fiscal year 2020, the Centers for Medicare & Medicaid Services increased payment rates for the relatively little used Inpatient Respite Care, Continuous Home Care, and General Inpatient levels by 156 percent, 40 percent, and 35 percent, respectively, while reducing the much more used Routine Home Care level by 2.7 percent.

And CMS has threatened that it isn’t done “rebalancing” hospice rates, since hospice cost report data have shown RHC payment levels to be 17 to 18 percent higher than hospices’ costs for the visits (see Eli’s HCW, Vol. XXVIII, No. 28).

Now, CMS is one step closer to collecting new data on the home health cost report that will lead to the same type of rebalancing reductions, Macke worries. CMS first issued the revised cost report in April 2019, and now has issued the form and instructions for another 30-day comment period under the Paperwork Reduction Act. The form will apply to cost reporting years ending July 2019 and later, despite industry calls to delay implementation.

New requirement: The new form will require “calculation and reporting of average hourly wage rates (salaries and benefits) for patient care personnel, including both W-2 employees and contracted personnel,” points out consulting firm The Health Group in Morgantown, West Virginia.

CMS uses the cost report “for annual rate setting and payment refinement activities,” the agency notes in its notice of the new form in the Feb.24 Federal Register. “Additionally, the Medicare Payment Advisory Commission (MedPAC) uses the home health cost report data to calculate Medicare margins, to formulate recommendations to Congress regarding the HHA PPS, and to conduct additional analysis of the HHA PPS,” the notice points out.

Beware: Worksheet S-3 Part V “scares me,” Macke tells Eli. The worksheet will require agencies to calculate an average hourly wage for 14 categories of direct care staff, with separate categories for directly employed versus contracted staff.“Complete this form for employees who are full-time and part-time, directly hired, and acquired under contract,” CMS says in the new instructions for the form.

First: Getting accurate hourly wage data will be difficult for multiple reasons. For example, many HHAs pay their staff per visit and thus don’t have precise time records. Likewise, HHAs often don’t have precise time records for contracted staff either.

CMS’s response: Back in 2017, CMS began requiring HHAs to report RN versus LPN G codes in 15-minute increments on claims, so agencies should have this data available, CMS says in a response to comments on the proposed cost report form.

“CMS just doesn’t understand,” Macke insists. Billing information doesn’t equate to recording and collecting expense data.

Second: Many home health agencies just don’t put a lot of time and resources into their cost reports, Macke laments. That’s because they no longer have reimbursement tied directly to them, outside of minor flu vaccination expenses.

HHAs often view cost reports as a “nuisance that they just want to get over and done,” Macke says. The bottom line is that “the data accuracy is not good,” he judges.

Yet, like with hospices, CMS and MedPAC will use the hourly wage data to calculate how much Medicare is “overpaying” HHAs based on costs versus payment rates, Macke warns. Then CMS is likely to make payment rate recalibrations accordingly.

“Cost reports are important,” even if it takes a few years to see the overall reimbursement impact, Macke emphasizes.“They will affect rates.”

Another problem: With the Patient-Driven Groupings Model, the Review Choice Demonstration, Targeted Probe & Educate medical review, and many other factors squeezing HHAs’ time and resources, many agencies aren’t even aware of these changes to the cost report, Macke worries. That’s illustrated by the fact that CMS received only three comment letters on the proposed report, none of them from actual home health agencies.

“There’s just not a lot of awareness,” Macke laments. That will inevitably translate to even less accurate data in the first year of the new requirements.

Note: The Federal Register notice is at www.govinfo.gov/content/pkg/FR-2020-02-24/pdf/2020-03633.pdf.