Home Health & Hospice Week

Gear up to accurately reflect your costs. 

If you want to secure your fair share of Medicare payments, you should turn your attention to supplies charges.

Now home health agencies can take an easier route to reclaiming supplies costs that were lost due to a payment system glitch announced by the Centers for Medicare & Medicaid Services last February.

A number of claims with supplies charges were held up by the system, and the charges had to be stripped before the claims could be processed. At first, CMS wasn't sure what was causing the problem, but it later deduced the glitch was limited only to claims with significant changes in condition (SCICs) or partial episode payment (PEP) adjustments (see Eli's HCW, Vol. XII, No. 12, p. 90).

After CMS fixed the problem, it urged agencies to resubmit their claims to add the supplies charges back in.

But busy agencies could barely find time to process their current claims, let alone claims that would result in no direct financial impact under the prospective payment system.

CMS Waves Intermediaries Off PS & R 

Now CMS says agencies can report those supplies charges on their cost reports rather than individually adjusting claims. "CMS and the [regional home health intermediaries] will provide instruction to HHAs that they may supplement PS&R supply data with additional information from their records to account for the lost supply charges," CMS says in a Nov. 19 letter to the National Association for Home Care and Hospice.

"That will be great," as long as agencies have their supplies costs in their records, judges consultant Pat Laff with Hilton Head Island, SC-based Laff Associates.

"Doing it the cost report way rather than through adjusting claims will be much more efficient," agrees consultant Mark Sharp with BKD in Springfield, MO.

The only hitch could come if CMS fails to adequately communicate to RHHIs that they should not reconcile the additional supplies costs reported with the agencies' PS&R data culled from its claims, Laff and Sharp point out. Unless instructed otherwise, intermediaries "always adjust down to the PS&R data," Laff says.

How Much Stripping Occurred?

Once the glitch was reported, some HHAs stopped including supplies charges on claims altogether, since they didn't affect the amount of reimbursement under PPS, CMS notes its letter to NAHC. But "a majority of agencies" stripped supplies charges only from the claims returned to them by their regional home health intermediary, CMS says.

Since only about 5 percent of claims are PEPs and SCICs that would have been returned, it could be only a small dollar amount if agencies stripped charges only from the returned claims, Sharp estimates.

But because stripping the charges had no direct reimbursement impact, many HHAs may have been likely just to discontinue adding the supplies charges on any claims to avoid hold-ups, Laff warns. That could mean more costs not accounted for.

Under PPS, agencies are paying less attention to reporting their full costs and more attention to other reimbursement-affecting practices, experts note. "They're getting the [cost report] information as accurate as they can," Sharp reports. "But it's only natural not to focus attention and resources" on cost reports that have no direct payment ramifications.

"Getting this cost report in is kind of a yawn" for many HHAs, Laff agrees.

But agencies won't be yawning if CMS decides to rebase PPS rates down the line based on cost information they're reporting today. CMS says in the letter to NAHC that "rebasing of the HH PPS is not currently planned," but industry veterans expect it will be inevitable.

And data in HHA cost reports are used to calculate figures such as the profit margin reported by the Medicare Payment Advisory Commission. MedPAC recommendations can make or break agencies' efforts in Congress.