Home Health & Hospice Week

But make sure you’re obeying labor laws.

Setting expectations with contract therapists from the get-go may help head off therapy-based denials based on poor or missing documentation.

Home health agencies have been under intense scrutiny of therapy services (see story, p. 170), and for many agencies, those services feel out of their control because they are furnished by outside therapists.

“Most of my clients are small providers and do not have therapists on staff,” related Pam Warmack with Clinic Connections in Ruston, La.

“Rather, they have to outsource their therapy services to a contract therapist.”

Problems: These HHAs may feel like they’re running into a brick wall when trying to combat therapy denials. “Despite numerous efforts to educate these therapists on Palmetto’s documentation requirements, the therapists continue to document poorly,” Warmack laments.

Even when agencies provide documentation templates for therapists to use, “there are errors and omissions on the documentation forms,” Warmack notes.

And often therapists don’t turn in their documentation until very late — 30 days or more after the visit isn’t unusual, Warmack adds.

Solutions: “Build into the contract with the therapist that visit documentation must be submitted within five to seven days,” Warmack recommends. “It must then be reviewed by a staff member who is knowledgeable and has a relationship with the therapist so that it can be improved if unacceptable.”

HHAs that don’t have a therapist on staff to review records may want to hire one just for that purpose (see story, p. 170).

“Every agency should have a therapy ‘coordinator’ to work one-on-one with therapists and therapy organizations,” Warmack advises. “Sufficient documentation should be a condition of payment for services.”

Mind Your Legal Responsibilities

The only hitch to building documentation requirements and deadlines into your contracts is your therapists’ employment status, says attorney Liz Pearson with Pearson & Bernard in Edgewood, Ky.

Good: “If the therapist is truly an independent contractor — meaning that he contracts with other HHAs or health care providers — then the agencies can indeed include in the contract that payment will not be made unless or until satisfactory documentation is received,” Pearson explains. “For contracted therapy, we include a provision in our contracts that holds the therapy company liable/responsible for denied claims arising from poor documentation. We include the agencies’ right to deduct the cost of the denied claim from future bills.”

Bad: If the therapist is an employee, even if you call her a contractor, you can’t have those contract provisions without risking violating federal and state labor laws, Pearson says.

“The big thing here is establishing the therapist as a true independent contractor,” Pearson advises. “If it’s a therapy staffing company, it is pretty clean because the therapist is an employee of the staffing company,” she says.

“Contracts with companies providing services are not subject to substantial regulation,” agrees attorney Thomas Harper with Gilliland, Macguire & Harper in Indianapolis.

“But if it’s an individual therapist who works only for the agency, likely he/she will not be considered an independent contractor,” Pearson cautions.

“The problem with HHAs contracting directly with a therapist is that for Medicare and Medicaid HHAs, therapy services must be offered ‘Under Arrangements’ with the HHA, or as a direct employee,” Harper explains. “However, a key requirement of an ‘Under Arrangements’ service is that there is direct control and supervision over the service provider. Direct control and supervision triggers the Internal Revenue Service control test for employment.”

And remember, “it doesn’t matter what you call them — it’s a matter of whether the therapist meets the independent contractor test,” Pearson stresses.

What’s At Risk

Why is it so important to make sure your compensation for a contract therapist is compliant with federal and state laws? You could incur a major financial penalty if not.

“If the therapist is determined not to be an ‘independent contractor’ by a government agency (such as the IRS, Department of Labor, or a whole host of state agencies like Departments of Revenue, Labor, or Unemployment), then the HHA would also be at risk under state wage laws that prohibit deductions or penalties from wages,” Harper notes. “State laws vary greatly but most prohibit that type of penalty.”

Pearson adds, “the penalty is generally tied to the amount of deduction — but also can implicate minimum wage. Penalties can be up to two times the actual amount of deduction and/or the amount that employee falls below minimum wage.”

Hidden cost: And, if the case is brought by a private attorney — as opposed to government agencies such as the DOL — attorneys’ fees are included. “Often that is the big kicker,” Pearson warns.

Note: For resources on determining whether your therapist can be classified as an independent contractor, go online to www.dol.gov/whd/workers/misclassification.