Medicare Compliance & Reimbursement

One agency lost $37,000 thanks to spotty record-keeping.

How much is enough? That's the perpetual question when it comes to documentation, and a recent Provider Reimbursement Review Board decision shows how important the answer can be.

Elwood, IN-based Visiting Nurse Association of North Central Indiana Inc. applied for an exception to therapy salary guidelines for its 1995 cost reporting year, according to a June 7 decision in VNA of North Central Indiana v. Blue Cross Blue Shield Association Palmetto GBA (No. 2004-D24). The VNA needed the exception because it couldn't hire contracted therapists in its rural area at the salary level mandated by Medicare's salary guidelines.

But the VNA's then-intermediary shot down the agency's exception request, costing the VNA almost $37,000. "The Provider did not submit sufficient evidence to substantiate its request," the intermediary argues.

For example, instead of submitting copies of newspaper advertisements it ran for the therapist positions, the VNA submitted only faxes it sent inquiring about prices for ads. And although VNA executive director Jessie Westlund swore in an affidavit that the ads were placed, the agency produced no cancelled checks or invoices proving the statement. The intermediary also wanted documentation proving there were no replies to the ads.

In another example, the agency submitted three invoices to different contractor therapists, but the intermediary argues there's no proof those invoice amounts are the going rate for area therapists.

And the VNA petitioned the Immigration and Naturalization Service to bring a foreign therapist into the country, but the petition was denied because the agency wouldn't divulge the names and addresses of its patients and other information. The intermediary argues because the INS denied the petition, it doesn't count as exhausting possibilities for less expensive therapists.

The majority of the PRRB sided with the intermediary and upheld the exception rejection.

But in an unusual move, two PRRB members dissented. Board Member Gary Blodgett argues that the VNA's documentation for its exception request was adequate. The fact that the intermediary refused to compare the agency's exception request to rates paid by other home health agencies in the area shows that its costs probably were in line with other agencies', Blodgett contends.

Board Member Suzanne Cochran goes even further, letting loose with a tirade of criticism for the intermediary. "The Intermediary's documentation requirements, endorsed by the majority, go too far," Cochran claims. "They cease to protect the Medicare trust fund and instead unnecessarily burden it. Moreover, there is no guidance to providers on how much is enough."

There's no way for HHAs to anticipate what documentation is necessary ahead of time, Cochran criticizes. "The Provider's claim was rejected because the Provider failed to anticipate what the Intermediary might question," she notes.

There's no reason for the intermediary to question the contracted rates the VNA submitted, or to cast doubt on the sincerity of the agency's INS request, Cochran insists. And asking the agency to prove no one responded to its recruitment ads is ridiculous. "Ad readers looking for work aren't likely to write a letter informing the advertiser that their prices are too low; they simply look for a better deal," she notes.

The intermediary offers "a poor excuse for failing to carry out its own responsibilities" when it says the exception request isn't compelling enough to require it to compare therapist costs to other HHAs' in the area, Cochran blasts. "Its conspicuous absence, particularly when it is required, suggests that it would have been unfavorable to the Intermediary." Other intermediary actions are "silly" and "misleading," Cochran charges.

Cochran's comments reflect the problems many agencies encountered under cost-based reimbursement, says consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. "The Medicare intermediaries were always good at telling the providers what was wrong or lacking with the information, but after the event and never before," charges Boyd.

The PRRB decision is at www.cms.hhs.gov/providers/prrb/2004D24.pdf.