Medicare Compliance & Reimbursement

Medicare beneficiaries are entitled to covered home health services no matter where they live, and the government should pay for them.

That's the argument one home health agency in a remote part of California's Sierra Nevada mountains has made, and the Provider Reimbursement Review Board seems to agree.

Back in 1998 Medicare was paying HHAs under cost-based reimbursement, and under the interim payment system the then-Health Care Financing Administration slashed per-visit limits for many agencies. For Bishop, CA-based Pioneer Home Health, the only HHA serving two isolated mountain counties, the cuts were life threatening.

"They chopped us off at the knees," Pioneer Administrator Pat West tells Eli. "We were already very cost-effective; we had no fat to cut out."

So Pioneer applied in 1998 for an exception to its IPS per-visit cost limits under the "atypical services" provision, according to Aug. 21 PRRB Decision No. 2003-D46. Pioneer's intermediary recommended the atypical services exception, but HCFA denied it in 1999, noting that the actual clinical services needed by patients were not atypical.

Pioneer then resubmitted its request for the exception, which had a reimbursement impact of about $90,000, under the "extraordinary circumstances" provision. HCFA again denied the request, claiming that exception was for situations like earthquakes and floods, not geographic hardships.

Pioneer argued to the Board that HCFA's interpretation of the definition was too narrow and that a large rural area that requires increased travel and salary costs does qualify for the extraordinary circumstances exception.

Pioneer is the sole agency covering a mountainous service area about the size of Maryland, with a population density of fewer than 4 people per square mile, West notes. It's classified as a frontier area by California.

"It's not like hopping on the freeway and seeing five or six patients within a block of each other," she says. It can take four hours to get back and forth to one patient.

"Average productivity for a rural area was 5.3 visits per day for home health aides and 4.5 for nursing visits, whereas the productivity for frontier areas was between 2 and 3 visits per day, specifically 2.9 visits per day for the Provider," notes the decision.

The PRRB recognized Pioneer's increased cost of doing business in an extremely rural area, and sided with the agency that its climate and terrain challenges should qualify the HHA for the cost-limit exception. "The Provider's unique service area constitutes an extraordinary circumstance for which relief from the per-visit limits should be allowed," the Board said.

If it stands, this decision may help other rural or frontier HHAs that have cost limit exception appeals in the pipeline, notes Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas, who represented Pioneer in front of the Board.

But it may have a larger impact if it helps lend credence to the home care industry's argument for reinstatement of a rural add-on to prospective payment system rates. "Any Medicare-eligible senior is supposed to have access to the same services," Boyd points out. But reimbursement limitations keep seniors in remote areas from accessing the home care benefit.

Pioneer had to cut back its service area when IPS hit, West remembers. "Now there is truly an area, thanks to Medicare, where beneficiaries have no access to home care," she laments. Pioneer's census dropped from 55 to 75 patients to around 35 to 45 patients after the cuts.

The elimination of the 10 percent rural add-on in April was "devastating" to Pioneer's fiscal health, West says. The non-profit HHA has had to turn to the community for the resources to continue seeing patients. "It's ludicrous to be asking for support to make up the difference for what the government won't pay," she protests.

Hospitals in extremely rural areas receive extra reimbursement as critical access hospitals, Boyd notes. "Why can't home care get the same thing?" he asks.

West and Boyd hope the PRRB's decision in Pioneer's case will help show how important rural costs are to providers, which in turn could encourage passage of legislation reinstating the 10 percent add-on.

But that precedent may help only if the decision stands. Centers for Medicare & Medicaid Services Administrator Tom Scully has 60 days from the decision in which to decide if he'll reverse the Board's judgment.

Pioneer may not be able to swing the cost of the expensive civil court battle that would be required to fight Scully's reversal of the decision, West says. "The problem is we didn't get paid the money in the first place, so how can we afford it?" she asks of the Catch-22.