Medicare Compliance & Reimbursement

CMS has switched nearly all pro-provider decisions

Home health agencies that have filed appeals of therapist compensation adjustments should prepare for a court battle - or perhaps not bother appealing.

That's because the Centers for Medicare and Medicaid Services administrator has reversed decisions favorable to home health agencies in 12 of 14 cases dealing with employee therapists' compensation being limited to salary guidelines for contractor therapists, according to attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, DC.

Since 1988, the Provider Reimbursement Review Board has ruled in favor of HHAs in all 14 cases, Hamme tells MLR. The PRRB repeatedly rejects CMS' and the intermediaries' arguments that paying employed therapists on a per-visit basis makes them subject to the salary limits for outside, contracted therapists.

But in all but the first two cases, the CMS administrator has overturned the favorable PRRB decisions. At reversal, many providers decide to drop the appeal because they don't have the resources for a court battle or because the reimbursement amount at issue is too small to make litigation feasible.

However, agencies that pursue appeals in federal court come out the winner every single time, says Hamme, who currently is handling three separate cases regarding this issue. One appeals court and three federal district courts have ruled in providers' favor on this issue, and CMS settled in one case, Hamme relates. "No court has ruled in favor of the secretary," he stresses.

Case in point: Regional home health intermediary Cahaba GBA disallowed more than $80,000 in therapist compensation in Centralia, IL-based VNA Healthcare Inc's cost report year ending in April 1998 by applying the contractor guidelines to employed therapists' compensation, according to the decision. The PRRB later decided in favor of the VNA's appeal (2005-D37).

"The decision will be overturned," predicts cost report consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. "And I assume that the VNA is going on to the courts or why bother with the appeal?" The $80,000 at issue is likely a strong enough incentive to proceed with a further appeal, Hamme agrees.

If the PRRB and the federal court system so uniformly reject applying contractor therapist guidelines to employed therapists' compensation, why does the government keep up the fight? Cahaba "would have to lose in every court or until [CMS] told them to stop before they would quit making the adjustment," Boyd predicts.

CMS is keeping its options open by requiring the intermediaries to continue litigating cases on this topic, Hamme suspects. "One benefit of such an approach for the agency is that cases with relatively low dollar amounts do not get appealed by providers to court when the administrator reverses them," he points out. "There have been a fair number of such cases."