Medicare Compliance & Reimbursement

CMS punts on wage index yet again.

The 2009 home health agency rate update notice does contain one piece of good news in an unexpected area.

Under the current 0.89 fixed dollar loss (FDL) ratio for outlier calculations, the Centers for Medicare & Medicaid Services expects outlier payments to reach 8.1 percent in 2008. That's well above the 5 percent they are supposed to make up, CMS points out in the 2009 PPS rate update notice in the Nov. 3 Federal Register.

If CMS kept the current FDL ratio and provider payment patterns stayed the same, outlier payments would reach 10.26 percent in 2009, CMS adds. To reduce it to 5 percent, CMS would have to adopt an FDL ratio of 2.71 --  a huge increase that would require HHAs to "lose" much more money before outlier payments would kick in.

However, CMS attributes much of the outlier payment increase to fraudulent and abusive billing in South Florida. "This growth in outlier payments is primarily the result of excessive growth in a few specific areas of the country," the agency notes in the notice.

Reprieve: "We will be examining outlier payments in these areas in more detail and will take action to remedy inappropriate outlier payments as necessary," CMS pledges. "Therefore, we believe that raising the FDL ratio to 2.71 is not justified at this time, given ... the actions that are underway to address excessive, suspect outlier payments that are occurring in these areas."

CMS will keep the FDL ratio at the current 0.89, it says. The agency will revisit the issue once its fraud-fighting activities have shone light on "appropriate" outlier payments, according to the notice.

This decision is "a small victory," cheers Bob Wardwell with the Visiting Nurse Associations of America. "To cut [the FDL ratio] again would simply cut services to the most needy."

The FDL determination is good news, agrees consultant Mark Sharp with BKD in Springfield, Mo. "Providers that are not abusing the outlier provision need the FDL to be in the 0.89 range to cover the additional costs they incur on those rare circumstances that high utilization is required for an episode of care," Sharp says.

CMS clearly expects its fraud-fighting efforts in the Miami-Dade area to have a big effect, says consultant Pat Laff with Laff Associates in Hilton Head, S.C.

Coming to you: And it won't just be Florida that's affected by CMS's outlier analysis, Laff expects. Agencies in other parts of the country are likely to soon see CMS's outlier enforcement activities, which bring in the Department of Justice and the HHS Office of Inspector General, he predicts.

The OIG and its partners will have to get creative to catch some of the fraudulent providers that are abusing the outlier provision, however, Sharp notes. Making actual visits to outlier patients to substantiate supporting documentation will be key, he believes. CMS, the OIG, and DOJ really need to get a handle on the problem, Wardwell estimates. If they can't, "it will be a terrible reflection on the capacity of HHS and DOJ to deal with blatant fraud and abuse," he says.

HHAs that have reclassified hospitals in their market didn't receive any help in this notice. Once again, CMS punts on the issue.

"We believe the use of the pre-floor, pre-reclassified hospital wage index data results in the appropriate adjustment to the labor portion of the costs as required by statute," CMS says in the notice. That means HHAs stay at the lower wage index while reclassified hospitals receive a higher one."It is a great disadvantage to many providers out there that have a much lower wage index than the hospital providers competing for the same staff," Sharp laments.

"The wage index issue is appalling," declares consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, Calif. "CMS does not care that some agencies are paid too much in one part of the country and other agencies are paid too little in another part of the country.