Medicare Update

CMS Issues Instructions on Home Health Agency Ownership Changes

In the Final Rule updating the Medicare home health prospective payment system for calendar year 2010, the Centers for Medicare and Medicaid Services (CMS) modified the regulations regarding ownership changes. 

New Regulatory Provision

Specifically, CMS amended 42 C.F.R. §424.550(b) by adding paragraph (b)(1), which states:

(1) If an owner of a home health agency sells (including asset sales or stock transfers), transfers or relinquishes ownership of the HHA within 36 months after the effective date of the HHA's enrollment in Medicare, the provider agreement and Medicare billing privileges do not convey to the new owner. The prospective provider/owner of the HHA must instead:

(i) Enroll in the Medicare program as a new HHA under the provisions of §424.510, and

(ii) Obtain a State survey or an accreditation from an approved accreditation organization.

According to CMS, the above provision serves to address concerns about turn-key and other sales of HHAs where there is no assurance that the buyer can maintain compliance with the conditions of participation.

CMS Instructions

To implement the regulatory changes, CMS recently issued Transmittal 318 (Change Request 6750), which amends the Medicare Program Integrity Manual (Manual) to state in part:

Effective January 1, 2010 - and per 42 C.F.R. §424.550(b) - an HHA may not undergo a CHOW pursuant to 42 C.F.R. §489.18 if the ownership change occurs within 36 months after:

• The effective date of the provider's enrollment in Medicare, or
• The effective date of the most recent ownership change for the provider.

This applies to all applications that are pending on - or are received on or after - January 1, 2010.

For purposes of 42 C.F.R. §424.550(b) and this section 5.5.2.6, an "ownership change" includes any of the following:

• CHOW
• Acquisition/merger
• Consolidation
• Change request reporting a 5 percent or greater ownership change (e.g., stock transfer, asset sale)
• Change request reporting a change in partners, regardless of the percentage of ownership involved

In Transmittal 318, CMS also instructs contractors to determine whether the effective date of transfer occurred within the above referenced 36 month period by requesting a copy of the transfer agreement, sales agreement, bill of sale, etc. 

If the transfer date falls within the 36 month period, CMS instructs contractors to return an application pursuant to the Manual and notify the provider that, per 42 C.F.R. §424.550(b), the HHA must:

• Enroll as an initial applicant;
• Obtain a new state survey or accreditation after it has submitted its initial enrollment application and the contractor has made a recommendation for approval to the state/regional office; and
• Sign a new provider agreement as part of the initial enrollment.

Possible Lack of Clarity

There may be some inconsistency or lack of clarity among the provisions of 42 C.F.R. §424.550(b)(1), 42 C.F.R. §489.18 and the Manual changes imposed by Transmittal 318.

For instance, the Manual changes appear to focus on prohibiting a CHOW (or change of ownership) pursuant to 42 C.F.R. §489.18 if the ownership change occurs within 36 months of certain effective dates.

For corporations, 42 C.F.R. §489.18 has historically indicated that a transfer of corporate stock does not constitute a change of ownership.

However, Transmittal 318 also defines the term "ownership change" to include a CHOW, merger and change request reporting a 5 percent or greater ownership change (e.g., stock transfer, asset sale).

In addition, 42 C.F.R. §424.550(b)(1) appears to apply to circumstances in which an owner of an HHA "sells (including asset sales or stock transfers), transfers or relinquishes ownership of the HHA within 36 months after the effective date of the HHA's enrollment in Medicare."

Do the CMS instructions require more clarity?

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CMS Issues Instructions on New Medicare Home Health Outlier Policy

In the Final Rule updating the Medicare home health prospective payment system (HH-PPS) for calendar year (CY) 2010, the Centers for Medicare & Medicaid Services (CMS) made a significant home health outlier policy change.

To combat perceived abuses, CMS adopted a 10 percent cap on outlier payments at the home health agency (HHA) level. At the time, CMS also suggested that:

• Medicare systems may maintain a running tally of year-to-date total home health payments.
• Outliers may be paid on a rolling basis (so that outlier payments do not exceed the cap).
• A periodic reconciliation process may be used in which withheld outlier payments are paid.

Subsequently, CMS announced that final instructions describing the changes to be made by Medicare contractors would be release in early December 2009.

Home Health Outlier Instructions

On December 23, 2009, CMS released Transmittal 1883 (Change Request 6759), which instructs Medicare contractors regarding the implementation of the new HHA outlier policy.

In brief, Transmittal 1883 indicates (among other things) the following:

• Medicare systems will track the total amount of HH-PPS payments and the total amount of outlier payments that each HHA has received.
• When each HH-PPS claim is processed, Medicare systems will compare the 2 amounts (above) and determine if the 10 percent cap on outlier payments has been met.
• Outlier payments will be made for a particular claim if the entire outlier does not result in the 10 percent cap being exceeded. In other words, partial outlier payments will not be made.
• When an outlier is not paid, HHAs will be alerted to such a claim adjustment by claim adjustment reason code 45 on the accompanying remittance advice.
• Medicare systems will conduct a quarterly reconciliation process. All claims where an outlier amount was calculated but not paid when the claims were initially processed will be reprocessed to determine if an outlier has become payable.
• If an outlier can be paid, claims will be adjusted to increase the payment by the outlier amount.
• Adjustments will appear on remittance advice with a type of bill code that indicates a contractor initiated adjustment (type of bill 3XI) and coding that typically identifies outlier payments.
• Quarterly reconciliation process will occur in February, May, August and November.
  

For more information, see Transmittal 1883. 

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CMS to Host Home Health, Hospice & DME Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) recently announced that it will hold the next Home Health, Hospice & DME Open Door Forum at 2:00 p.m. (ET) on January 20, 2010.

To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 45247192. To participate in person, RSVP and security clearance is required.  One must RSVP by 2:00 p.m. (ET) on January 14, 2010 to HOMEHEALTH_HOSPICE_DMEODF-L@cms.hhs.gov, and include your name, organization, telephone number, and "Home Health" in the subject line.  The Open Door Forum will take place at the Hubert H. Humphrey Building, 200 Independence Avenue S.W., Washington, D.C.

Beginning 2 hours after the Open Door Forum, CMS will also make an audio recording of the Open Door Forum available.  To access the audio recording, one must dial 1-800-642-1687 and enter the conference ID.  The recording will expire after 3 business days.

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OIG Reports on Medicare Home Health Outlier Payments in Miami-Dade County

On December 7, 2009, the Department of Health of Human Services' Office of Inspector General (OIG) released a reported titled Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County and Other Geographic Areas in 2008 (Report).

According to the Report, the OIG analyzed all home health claims that were submitted and paid in 2008 to identify geographic areas that exhibited aberrant Medicare home health outlier payment patterns. The OIG defines aberrant to be at least twice the national average for 3 or more of the 5 payment characteristics reviewed.

In brief, the OIG found that:

• Miami-Dade County accounted for more outlier payments in 2008 than the rest of the nation combined. In fact, Miami-Dade County accounted for 52 percent of the approximately $1 billion Medicare paid in home health outlier payments in 2008, while only 2 percent of all Medicare beneficiaries receiving home health services resided there. 
• In Miami-Dade County, Medicare outlier payments for home health claims with a primary diagnosis related to diabetes were 8 times the national average.  
• 23 counties nationwide exhibited aberrant home health outlier payment patterns similar to that of Miami-Dade County (but to a lesser extent). 

In the Report, the OIG recommends that home health services in Miami-Dade County and the 23 additional counties warrant additional review as part of ongoing antifraud activities (such as the Health Care Fraud Prevention and Enforcement Action Team (HEAT)). However, the OIG does not identify the 23 additional counties in the Report because they may be subject to future OIG and HEAT reviews.

The OIG also recommends that the Centers for Medicare & Medicaid Services (CMS):

• Continue with efforts to institute a cap on the total outlier payments an individual home health provider may receive annually.
• Review home health providers that exhibit aberrant outlier payment patterns and respond appropriately based on the findings.
• Continue with efforts to strengthen enrollment standards for home health providers to prevent illegitimate home health agencies from obtaining billing privileges. 

CMS concurred with the 3 recommendations (above).

As part of the Final Rule updating the Medicare home health prospective payment system (HH-PPS) for calendar year 2010, CMS also adopted a 10 percent cap on outlier payments at the agency level and lowered the targeted total aggregate outlier payments to 2.5 percent of HH-PPS payments.

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Senate Adopts Health Reform Amendments to Protect Medicare Benefits

In the last few days, the U.S. Senate has debated and voted on a few amendments to the Senate health care reform legislation (H.R.3590) involving Medicare benefits including:

• On December 5, 2009, the U.S. Senate voted 96-0 to approve an amendment (S.Amdt.2926) offered by Senator John Kerry, which is aimed at protecting home health care benefits and states:

"Nothing in the provisions of, or amendments made by, this Act shall result in the reduction of guaranteed home health benefits under Title XVIII of the Social Security Act."

• On December 4, 2009, the U.S. Senate voted 97-1 to approve an amendment (S.Amdt.2899) offered by Senator Debbie Stabenow, which is aimed at protecting benefits provided to beneficiaries through Medicare Advantage plans and states:

"Nothing in this Act shall result in the reduction or elimination of any benefits guaranteed by law to participants in Medicare Advantage plans."

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Related Posts:

• Senate Rejects Motion to Remove Home Health Cuts from Health Reform Legislation
• Senate Rejects McCain Amendment to Limit Medicare Payment Reductions  

Senate Rejects Motion to Remove Home Health Cuts from Health Reform Legislation

On December 5, 2009, the U.S. Senate voted 41-53 to reject a motion offered by Senator Mike Johanns, which would have sent the Senate health reform legislation (H.R.3590) back to the Senate Finance Committee with instructions to remove about $42.1 billion in payments cuts for Medicare home health care services.

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CMS to Host National Provider Conference Call on OASIS-C

The Centers for Medicare & Medicaid Services (CMS) recently announced that it will host a national provider conference call on the Outcome and Assessment Information Set (OASIS-C).  The call with take place from 1:30 p.m. - 3:00 p.m. (ET) on December 8, 2009.

This call is the third in a 3-part series of calls and will provide information on:

• Process and outcome measures that will be reported on Home Health Compare and CASPER
• Reasons behind the development and reporting on process measures
• Role of NQF in endorsing measures for public reporting
• Quality measurement reporting schedule

Following the presentation, participants will be allowed to ask questions of CMS representatives. CMS reports that it will post a PowerPoint slide presentation for download on the CMS Sponsored Calls page of the CMS website prior to the call. To participate in the call, registration is required.

For more information, visit the CMS Sponsored Calls page of the CMS website.

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Top Ten Medicare Update Blog Posts in November 2009

Below are the top ten Medicare Update posts during November 2009 (based on the number of views):

1)   CMS Releases Final Medicare Physician Fee Schedule Changes for 2010

2)   CMS Releases Final Medicare Home Health Payment Changes for 2010

3)   CMS Releases 2010 Final Rule for Hospital Outpatient Departments and Ambulatory Surgical Centers

4)   CBO Releases Cost Estimate for Medicare Physician Payment Reform Act

5)   Senate Health Care Reform Bill Provides for Recovery Audit Contractor Expansion

6)   Senate Health Reform Bill Includes Significant Medicare Payment Reductions

7)   CMS to Instruct Medicare Contractors on Home Health Outliers in December 2009

8)   Senator Kaufman Introduces Health Care Fraud Enforcement Act

9)   House Passes Affordable Health Care for America Act

10) Senator Grassley Introduces Fighting Medicare Payment Fraud Act of 2009

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CMS Posts FAQs on New Medicare Home Health Outlier Policy

The Centers for Medicare & Medicaid Services (CMS) recently posted 2 Frequently Asked Questions (FAQ) concerning its new outlier policy. The new FAQs address the following questions:

• What is the effective date of the new outlier policy? In other words, what determines if a given claim is subject to the new outlier policy?
• HHAs, and consultants to HHAs, are looking for guidance as of how to handle patients whose episodes fall into the outlier category. What are HHAs to do with such patients?

Follow the above links to see CMS's answers. 

On November 10, 2009, CMS published the Final Rule updating the policies and rates for the Medicare home health prospective payment system (HH-PPS) for calendar year (CY) 2010. The Final Rule makes significant changes to the policies on outlier payments.

Outlier payments are made for episodes for which the estimated cost exceeds a threshold amount.  The Social Security Act requires that the estimated total outlier payments be no more than 5 percent of total estimated HH-PPS payments in a given year.

In the Final Rule, CMS reduced the fixed dollar loss (FDL) ratio to 0.67 for CY 2010. Further, to combat perceived abuses, CMS adopted a 10 percent cap on outlier payments at the agency level and lowered the targeted total aggregate outlier payments to 2.5 percent of HH-PPS payments.

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CMS to Instruct Medicare Contractors on Home Health Outliers in December 2009

On November 10, 2009, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule in the Federal Register updating the policies and rates for the Medicare home health prospective payment system (HH-PPS) for calendar year (CY) 2010. 

As previously reported, the Final Rule makes significant changes to the policies on outlier payments.

Outlier payments are made for episodes for which the estimated cost exceeds a threshold amount.  The Social Security Act requires that the estimated total outlier payments be no more than 5 percent of total estimated HH-PPS payments in a given year. The wage adjusted fixed dollar loss (FDL) amount represents the amount of loss that a HHA must bear before an episode becomes eligible for outlier payments.  Annually, CMS reviews the percentage of outlier payments and adjusts the FDL ratio as appropriate. 

For CY 2009, CMS adopted a FDL ratio of 0.89. However, in the Final Rule, CMS reduced the FDL ratio to 0.67 for CY 2010. Further, to combat perceived abuses, CMS adopted a 10 percent cap on outlier payments at the agency level and lowered the targeted total aggregate outlier payments to 2.5 percent of HH-PPS payments.

In response to comments in the Final Rule, CMS briefly outlines how it may implement the 10 percent cap on outlier payments at the agency level.  In part, CMS states the following:

"Under our planned implementation approach, for each home health provider, the claims processing system will maintain a running tally of the year-to-date (YTD) total home health payments. The claims processing system will ensure that each time an outlier claim for an agency is processed, actual outlier payments will never exceed 10 percent of the agency's YTD total payments. While an agency will always receive its base episode payment timely, the outlier portion of the claim will be paid on a rolling basis, as the agency's YTD payments support payment of the outlier.  We plan to have a periodic reconciliation process under which outlier payments that were withheld are subsequently paid if the HHA's total payment have increased to the point that their outlier payments can be made..."

Today, CMS posted an announcement on its website stating that the "[f]inal instructions (Change Request/Transmittal) describing the changes that will be made by Medicare contractors to implement this new outlier policy are currently being developed and are expected to be released sometime in early December." 

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