In early February, CMS sent up a trial balloon in the form of a Paper Work Reduction Act notice in the Federal Register asking for comment on the collection of information for a pilot on pre-authorization of home health services in the fraud-prone states of Florida, Texas, Illinois, Michigan and Massachusetts. That trial balloon was barely aloft when the industry got out the BB guns and started shooting. A grass roots effort turned out the public comments and lobbyists helped circulate a letter opposing the yet-to-be-proposed prior-authorization demonstration that was eventually signed by 116 lawmakers. And you thought no one reads the Federal Register.
Prior authorization for home health services raises the ire of the industry because it can slow beneficiary access to services which can diminish outcomes for the patient. Prior authorization also raises the specter that Medicare fee-for-service home health agencies will be forced to operate in the way they do as members of Medicare Advantage plan networks. Many Medicare Advantage plans require prior authorization before the commencement of home health services and agencies do not recieve the upfront "anticipated payment" that amounts to about 2/3 of the episode reimbursement. On the other hand, CMS is under a lot of pressure to reduce improper payments. Please see our recent report on Recovery Audit Contractors for more on that. Home health is rife with improper payments - largely due to documentation errors. Complete capitulation by CMS was not politically possible, given the OIG's recent demand that CMS come up with a plan to reduce its improper payment rate below 10 percent.
Yesterday, CMS found a way to begin to address the extremely high improper payment rates in home health without going so far as requiring prior authorization. Instead of obtaining prior authorization to admit and treat a patient in home health care, CMS is asking agencies in Florida, Texas, Illinois, Michigan and Massachusetts to submit a "pre-claim" review of documentation that supports the admission of the patient and the level of home health services. They are to submit to pre-claim review after they have submitted their Request for Anticipated Payment. An HHA can submit to a pre-claim review as many times as necessary to get it right. If an HHA does not submit to a pre-claim review and the claim is submitted for payment, then the claim will be subject to prepayment review to determine medical necessity. If after three months of the demonstration being operational, the HHA does not submit documentation for pre-claim review and the claim is later deemed payable, it will be subject to a 25 percent reduction. This demonstration is scheduled to last three years and begin in Illinois no earlier than August 1, 2016.
The industry in the form of the Visiting Nurses Association fo America (VNAA) and the Alliance for Home Health Quality and Innovation (AHHQI) consider CMS's move to be pre-authorization by another name. The Partnership for Quality Home Healthcare (PQHH) which represents many of the publicly traded home health providers agreed. Both issued statements today opposing the effort, suggesting alternatives and pointing out that CMS failed to use the rulemaking procedure to implement the demonstration.
Pre-claim reviews will be handled by the Medicare Administrative Contractors who get mixed reviews from providers on their ability to adequately communicate and educate. HLS, for example, has been plagued by pre-payment reviews of IRF claims that return 100 percent denial rates. So the industry is understandably wary that the MACs will use what is meant as a way to improve on documentation problems to deny claims after services have commenced. Sophisticated, well capitlaized operators will probably have few problems overcoming documentation problems. It is the rest of the industry - the small local operator that make up so many of the HHAs in the US - that is most likely to be negatively impacted.
We tend to think that anything that helps improve the reputation of the industry and pushes it toward consolidation is probably, in the long run, a good thing. We do acknowledge that pre-claim review in a few states may be a big headache but probably not the end of the world for reputable operators like AMED, HLS, LHCG, KND and AFAM.
