CMS’s struggle with the Medicare improper payment rate proves out Maslow’s law; if all you have is a hammer, everything looks like a nail. Nowhere is that more true than home health. In recent years, Congress and CMS have tried to rein in fraud, waste and abuse through a physicians’ face to face requirement, moratoria on new home health providers in select counties in Florida, Illinois and Texas, pre-claim review in Illinois and a recovery audit jurisdiction dedicated solely to home health, hospice and DMEPOS.
Despite those efforts, or because of them, the improper payment rate for home health has risen from 4.8 percent in 2010 to 42 percent in 2016. (There have been certain changes in measurement that contributed to the shift as well.) On Friday, CMS threw in the towel at least temporarily on one of its efforts – the Pre-claim Review Demonstration - and is looking to end the physicians face to face requirement imposed by the ACA.
According the CMS website, the Pre-claim review Demonstration in Illinois has been paused, effective March 31, 2017 and will not expand in Florida as expected on April 1. The decision is a win for the industry which worked hard to end the program.
The PCRD has been plagued with problems. In the first month of the program 55 to 60 percent of claims were not being “affirmed." Things have improved since then – the most recent report from January 2017 indicates the rejection rate has fallen below 10 percent.
The rough start in Illinois did not augur well for the next phase of the demonstration in Florida which has significantly more home health claims. Reportedly, the pre-claim review will be at the discretion of the provider who will be excluded from post-payment audits like those conducted by RACs.
The PCRD has had the most negative impact on smaller, less capitalized providers in Illinois. Expansion into Florida, especially if the rollout was as rocky in Illinois would have been a headwind for the public home health providers like AMED and LHCG.
Also reportedly, CMS is considering asking Congress to end the face-to-face requirement imposed by the ACA. This requirement, which was designed to limit fraud, waste and abuse by providers, has largely been ignored by physicians who order the home health care.
The lack of cooperation from physicians that order the care has driven up the improper payment rate for home health and for Medicare as a whole contributing to a rate in excess of 10 percent. Departments of the government with improper payments rates above 10 percent must submit corrective action plans on how they will reduce the rate.
Medicare Improper Payment Rate 2010 to 2016
Hence, efforts like the Pre-Claim Review Demonstration.
If Congress agrees to end the requirement for a face to face consultation between physician and home health beneficiary, the improper payment rate for home health and Medicare should decline to pre-2010 levels, all other things being equal.
It would not be an insignificant thing.
A lower improper payment rate may finally crack open the door to relaxing the homebound requirement for home health. CMS has hinted at relaxing the definition or waiving the homebound requirement in the past, most notably as part of the CCJR. It is an open secret that the obstacle for doing so has been the OIG which is concerned about the improper payment rate. As home care is a critical component of Secretary Price’s vision for patient-centered health care system, we expect him to drive toward greater use of the benefit and a lower improper payment rate makes that more likely than not.
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Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
