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Takeaway: Providers will have option to subject to pre-claim or post-payment review with time off for good behavior.; much depends on MACs' execution

This afternoon, CMS announced a revival of sorts of the Pre-claim Authorization demonstration it launched in Q4 2016 and was forced to suspend in April 2017. Using a paperwork reduction notice, CMS has proposed implementing in Illinois, Ohio, North Carolina, Florida and Texas, with the option to expand to other states in the Palmetto/JM MAC jurisdiction, the Review Choice Demonstration.

Providers in these states will have the option to participate in either 100 percent pre-claim review or 100 percent post-payment review. Theese providers will be subject to review until the home health agency reaches “the target affirmation or claim approval rate” – whatever that is. Upon reaching the undefined “target affirmation or claim approval rate” the agency may choose to be relieved from claims reviews, subject to an occasional spot-check to ensure ongoing compliance.

Providers who are unwilling to submit to pre-payment or post-payment reviews may opt out but are subject to a 25 percent payment reduction from Medicare. Not exactly a choice.

The Bad. The problem with pre-claim review demonstration that was halted in 2017 was that the Medicare Administrative Contractors are ill-equipped to review the volume of claims necessary in a timely manner and with the necessary expertise. We know of no progress the MACs have made in the last year or so that would suggest a different outcome this time around.

The Good. Providers can select post-payment review which may limit the financial impact relative to a pre-claim review. However, the lack of expertise at the MACs may result in inappropriate claims denials. Since the Office of Medicare Hearings and Appeals is still experiencing backlog in claims appeals from the poorly executed Recovery Audit Contractor program in 2011-2013, there will be little recourse for providers subject to a MAC post-payment denial.

The program is structured so that good actors – which probably includes the publicly traded companies of AMED, LHCG et al who have the capital, human and otherwise, to fund efficient and accurate claims procedures – will be relieved of reviews once their good behavior is affirmed. However, the “target affirmation or claim approval rate” is not defined in the notice so it is difficult to assess the impact at this point.

To be fair to CMS, the improper payment rate for home health – largely due to the ill-conceived face-to-face requirement – is so high it requires them to adopt mitigating strategies and report their progress to Congress. They have chosen a path that at least provides more flexibility for providers than the 2016 iteration. Much, of course, depends on the MACs' execution and in that regard we are not optimistic.

We anticipate a lot of blowback from the industry but since it is a restart of an earlier effort, we doubt CMS will completely withdraw the proposal.

Link to the notice is here.

Call with questions. It is never a dull day when it comes to Medicare's home health policies.

Emily Evans
Managing Director
Health Policy