CMS Proposes Pre-Claim Review Demonstration for Home Health Services

On May 29, 2018, the Centers Medicare and Medicaid Services (CMS) announced its intention to implement a revised Medicare demonstration project that will affect Home Health Agencies (HHAs) providing services to Medicare beneficiaries in Florida, Illinois, North Carolina, Ohio, and Texas. The proposed demonstration is currently limited to these five states; however, CMS expressly retained the option to expand the demonstration project to other states in the Palmetto/JM jurisdiction, which includes Alabama, Arkansas, Georgia, Indiana, Kentucky, Louisiana, Mississippi, New Mexico, Oklahoma, South Carolina, and Tennessee.

The new demonstration project proposes to give participating HHAs the choice of submitting to 100% pre-claim review or 100% postpayment review, or of facing a 25% payment reduction on claims. An HHA that chooses to participate in pre-claim or postpayment review remains subject to its chosen method until the HHA reaches CMS’s target affirmation or claim approval rate. The current rate is set at a lofty 90 percent, based on a minimum of 10 pre-claim requests or claims submitted. After reaching the target affirmation or claim approval rate, the HHA may opt out of 100% pre-claim or 100% postpayment review but will continue to be subject to spot checks of 5% of their claims. HHAs that do not participate in the pre-claim or postpayment review options will receive a 25% payment reduction on all claims submitted for home health services and may be subject to review by Recovery Audit Contractors.

CMS states that the new demonstration is designed to “assist in developing improved procedures for the identification, investigation, and prosecution of Medicare fraud occurring among [HHAs]” and offers a solution in “working towards the prevention and identification of potential fraud, waste, and abuse; the protection of Medicare Trust Funds from improper payments; and the reduction of Medicare appeals.” However, CMS previously implemented a similar pre-claim review demonstration that ended at the end of March, 2017, after the demonstration was found to highlight more paperwork errors than Medicare fraud.

The proposed demonstration has already been met with resistance from the Home Health industry. The National Association of Home Care & Hospice (NAHC) stated that, “[n]o other health care sector is forced to submit every claim for review or face a punishing [25%] pay cut.” In addition, NAHC President, William A. Dombi, described the demonstration program as a “great concern to the home health community” and dismissed CMS’s suggestion that the demonstration offers HHAs choices: “While it is touted as a choice of options for [HHAs], the options presented are two with increased paperwork burdens and one that would financially cripple a HHA with a 25% pay reduction.” Mr. Dombi also noted that the addition of the postpayment review feature, which was not included in the precursory 2017 demonstration, “is very likely to lead to a substantial appeals backlog.”

The public, including interested Home Health providers, have until July 30, 2018, to comment on the CMS proposed demonstration. For more information on the demonstration or for assistance submitting comments, please contact Jennifer E. Tyler or Charmaine A. Mech.

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