September 2022 |
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The Death of the Home Health Pre-Claim Review Demonstration?

Why Home Health

For years the home health care industry has been viewed by government regulators as a breeding ground for fraud and abuse. In 2016 HHS OIG released a report identifying common characteristics of Home Health fraud cases throughout the United States. The reasoning behind the report was that Home Health payments constituted a substantial portion of payments made by the Medicare Program. According to HHS, nationwide investigations revealed that fraud, waste, and abuse were rampant within the home health industry. In 2015 alone, the Medicare Program paid over $18.4 billion to more than 11,000 home health agencies. Of that $18.4 billion, HHS OIG estimated that over $10 billion was attributable to improper payments. Furthermore, between 2011 and 2015, more than 350 criminal and civil cases that accounted for more than $975 million in payments were filed against home health agencies.

The Pre-Claim Review Demonstration

Contemporaneous to that report, CMS decided to implement a three-year Pre-Claim Review Demonstration for home health services. The Demonstration Program was to be implemented in two stages. The first stage beginning in 2016 that involved Illinois, Florida, and Texas. The second stage was scheduled to begin in 2017 and included Michigan and Massachusetts.

The purpose of the project was to determine if the pre-claim review of home health claims could improve methods for the identification, investigation, and prosecution of Medicare fraud. Tangentially, CMS hoped to determine whether or not the demonstration would reduce expenditures while simultaneously improving quality of care.

Home Health agencies participating in the demonstration were not required to create any new or different medical documentation. Agencies needed to submit the same supporting documentation they would typically submit for any type of ADR review performed by a Medicare Contractor, only the documentation would be submitted much earlier in the claims adjudication process. According to CMS, the pre-claim review would not delay care to Medicare beneficiaries or alter the home health benefit.

The roll out of the project was scheduled to occur in Illinois, no earlier than August 1, 2016; Florida no earlier than October 1, 2016; Texas no earlier than December 1, 2016; and Michigan and Massachusetts no earlier than January 1, 2017. The demonstration is set to end in all states on June 30, 2019. If a home health agency operates in a state where the demonstration is occurring and does not utilize the pre-claim process, those claims will be stopped for pre-payment review and could be subject to denial. Also, after the demonstration has been operational for three months, CMS will reduce payment by 25% on all claims deemed payable but did not first receive pre-claim review.

The Project Shows Promise

The pre-claim review began in Illinois on August 3, 2016. Before CMS could even publish the first statistics on the progress of the review, a change was required. CMS had to implement a new process to distinguish between those beneficiaries who are not eligible for Medicare coverage of home health services and those that may be eligible but the documentation is lacking in some way. This change was established to assist review contractors in identifying agencies having claims denied due to documentation issues so that educational resources were properly allocated.

Throughout the review process CMS would publish the Affirm Rates for claims and agencies subject to the demonstration. At week 11, 78% of the Illinois claims received an affirmed or partially affirmed decision. Two weeks later that number improved to 83%. In an effort to provide further transparency, CMS began to provide specific figures for fully affirmed claims and those that were partially affirmed. In order for a claim to be considered only partially affirmed, at least one service submitted on the pre-claim review request was provisionally affirmed and at least one service was non-affirmed. This first attempt at transparency occurred in week 14 where the affirm rate experienced a slight drop to 82%. The percentage for fully affirmed claims was 77% with 5% of the claims achieving only a partial affirmed decision. The affirm rates published by CMS continued to improve with the passing weeks and reached a rate of 91.7% after twenty-four weeks, which ended on January 14, 2017.

The Demise

Despite this success, on March 31, 2017, CMS announced that it would pause the demonstration in Illinois for at least 30 days and the demonstration would not expand to Florida. CMS provided very little reasoning or guidance to providers about the pause. CMS did state, on an FAQ page related to the demonstration, the pause was done so that consideration could be given to a number of changes to improve the demonstration process. CMS does not give any roll-out dates for the other states but indicates 30 days-notice will be issued on the CMS website. Agencies in Illinois are encouraged to submit claims in the fashion they did prior to the demonstration. If a provider received notice that a claim was affirmed, CMS advises the agencies to submit that information with the claims.

While the true reason behind CMS’s pausing of the demonstration project may never be known, we do know that prior to implementation, 116 members of Congress signed a letter addressed to the Secretary of HHS and the Administrator of CMS asking them to withdraw the proposed demonstration. These members of Congress felt the project would restrict access to necessary care, be too costly to taxpayers, and that CMS lacked the authority to implement the project in the manner they chose. The Congressional letter identifies the over a quarter of a billion dollar price tag as adding an incredible administrative cost to physicians and home health agencies while doing very little to prevent fraud. The Congressional group further stated that while the Secretary has the authority to develop improved methods for investigating and prosecuting fraud, the demonstration is markedly different as it is simply a method of screening and utilization management. The most interesting aspect of this letter is that one of the Members of Congress signing it was Tom Price, the newly appointed Secretary of Health and Human Services.

Since Secretary Price appears to have been against this project from the beginning and he is now running the agency responsible for the demonstration, it is very likely that the pre-claim review demonstration will cease to exist. What won’t change is the government’s plans to eradicate fraud within the home health industry. The OIG report identified 27 cities in 12 states as hotspots for home health fraud (based on number of agencies with multiple common characteristics). These hotspots included areas already targeted by HEAT Strike Force Teams including Chicago, Dallas, Detroit, Houston, and Miami. The report also identified new areas of concern within the home health world. These newly identified hotspots included Las Vegas, Orlando, San Diego, Phoenix, Provo, and Ada, Oklahoma. The desire to address problems in home health is further supported by OIG’s 2017 Work Plan. Under the 2017 Work Plan, OIG (as well as the FBI and state MFCU) will continue to investigate home health agencies; specifically comparing home health survey documents to Medicare claims data. While home health agencies may escape the burdens of the pre-claim review demonstration they are still in danger of experiencing government oversight – this time more directly in line with ZPIC audits and law enforcement inquiries and investigations.


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