Home Health Agencies Grapple With Prior Authorization Rule

Home health providers and associations were quick to denounce a preauthorization requirement after the Centers for Medicare & Medicaid Services (CMS) revealed it will move forward with its formerly announced plans.

Across the board, industry officials expressed disappointment and concern with the CMS plans for prior authorization, now deemed the Pre-Claim Review Demonstration for Home Health Services. It will roll out in five states as announced in February, and aims to crack down on Medicare fraud and abuse.

In particular, the home health sector criticized CMS for dismissing the comments and concerns from lawmakers and health care service providers, instead pushing forward the demonstration for home health care in Illinois, Florida, Texas, Michigan and Massachusetts. The first state, Illinois, will face the requirement no earlier than Aug. 1.


“This is a big deal,” William Dombi, vice president for law at the National Association for Home Care & Hospice (NAHC), tells Home Health Care News. “There are a lot of challenges, a lot of questions.”

Cause for Concern

Under the three-year demonstration, home health agencies in the five selected states will be required to submit documentation for review before processing claims for services. The requirement comes as a result of a 59% improper payment rate among home health claims in 2015, which largely stemmed from insufficient documentation, CMS stated. The pre-claim review demonstration aims to educate home health agencies on what documents are required and encourage correct submissions, while still allowing agencies to provide services prior to the preauthorization decision.


“CMS is testing whether pre-claim review helps reduce expenditures, while maintaining or improving quality of care,” the agency stated. “Additionally, CMS believes the demonstration will also help assure services are provided in compliance with applicable Medicare coverage and payment rules, thereby assisting in the prevention of fraud, waste and abuse.”

The issue with CMS’ reasoning on this front is that improper payments don’t necessarily equate to fraud, says Joy Cameron, vice president of policy and innovation for the Visiting Nurse Associations of America (VNAA). For the most part, home health agencies are providing the documentation they believe is correct in submitting claims, only to be rejected or face scrutiny over payments later on.

“We’re willing to sit down and talk [with CMS] about fraud, but this isn’t the way to do it,” Cameron says.

The pre-review demonstration would be similar to the Prior Authorization of Power Mobility Device Demonstration, which CMS implemented in 2012 and requires prior authorization for scooters and power wheelchairs within seven states with high population of fraud- and error-prone providers.

But equipment is very different from service, Dombi says. Home health remains an episodic benefit, begging the question of how something can be authorized if it’s apt to change by the time of the official claim. Cameron echoed that sentiment.

“[Home health] is not an item—it’s a very different animal,” she says. “This is an incorrect setting for this demonstration.”

Others worry about the administrative implications involved. The demonstration could impose even further documentation requirements on already burdened agencies, which might result in poor care transitions and more confusion among seniors seeking care, according to the Partnership for Quality Home Healthcare, a Washington, D.C.-based coalition of home health providers that works to improve the integrity, quality and efficiency of home health care.

“We appreciate the steps CMS has taken to protect beneficiary access to care in the revised demonstration, however, much more needs to be done,” Colin Roskey, executive vice president of the coalition, said in a statement. “We remain concerned that the demonstration does not go far enough to protect patients from potential harms inherent with pre-claim review, including confusion, delays and service interruptions in care for a vulnerable patient population. We are also concerned that CMS has not followed notice-and-comment standards for obtaining and responding to input from those immediately affected by the demonstration.”

Indeed, the proposed demonstration garnered pushback from the home health sector and lawmakers alike. Last month, 116 bipartisan House lawmakers wrote a letter to CMS expressing concerns that prior authorization could cause delays in care.

“That lobbying didn’t make as much of an impact as we were hoping,” says Rachel Hecox, RN, director of clinical services at Western Illinois Home Health Care. The family-owned and operated agency has been in business 35 years and covers 10 counties in west central Illinois, one of the selected states.

Further Confusion Ahead

As with any new procedure, home health agencies must prepare for what’s ahead.

“I think everybody needs to thoroughly understand what is included and required in this demonstration,” says Gina Mazza, director of regulations and compliance and partner at home care and hospice consulting firm Fazzi Associates. “That is priority No.1 [for agencies]. This is not something you leave up to chance. The agencies have to have a proficient working knowledge of what is required.”

That just might be the problem, according to Dombi. As it stands, CMS hasn’t clearly defined what documentation will be necessary to submit for review prior to a claim or how it should be submitted, and the agency needs to offer further guidance, he says.

During the pre-claim review process, Medicare will work closely with the agencies to explain what documentation is necessary and why a prior submission was insufficient, according to CMS. A home health agency will be able to resubmit the supporting documentation as often as necessary during the review. CMS will respond to the initial pre-review submission within 10 days,

“The communication piece, a timely response from the government, is a concern,” says Michele Berman, director of rehabilitation at BAYADA Home Health Care. “[Even if] we’d be getting a timely response, within the 10 days, [my concern is] how much of a burden it will be to ask for a reconsideration after a denial.”

The demonstration should not delay care to Medicare beneficiaries and doesn’t alter the Medicare home health benefit, CMS stated.

Mistakes could prove detrimental, though, especially when it comes to finances. Delays in submitting claims mean there will be continuous cash flow issues. If a provider submits a claim without going through the pre-claim review  after the first three months of the demonstration, and the claim is determined payable, there will be a 25% reduction in the full claim amount.

“With trying to combat fraud in the home health industry that ultimately is putting such a strain on businesses to do the right thing, it may potentially damage the industry to a point where people go out of business,” Hecox says.

The financial aspect is crucial, even without considering potential deductions in Medicare payments, VNAA’s Cameron says. The administrative side of compliance could prove costly, and might take funds away from other critical aspects of business.

“Our concern is we don’t get to invest in the marketplace or in our staff, because we’re going to be paying for this,” she says.

One positive Dombi finds is that CMS views this as a way to help get to a point of compliance before submitting a claim, rather than having to review a claim after. Still, NAHC is “extraordinarily” concerned about implications, and wants to work with CMS to ensure that the demonstration becomes a positive rather than a negative, even if that takes some time.

“If we have a choice, Aug. 1 will not be the point when Illinois finds itself in this new system,” Dombi says.

Written by Kourtney Liepelt

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