Here’s How Home Health Agencies Want to Fix Audits

If there’s one word that can instantly strike fear in the heart of a home health care business owner, it is, perhaps, “audit.” That’s because agencies can be subjected to an audit of their records and health care claims at any point, seemingly at the mere will of a state or federal agency.

As some in the industry see the audit process as an unfair, David and Goliath situation, there are those working with policymakers to produce positive change for audit processes, and those who are fighting back.

After being slapped with an audit and suspension on Medicare payments late in 2016, one Illinois business owner filed a lawsuit against the auditor, a Zone Program Integrity Contractor (ZPIC), and Health and Human Services (HHS) Secretary Tom Price. Rizaldy Villasenor, CEO and owner of MedPro Health Providers, an Illinois-based home health care agency, is still involved in the ongoing lawsuit against the auditor AdvanceMed and the business could shut down completely, according to Villasenor.

At the same time, one of the nation’s largest home health care providers, Louisville, Kentucky-based Almost Family (Nasdaq: AFAM), is working to promote legislation that eases audit burdens on home health companies.

Time and Extrapolation

The negative impacts of audits are why Almost Family is working with state lawmakers and advocates to promote safeguards for home health care businesses. However, like many other issues, states are very individualized in their approaches and rules when it comes to audits.

One of the biggest issues, according to home health providers, is the loopback period, as home health care agencies can be audited for records dating a few years back.

“It’s not unheard of for agencies to have difficulty retrieving their records,” Denis Fleming, vice president of government relations of Almost Family, told Home Health Care News. “That can put a tremendous burden on a small agency. We hear instances of agencies that immediately consider bankruptcy, [because they are] just unable to meet the cost of the audit or legal representation to challenge it. And that is just going in the wrong direction, given the burden health care is expected to carry and the rebalancing of Medicaid expenditures while preparing for the baby boomers demographic in so many states.”

For Villasenor, the audit came in 2016, but looked at records dating back to 2013, he told Home Health Care News. The audit process for Villlasenor’s company looked at a sample of roughly 30 claims. AdvanceMed determined there were overpayments among that sample, and extrapolated that the company had received overpayments across the board.

“The process of extrapolation—is it fair?” Villasenor asked. “This is not a regular business transaction. You’re dealing with patient care. [Auditors] look at a sampling of 20 or 30 claims and say, based on the review of that small sampling, 70% or 80% of your claims have overpayment. Is it fair to go back so many years and extrapolate?”

Fleming also sees an issue with the extrapolation process, with formulas that look at claims several years back.

“Properly constructed and initiated by states or by the federal government, [audits] are important federal integrity tools,” Fleming told HHCN. “Audits that we have seen in some states often use extrapolation formulas that sometimes reach back two and three years. [They are] are not uncommon and can be devastating to an agency.”

Providing Proof

Because MedPro is based in Illinois, the home health care provider was involved in the pre-claim review demonstration from August 2016 through December 2016, before the company’s Medicare payments were suspended. With a high affirmation rate from regional Medicare Administrative Contractor (MAC) Palmetto, which Villasenor estimates was as high as 98% toward the end of 2016, the extrapolation formula seems out of sync with MedPro’s business operations, he said.

Villasenor says this high affirmation rate proves his business has high operational standards. Indeed, he argues that while the rollout of PCR in Illinois was a bit rocky at first, the process improved over the months MedPro was involved in the program.

“To be fair to Palmetto, when they rolled it out they hired a lot of people and we were calling them initially,” he said. “Initially, they didn’t have their act together. But we saw them progress over two to three months. They were getting better, calling us about what was missing, and they were specific. We loved working with them at the later part.”

Villasenor hopes that the audit process could eventually follow a similar experience, with ongoing communication, requests for additional documentation and review for home health claims, he told HHCN.

Promoting Safeguards

With serious business impacts on home health agency owners, making the audit process more transparent, with more limitations, could lessen the onus owners feel when faced with a notice of audit.

A good solution for the current audit situation is two-fold, according to Fleming.

First, home health care agencies should have more time to respond to audit inquiries and correct mistakes, he said.

“The upshot is to give the agency an opportunity to respond rather than be exposed to a devastating audit,” Fleming said.

Additionally, state or federal agencies should have to meet a more significant set of standards before presenting an audit to home health care agencies, shifting the burden of proof off of business owners and onto government entities.

“A final point is to sort of level the playing field about placing the burden of proof off to the agency initiating the audit,” Fleming said. “[The federal or state] agency would have to meet certain standards, develop a more extensive case for an audit at the time it is initiated and present it to the provider.”

There is one state that offers this type of dream model, according to Fleming—North Carolina. There, home heath care agencies are afforded a very limited loopback period. In other states, however, there are fewer limitations and more risks for home health care agencies.

Smaller agencies can also be wiped out just from the process of responding to an audit, while a large entity like Almost Family, with 340 branch locations in 26 states, can more likely manage an audit.

“It’s important for states to be mindful of the burden overreaching audit processes can lay on small agencies,” Fleming said. “Large agencies and companies that operate in multiple states and experience challenges with audits, in a general sense, have the scale and experience to try to manage them.”

Still, Almost Family is continuing to fold audit reforms into its state-by-state approach to policy advocacy.

Written by Amy Baxter

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Amy Baxter
Assistant Editor at Home Health Care News
When not writing about all things home health, Amy fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."